Bill Joy, the co-founder of Sun Microsystems once noted, “No matter who you are, most of the smartest people work for someone else.”
Today, more leaders are waking up to the fact that many of those smart people are freelancers and contractors — who work for themselves, according to the 2018 Deloitte’s Global Human Capital Trends report “The Rise of the Social Enterprise.”
And that could be good news for freelancers who wish their careers weren’t just a random set of assignments and yearn to work with clients who can connect them with meaningful projects that have a common thread.
With more companies relying on freelancers and contractors to do important work, their leaders and human resources executives are giving a lot more thought to how best to cultivate them, the report found. The report is based on a global survey of 11,000 leaders of organizations in all size categories.
“Everyone is going to see an increase in this part of the workforce,” says Deloitte’s Global Leader for Human Capital Marketing Jeff Schwartz.
And with more companies pursuing freelance talent, employers will need to raise their game to attract the best free agents, Deloitte found. “In a tight labor market, this becomes much, much more important,” says Schwartz.
Employers that are looking only at the experience of traditional employees and not of all types of workers—including freelancers and contractors—will be at a disadvantage, Schwartz says. “The experience starts with how do I find you? How do I access you? What does that onboarding experience look like?”
Currently, the report points out, there are 77 million “formally identified freelancers,” in Europe, India and the U.S., according to several surveys. And in the U.S., 40% of workers are now involved in some type of contingent work arrangements. This percentage, which has been steadily rising, increased by 36% in the past five years and now includes workers of all ages and skill levels, Deloitte notes.
Among the respondents Deloitte surveyed about the makeup of their workforce:
- 50% reported a significant number of contractors in their workforce
- 23% said there were a significant number of freelancers
- 13% reported a significant number of gig workers.
And by 2020:
- 37% predicted a rise in contractors
- 33% expected an increase in freelancers
- 28% foresaw an uptick in gig workers.
The challenges facing employers go beyond simply getting things done. As the report points out, “The challenge is not just the tactical one of finding enough of the right people to execute particular tasks at particular times. To drive real value through the new workforce system, organizations need to understand how to appeal to and engage with workers of all kinds. And not all workers in this ecosystem have traditional views of what an employer-worker relationship should look like.”
In one recent study of Millennials and those in Generation Z, 75% said they plan to start their own business, and more than 70% want work to support their personal interests, the report pointed out. Taking note of this will give employers an edge in packaging work in appealing ways, the report found.
Companies are also looking for ways to repackage work in ways that appeal to older workers who may be seeking more flexibility. With the population aging and lifespans expanding, the report found, 20% of organizations are partnering with older members of their workforce to develop new career models, in order to tap into a “proven, committed and diverse set of workers.”
“Doing this requires innovative practices and policies to support extended careers, as well as collaboration between businesses and workers, to tackle shared challenges such as age bias and pension shortfalls,” the report says.
One way companies are positioning themselves for success in this environment is setting up internal “talent clouds,” which enable teams across the organization to tap into talent that exists both on staff and in a company’s freelancer network, the report found. The idea isn’t solely to raise productivity but tap into employees’ desire to pursue meaningful projects they care about, says Schwartz.
“You can make available projects to people across the entire organization,” says Schwartz. This may turn out to be good news for freelancers, helping them to connect with new clients within an organization.
Still, it’s likely to take a while before freelancers see any changes at many companies. Currently, only 45 percent of organizations provide contingent workers with training and 54 percent offer them onboarding, according to Deloitte’s findings.
“Most employers are currently treating alternative workers as unskilled workers, not professionals,” the report notes.
Despite the growing role of freelancers and contractors, the report found:
- Only 16% of respondents’ organizations have established policies and procedures to manage a variety of types of workers
- HR is not involved in selecting freelancers at 39% of respondents’ companies
- HR is not involved in hiring decisions for contractors at 35% of respondents’ companies
- Only 29% of respondents’ organizations track workers’ compliance with contracts
- Only 32% of respondents’ organizations track their quality of work.
“Since alternative workers can make up 30 to 40% of the workforce, organizations should carefully consider under what circumstances they should be screened,” notes Deloitte.
Currently, HR software generally isn’t set up to help manage a non-traditional workforce, the report points out. While software from SAP’s Fieldglass and ADP’s WorkMarket—as well as from startups like Rally Team and Fuel 50—is changing that, the report found, many respondents are having difficulties working in an environment where there’s little infrastructure to support the hiring and management of freelancers. Indeed, 38% of respondents worry about the instability of a nontraditional workforce, and 39% worry about violations or changing government regulations in managing or categorizing these workers, Deloitte found.
Some respondents also fear hazards related to the hiring of freelancers and contractors could hurt their brand. Among respondents, 42% were concerned about the loss of confidential information tied to the use of contractors, and 36% worried about the reputational risk that comes from the negative perception of using non-traditional workers.
Of course, treating freelancers and contractors like they are W-2 employees when it comes to HR procedures may not be practical for many companies, unless their projects are very slow moving. Organizations may not be willing to sacrifice the nimbleness that comes with being able to hire freelancers on the spot.
There are also issues with labor classification that may emerge. Deloitte points out that organizations may feel workers will become categorized as full-time employees if programs typically set up for W-2 workers, such as training, are offered.
Nonetheless, Deloitte recommends finding creative solutions that help freelancers and contractors grow as solo entrepreneurs.
“[C]ompanies should consider workforce brand and incentive programs that cover the range of ecosystem workers,” the report notes. “What can alternative workers do to make more money? What skills and capabilities should they develop? How will they be measured? HR should formalize these practices for the ecosystem rather than waiting for procurement to do it.”
