It’s a topic of some importance to me as a former HR executive, author and consultant. And, I confess some disappointment. Speaking recently at a large HR leadership conference in Europe, fewer than 30% described their organizations as far along in defining their workforce in future. Fewer still saw their organization ready to benefit from the freelance revolution. In workshops I’ve delivered to HR executive audiences in New York, San Francisco, Washington, D.C., London and elsewhere, it’s the same: HR leaders are well aware of what’s happening globally as the freelance revolution gains traction, but aren’t applying that insight to their own company’s freelance use in a meaningful and strategic way. Too often, HR delegated management of freelancers to Procurement or the discretion of individual managers.
For a great many HR departments the default mission is still defined implicitly: we’re responsible for full-time employees.
It’s a mistake that HR needs to correct. In many organizations, full-time is becoming a less overwhelming part of the total workforce. In a recent Toptal survey, 91% of companies regularly tap freelance expertise, 76% are increasing freelance involvement, and companies like Apple and Google already employ more freelancers than regular employees.
I’ve wondered why HR is so late to the freelance revolution. Then I found a recent HR.com survey helpful. The survey was conducted by HR.com and Sense. 500 HR professionals participated.
Most of the findings replicated other survey results:
- A majority of surveyed organizations use freelance professionals
- The principal benefits are flexibility and cost
- Fewer than half see their organizations as effectively managing freelancers
- Organizations that do manage freelancers well track use freelancers, measure engagement/satisfaction, communicate with key updates and effectively screen and select
But one additional finding was very interesting: When asked “What factors keep your organization from hiring a greater proportion of contingent workers (choose all that apply)?” Fifty-five percent said “We need to retain, long-term qualified skilled employees;” two-fifths said, “Our business requires skill sets that require a long time to hone” (44%). “About half (47%) added because “We need long-term employees who understand our culture.”
But, resisting the freelance revolution isn’t a solution. HR needs to shift its internal conversation from “yes but” to “yes how.” A Paychex study found small businesses are moving ahead in building flexible, blended workforces. Randstad Sourceright reports that most companies they surveyed plan to replace up to one-third of their permanent staff with freelancers over time.
So what’s going on with HR? I think HR just hasn’t made the transition to how it must operate, and what it must contribute, in a world where industries are fundamentally disrupted by technology and forced to dramatically transform in order to succeed. HR has to be part of that transformation. Andreesen-Horowitz founder Mark Andreessen wrote in Why Software is Eating the World: “Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale. In 2000, when my partner Ben Horowitz was CEO of the first cloud computing company, Loudcloud, the cost of a customer running a basic Internet application was approximately $150,000 a month. Running that same application today in Amazon’s cloud costs about $1,500 a month.”
Now, through online talent marketplaces, organizations have access to global expertise in a wide variety of professions. It provides a deep foundation for organizations to build flexible, blended workforces. And it challenges HR to be responsive to the needs of the total workforce, not just full-timers.
As Mathias Linnemann, cofounder of Worksome said, “It’s time for HR to recognize 100% of their company’s workforce, not just 60 or 70%.”
I agree. I look forward to HR adopting an “all hands on deck” response to this reinvention of the workforce; it’s as big as any big strategy change and requires real leadership from HR. It affects every department, every team, every individual. As I wrote in Agile Talent, HR leaders must:
- Recognize the value of the flexible blended workforce
- Assess where freelancers make sense and create value
- Recommend how the organization should manage its freelance workforce
- Build relationships with important freelance talent pools, including both global online talent marketplaces like Upwork and Fiverr and more boutique platforms like 10x Management and Hoxby Collective
- Implement a rigorous contracting and on-boarding process, and performance management system
- Determine how they will reward freelancers: some organizations offer performance bonuses, equity or back end profit participation
- Teach managers to effectively manage and engage freelancers; its different because freelancers are entrepreneurs in partnership with an organization, not employees
- Collect and share information and internal/external best practice across the organization
In a recent Forbes article, I described the six critical areas of alignment that matter most in an organization’s readiness to benefit from the freelance revolution: these alignments all depend on HR professionalism and leadership.
What needs to change? As one writer put it, “Most freelancers will tell you that most of their clients don’t work with them effectively. Clients hold us at arm’s length. Their on-boarding for contingent workers is non-existent. They lose our invoices. They don’t tell us the mission of the company, the values of the company or the strategy we’re supposed to aligning our work around. This is a huge waste of the value of freelance professionals. The customary way of working with freelancers seems purposely designed to leave value on the table.”
PwC, Deloitte, Accenture and McKinsey all predict the freelance revolution will continue to expand in size and professional range because it offers the flexibility, talent quality and cost efficiency that organizations require. We know that freelancing is a significant factor in professionals as varied as AI/machine learning specialists, supply chain experts, marketers, lawyers, scientists, and management consultants among other professions. Yes, and even HR professionals!
Finally, HR professionals must pick up their skills and knowledge of best practice. As in all matters of change, the “how” matters. I see some optimistic green shoots from SHRM partnerships with John Boudreau of USC and Josh Bersin’s research team, but for too long HR business partners have viewed good working relationships with company leaders as a proxy for HR value creation. It’s not enough. HR needs to shift from a service to a product model in which talent is the product (along with culture and change). We know talent is a make or break factor in company performance, but its no longer just full-time talent. The magic is in the mix; the solution must be bigger, more innovative, and more inclusive than what HR produced in past. The flexible, blended workforce has more moving parts. It needs HR leadership.
Organizations have a great deal riding on HR these days; the potential for HR contribution (and reward) has never been greater. Now’s the time for HR to step up to a more strategic contribution.
Copyright & Source: Jon Younger / Forbes.com – Photo by Buro Millennial from Pexels