Over the last couple of decades, freelancing has evolved from a fringe pursuit to a viable career alternative. In the process, it’s created an army of talented professionals and platforms for finding and managing them.
In fact, companies of all sizes have turned to freelancers to punch above their weight. A survey by LinkedIn, for example, found that 70% of small firms had hired at least one freelancer. Meanwhile, 81% of companies that had hired a freelancer in the past planned to do it again.
While there are many competent freelancers who work “gigs” or use temporary work as a springboard to a full-time offer, a growing part of the freelance population is working independently by choice. There are now 57 million freelancers in America, representing 35% of the workforce, according to the latest Freelancing in America study.
Many "gig" workers are leaders in their fields, ranging from top attorneys and engineers to financial officers and creative directors for hire. In the case of many smaller companies, it might be impossible to meet their salary needs—but very feasible to hire them for key projects.
There are many reasons why it makes sense for smaller firms to opt for freelancers rather than full-timers, but this strategy isn’t without its downsides. The key to making the gig economy work is to understand when and how it's best implemented.
Here’s what small companies need to know about working with freelancers.
Know Exactly What You Need
You wouldn’t hire a new full-time position without a detailed job description, a well-researched salary range for that position, and room in the budget to pay for it. Yet, many companies dive into the search for freelance talent without thinking through exactly what they need and how a freelancer—or network of freelancers—fits into their organization.
Focus on Quality
A common misconception is that freelancers are “cheap.” It’s true that a flexible workforce makes it possible to bring new people on board without the commitment of a steady paycheck, health and retirement benefits, paid time off and other perks.
However, on an hourly or contract basis, freelancers typically cost more. The Freelancing in America study—which included more than 6,000 U.S. workers—found that skilled freelancers earn more per hour than 70% of overall workers.
Keep in mind that freelancers often pay for costs that would otherwise be covered by their bosses. Also, volume is often part of the equation. If a project is long-running, requires more hours, or is a series of assignments, a firm may have more room to negotiate.
The good ones are often worth it. One choice contractor could make a bigger impact on a smaller firm than several full-timers with less experience.
Find the Right Fit
It’s also important to think about what’s at stake with the position. Indeed, the reasons for hiring freelancers are as wide-ranging as their skills and backgrounds.
There are freelance positions that are truly temporary, may require little interaction with other employees or customers, and have few consequences if things don’t work out—but that’s often not the case.
Small firms using freelancers for key projects may need to do more vetting to find trustworthy and competent contractors. This is all the more important for freelancers who are working remotely. It takes time to find and establish trust in people you may never meet face-to-face.
If you’re doing your own vetting, create a well-defined list of qualities and skills that are required and nice to have, as well as red flags. While you might think there’s more flexibility about whether a candidate is a good fit culturally, the opposite may be true.
That kind of planning is time well-spent. A good freelancer doesn’t just do a job well; he or she can help solve critical problems and open doors to new customers or key hires. What’s more, it’s not unusual for a freelancer to stick around longer than a full-time equivalent.
As with any aspect of a business, there can be a fine line between making the gig economy work and making it a time-consuming distraction. The difference lies in systems and processes. Take the time to establish systems for workflow, communication, feedback and payment.
You'll want to designate someone to manage freelancers, and let everyone know the chain of command and communication. Alternatively, more companies are also outsourcing this component. Over the last decade, third-party platforms have answered a growing need to connect companies with the right freelancers, as well as manage the entire process.
Don't Overlook Engagement
Among companies, there is a growing awareness that employees who are engaged tend to be more loyal and productive. While skilled freelancers generally prioritize flexibility over the warm-and-fuzzy feeling of being part of a team, they are still human.
Where companies often go wrong is viewing the relationship as purely transactional. Freelancers may balk at being micromanaged (as do most professionals), but that isn’t to say they don’t want well-defined expectations or seek constructive feedback.
They also generally like to feel they are part of a team. It might not be necessary to fly in a freelancer for the holiday party, but simple gestures can go a long way in incentivizing these pros to do their best work and prioritize your company’s projects.
The gig economy isn't just a boon for workers. It is changing how companies think about their workforce. What's key is knowing when and how to effectively bring freelancers into the fold.