A whopping 34% of the US workforce is freelancing, and 80% of non-freelancers say they would be willing to do work outside their primary job to make more money. The number of individuals looking for freelance work is on the rise. Companies have the opportunity to snag top talent without onboarding a full-time employee. This can be a win-win for talent who want to work on exciting and focused projects — and companies who need to have the right skills for the right projects.
After finding and sourcing freelance talent, companies officially hire freelancers and bring them onto the team — this is where many mistakes can happen.
While some companies have a proper, HR-approved process for full-time employees, many do not have a similar process for hiring freelancers. And though this is changing, businesses still make common mistakes when bringing a non-full time staff member onto the team.
Here are the five most common mistakes companies make when hiring a freelancer and how to avoid them.
Companies are not just hiring to get a project done; they’re hiring to get a project done well. Especially when hiring for a rush job, businesses can go the low price route, hiring the person who can finish quickly and cheaply. Sometimes it works out, and the project goes smoothly, but many times, companies pay for what they get and end up redoing the project — costing them much more than expected.
Solution: Have a Network of Pre-Approved Freelancers
Take time to vet freelancers and let approved talent know that while the company may not have work now, it will in the future. Going through this process ahead of time ensures a qualified bank of talent who, depending on schedule, can take on a rush project.
Are employees receiving a W-2 or a 1099? Could the freelancer actually be legally considered an employee? The Department of Labor (DOL) has strict rules on this, and even if a freelancer willingly accepts a 1099, they could be classified as an employee. This mistake will get the company into trouble with the DOL and the IRS, so it can be an expensive one to make.
Solution: Review Hiring & Use Technology for Compliance
First companies should examine DOL regulations and understand if their freelancers are actually full-time workers. To ensure the company stays within those regulations, it should invest in a freelance management system (FMS) to move forward. A FMS can properly track work done by freelancers and automatically categorize them accordingly, making sure all regulations are met.
Lack of support can come in many forms for freelancers. From not having access to appropriate tools to silence from management, freelancers can sometimes be forgotten. Freelancers often communicate back-and-forth on email, and sometimes with more than one full-time team member, which means companies can often drop the ball and not give freelancers adequate support.
Solution: Set up a System for Freelancer Needs
If a freelancer needs access to a platform or if they need to double check a part of a project, make sure there is a system in place, so he or she knows exactly where to go to leave comments or ask questions. Using technology that alerts managers to these queries can create a more supportive environment, which will pay off, as 91% of workers say they feel motivated to do their best when they have leadership support.
Only half of employees know what’s expected of them at work, which means goal setting is a problem in the workplace. This issue can spill over into the freelancer world as well. Projects that are not explained in full or do not include project goals can often go poorly.
Solution: Create Full Briefs
There are templates that companies can use to build project briefs that go over in detail what needs to be done. It’s always best to send more information rather than less so freelancers understand the project goal and all elements of the task.
Not getting paid on-time or not understanding payment terms is one of freelancers biggest concerns. In fact, a survey found that 70% of freelancers said they lost some money because of delinquent client payments. Companies that do not communicate the payment process can receive a bad reputation and lose access to top talent.
Solution: Create a Payment Structure
From storing invoices to tracking payments, managing payments can be a difficult task — especially for a finance person who has a full-time team to manage. But using spreadsheets and email only can create confusion for both the company and the freelancer. Technology can easily solve this problem for businesses that struggle with paying freelancers. Using an invoice and payment platform, businesses can keep invoices together and set up alerts and notifications to pay everyone on time.
Everyone makes hiring mistakes at some point, but as companies hire more and more freelancers, it’s best to get it right the first time. By avoiding these five mistakes, companies are set to have a fruitful relationship with freelancers and keep retention of these employees high.
Learn more about the easiest ways to onboard, manage, and communicate with your freelancers by checking out Shortlist.
