Harnessing the gig economy: a practical guide for SMEs to leverage freelance talent - Jeremy Lang

Five years on from the beginning of lockdown and the world of work is not what it used to be. Apart from the rise of remote working, the pandemic years brought about a rate of technological advancement in a few years that is equivalent to the previous 50. While many in-person businesses closed, the gig economy exploded with 2.1 million workers going into freelancing in 2020 alone.

In South Africa, while this migration was motivated by unavoidable retrenchments and widespread economic instability, across the world, another mass exodus from traditional work occurred in 2021 when workers voluntarily left their jobs driven by a desire for better opportunities and improved work-life balance in what is now referred to as the Great Resignation.

The benefits of hiring freelancers

The hybrid model became the go-to strategy when lockdown was lifted but recently there’s been an increase in Return-to-Office (RTO) mandates from companies of all sizes. Those who have experienced a taste of remote work, however, are creating their own hybrid models completely independent of permanent employment working out of local co-working spaces with other like-minded people.

For small and medium enterprises (SMEs), this shift to contract work, as opposed to permanent employment, holds numerous benefits. I have highlighted three of these benefits that I believe are most significant:

• Cost savings: Businesses can reduce overhead costs such as salaries, fringe benefits, and office space by hiring freelancers only when needed.
• Access to skills on-demand: SMEs can tap into a global talent pool with expertise in niche areas without committing to long-term employment. External professionals also bring diverse experiences and creative insights that can enhance business strategies and outputs.
• Flexibility to scale: Freelancers allow businesses to quickly scale up or down based on project demands, making operations more agile.

There are challenges that this model presents like managing the quality and consistency of the work being produced by different contractors as well as legal and contractual considerations. It’s also difficult to form an enduring company culture and brand without a committed team.

For SMEs, hiring freelancers usually has more pros than cons. Professional freelancers who work on a project basis tend to have a strong focus on efficiency and that is highly conducive to the fast-moving nature of SMEs. Engaging freelancers for specific projects also reduces the risks associated with bad hires or hiring people on a long-term contract before a project succeeds.

Three practical steps for working with freelancers

Freelancers may be the key for SMEs to manage increasing or fluctuating workloads without the legal and financial process of full-time employment. There are, however, certain considerations that business owners and SMEs should heed to ensure this model is profitable for all.

• Get it on paper: Avoid misunderstandings, mitigate risk and manage the relationship by putting a policy in place to govern the process. There are many templates online but essentially a legal agreement should include the scope of work, the contractor’s fee, how many revisions are included, the fact that the agreement does not constitute full-time employment, and a non-disclosure agreement where necessary.
• Respect their autonomy: Freelancers are independent contractors, not employees. They manage their own time and work schedules, so the small business owner needs to trust them to fulfil their contractual agreements. Freelancers value their own flexibility above all else, so it’s important to respect their processes. This is a collaborative relationship, and you may not be their only client, so avoid micromanaging or following up on progress before the stipulated deadline.
• Pay on time: A reliable freelancer that understands your brand is a rare find and that relationship should be treated as a long-term investment. Regularly hiring the same contractor is time- and cost-efficient, so be diligent about paying promptly to retain access to their services. It should be a principle of reciprocity that if you expect a freelancer to deliver work by a particular deadline, you should extend the same respect by paying on time as stipulated in their contract. Keep in mind that freelancers may charge 50% of their fee upfront as a deposit to safeguard themselves against non-payment.

Approach freelancing strategically by setting clear agreements, boundaries and maintaining mutual respect. In doing so, SMEs can build strong, reliable relationships with independent professionals, gain access to top-tier talent, and create a cost-effective workforce that supports long-term business growth.

Jeremy Lang is the managing director at Business Partners Limited.
*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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