In the 2016 Global Human Capital Trends Report, put out by Deloitte, 42 percent of the executives surveyed said they expected to increase or significantly increase the use of contingent workers in the next three to five years. Businesses are increasingly relying on a “blend” of full-time and freelance workers, and this shift is actively disrupting and reshaping the workforce as we know it.
There are a number of forces behind this trend. To start, the supply is there. 55 million Americans freelance, representing 34 percent of the U.S. workforce. There is no shortage of talented freelance workers available for companies looking to hire them. The workforce is also changing in terms of the skills that are in-demand. New skills and jobs seem to emerge every month, making the old approach to hiring outdated. Things move faster than traditional hiring models can keep up with. According to the The New Future Workforce Report, 41 percent of hiring managers felt hiring got harder in the past year, while just 14 percent said it got easier, and hiring difficulties increased across nearly all roles.
Amidst rapid change, new job categories and ever-evolving business needs, it’s no surprise that businesses are embracing freelancers, who enable them to adapt and stay agile. 56 percent of the 1,000 hiring managers surveyed said they hired freelancers to help scale to meet project demands and 49 percent said it was to find skills not currently available in-house. 80 percent reported increased productivity as a result of hiring freelancers.
The reality is that there are downsides to workforces that are entirely full-time and workforces that are entirely freelance. A 100% full-time staff is inflexible and inefficient. There may be times when the staff is overloaded with work and times when they don’t have enough to do and people are sitting around. However, an entirely freelance staff is also not optimally efficient. Finding, onboarding, briefing, and communicating with an ever-changing roster of freelancers can be time-consuming, whereas staff can just show up and get to work. And an all freelance-staff doesn’t build up the kind of institutional memory that can be key to innovation and momentum.
Every business can benefit from bringing freelancers onboard, but the question of how many freelancers to use and for what roles can seem fuzzy. What’s the appropriate ratio of full-time to freelancer? The short answer is there isn’t one, but there are a number of criteria that leaders can consider when composing the workforce of the future, which is to say, a workforce that’s a strategic blend of full-timers and freelancers.
Know Your Needs
First, let’s dive into the reasons to hire full-time employees. These workers are fully committed to your organization. Regardless of whether the team is all together in one office or distributed, full-timers show up for work everyday and are consistently available. They build up knowledge of the company—its product, operations, culture, values—over time that informs how they approach their work. For example, succeeding in sales requires deep subject expertise of the product and its positioning, while customer success people are most effective when they cultivate meaningful relationships with clients. In addition, there are roles that have fairly consistent needs and are heavily rooted in process, such as accounting and payroll, for which full-time workers make the most sense.
On the flip side, freelancers are a valuable asset for roles like software engineering, design, or writing, which tend to be project-based. The demand for these skills may ebb and flow throughout the year, perhaps seasonally or around big product pushes. Or maybe there is never enough work to necessitate a full-time staffer. If a startup wants to write a handful of blog posts a month, there’s not enough work to make a full-time copywriter worthwhile, but a freelancer is perfect for the job.
Freelancers are useful for highly specialized skillsets, like data science, where making actual hires can be difficult and expensive. Tapping into the freelance pool dramatically expands the types of skills businesses have access to, not to mention geographies. A company that wants to establish a presence in a foreign country, such as for customer service, can use freelancers to easily expand its geographic reach. It’s easier to take risks or scale up fast with freelancers than with full-time employees.
Consider your budget
For businesses on a tight budget, freelancers are fantastic because they cost less. Employee benefits can add up to around 1.35 times base salary, not to mention the costs associated with taxes, recruiting, onboarding, and training. According to the Society for Human Resources Management, the average cost of hiring and training a salaried employee is about 6 to 9 months of salary. An organization with limited resources can conserve its resources by relying more heavily on freelancers.
Blend It Up
Ultimately, the workforces of the future will be a blend of full-time and freelance that takes into account the dynamic needs of the company, budget, and goals. Companies should have a core group of full-time employees who are committed to the job and have deep expertise, as well as an arsenal of freelancers who can swoop in to overcome talent gaps and shortages, supplement teams and provide unique expertise, but only as needed. There may not be a golden ratio, but being thoughtful and strategic about what type of worker is right for what type of job is key to staying competitive in the workforce of the future.