As the number of freelancers your organization engages increases, there’s almost a direct correlation in the decrease in visibility. It becomes more difficult to get clarity on where freelancers are engaged, whether they are being used effectively, and ultimately, how much they are costing your organization.
The cause of the mystery is the ease with which freelancers can be hired. For example, freelance marketplaces now enable any line manager with a credit card to hire a freelancer, often bypassing existing HR and established onboarding processes.
Without being able to see where and how your organization engages freelancers, you are at risk of experiencing several unwanted consequences.
Phantom skills shortages can appear, and under-utilization of existing freelance resources can result in unnecessary hiring. Combined, you can quickly see recruitment costs spiral out of control.
In addition to the immediate risk of uncontrolled costs, your organization is also exposed to the risks created from the absence of a systematic onboarding process.
Lack of contracts exposes your organization to the risk of incorrect or incomplete work being delivered. Currently, it’s possible to engage a freelancer with as little as a verbal brief, so to retake control, organizations need a method to standardize contractual compliance with their freelancers.
Freelancers also pose a potential data/information security risk, unless there is a system in place to remove the freelancer from accessing sensitive business information when their contract finishes. This, of course, has significant implications with the incoming General Data Protection Regulation.
And without the right checks being made, it is possible for a line manager to unknowingly create an IR35 risk by hiring a freelancer for a role that looks like employment.
HR the Key to Regaining Control
In larger organizations, the sourcing and management of contingent workforces predominantly resides with procurement teams rather than HR.
This is problematic for two reasons: First, it indicates hiring decisions are being made by business units and line managers without complete oversight of an organization’s resources and talent strategy; Second, it clearly shows contingent workers are managed in a different way to traditional employees. The resulting lack of oversight and inconsistent management practices ultimately expose the issues created by an absence of visibility and gaps in onboarding.
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Human resources, already responsible for acquiring, onboarding and managing an organization’s traditional employees, is the logical choice for managing the increasingly important impact the gig economy has on its workforce for two reasons:
- Impact on overall talent strategy. Only with complete end-to-end control over talent acquisition, retention and utilization, can HR effectively resource short-term requirements as well as successfully plan for the future.
- Tools and technology. HR is equipped with the right tools and technology. Tools such as the Employer Value Proposition (and more commonly the Freelancer Value Proposition) and technology like FreelancerManagement Systems are tried and tested methods for HR.
Effectively managing a contingent workforce of freelancers and independent consultants is far too complex for the average procurement RFP. HR is the best choice for understanding and catering for the needs of an organization’s people, regardless of their employment status.
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