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Jonny Dunning

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Gig economy: how to integrate it into a wider talent acquisition strategy


In this five-part series to understanding the gig economy, we’ll look at a number of topics:

  1. What is the gig economy?
  2. How to integrate freelancers into a talent acquisition strategy
  3. The challenges of managing a freelance workforce
  4. Address skills shortages with talent pools and the hidden workforce
  5. Gig economy: what’s its place in the future of work?

In the first part of our series on understanding the gig economy, we looked deeper into what the gig economy is and addressed some of the confusions and misconceptions.

In this second part, we’ll explore how to integrate the gig economy and its workers into a wider talent acquisition strategy.

Competition for talented freelancers

As discovered in the first part of this series, most freelancers are seeing an increase in demand for their time (reflected by a correlating increase in average day rate). This shows that finding and acquiring talented freelancers is just as competitive as the search for people for permanent roles.

Growth in UK freelancing numbers

According to IPSE, 6% (1.9m) of the UK’s current working population (31m) is freelancing. PWC predicts this percentage to increase to 30% by 2020. In real numbers, that means there will 9.6million freelancers working in the UK within three years.

However, the ONS predict the UK’s working population will remain relatively static, reaching 32million by 2020. The means the increase in the number of freelancers simply represents a change in the distribution of employment types. There will not be 9.6 million new workers, simply more people choosing the gig economy over traditional employment.

But with only 10% of the UK’s current freelance population specialising in IT, the challenge for HR teams to attract and acquire talented freelancers with IT and technical skills will remain.

Contingent worker value proposition

As every HR professional knows, the key to attracting the best people is a business’ Employer Value Proposition. It’s the answer to the employee’s question, ‘why should I work for you?’. A compelling EVP can be the difference between making an essential hire or not.

With the increase in the percentage of people choosing to work in the gig economy, this creates a need for a Contingent Value Proposition.

Currently, freelancers and gig workers are often engaged directly by line managers and the ‘hire success rate’ is purely down to how appealing the project’s brief is. In a competitive marketplace, where the best freelancers have an abundance of opportunity, a brand needs a strong and compelling CVP to stand out from the crowd.

Freelancers as interims

An area where the use of contractors or freelancers is popular is interims, which makes it a prime area to think about how the use of gig economy workers can complement an integrated talent strategy.

The REC says the time to hire a full-time employee is now 68 days. But with three month notice periods being the norm for senior roles and interviewing/onboarding processes commonly taking a couple of months, it can easily take five months for a new permanent hire to achieve productivity – the estimated cost of this ‘productivity gap’ is £5,700 on average.

The benefits of using an interim freelancer

The obvious benefit of using an interim freelancer is that business critical projects do not need to be put on hold.

On average, it takes three days to fill a freelance professional services project (e.g., web development), which means a business can have a freelancer hired and in place very quickly – ideal for those projects that simply can’t wait around for five months.

There is also an additional benefit of using an interim freelancer, which is to expedite the onboarding of the incoming permanent hire. For example, an incoming marketing manager will want to review competitor and market research as soon as they start to put together their strategy. An interim freelancer can speed this process along by completing all the necessary desk research and produce a suite of reports.

When to use an interim freelancer

Hiring a freelancer is an extremely quick, effective solution for resourcing most projects, but there are some considerations before hiring a freelance in an interim position:

  • Is it cheaper to wait?
  • Does the role suit a freelancer, practically and from an IR35 point of view?

Is it cheaper to wait?

There are projects where the business cannot afford to wait. In highly competitive fast moving industries, if you wait for a key hire to start before you begin working on a new product or development, you may lose competitive advantage.

For all other scenarios, the answer isn’t as straight-forward and needs some consideration.

Here’s an example scenario: you work for an ecommerce business selling red widgets. You are tasked with hiring a new developer to improve your business’ ecommerce performance. The new hire will join the team in three months, and they are going to help you hit your targets of increasing revenue by £5,000 a month and reducing the cost of inaccurate order fulfilment by £1,000 a month. There is also added pressure on your new hire because, if the business doesn’t hit its targets, marketing are going to need to spend an extra £10,000 on advertising to sell the stock.

To save you getting out a calculator, in the above scenario, the cost of your productivity gap is roughly £28,000 over the three months. About £310 a day.

If you can hire an expert freelance developer to produce results for less than £310 a day, it is financially viable and you should proceed with an interim freelancer.

Does the role suit a freelancer?

Assuming it makes sense financially to hire an interim freelancer, the next thing to consider is whether the role suits a freelancer.

There are two factors when considering the suitability of a freelancer for a role:

1) Practicality

Projects that do not require the worker to be in a specific location or working between set hours fit freelancers the best.

2) IR35

As you’ll know, IR35 is legislation designed to combat workers who fraudulently claim to be contractors for tax benefits, therefore, it’s important that you are IR35 compliant.

With IR35 in mind, you may decide against using an interim freelancer if the freelancer is required to manage your staff or control a budget or other financial responsibilities.

Use this calculator to assess your freelancer’s IR35 risk.

Skills shortages

Tapping into the gig economy is a can also help HR teams address skills shortages.

Tech, engineering and creative skill shortages continue to be a challenge for HR and recruitment teams. The gig economy introduces a potential solution by offering methods and audiences beyond the scope of traditional recruitment norms.

The next part in our series on understanding the gig economy will look at this in more detail.


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