For years, Americans thought of "work" as a standard 9-to-5 job, but many employees are finding new ways to provide for themselves. Today, thanks to the advent of online talent platforms and on-demand service apps, almost one third of the total American workforce sustains a side gig in addition to their day job.
While Intuit estimates that 40 percent of the U.S. workforce will be independent contractors by 2020, new data finds that small business owners are reluctant to leverage freelance and contract workers. A recent Manta survey reveals only 36 percent of small business owners currently employ contractor workers, and 85 percent have no intention of hiring freelancers at all this year. Of the small business owners who do use contract workers, 75 percent don't provide any employee benefits.
As the talent market increasingly tips in the job seeker's favor, small business owners may need to reconsider the gig workforce if they hope to outperform the competition.
Freelancers Raise Liability & Accountability Concerns
Utilizing a gig-based workforce provides a level of availability and flexibility that is absent with a full-time staff, but it also raises several management concerns for small business owners.
Business owners cite the inability to monitor gig workers as one reason why they hesitate to outsource to contractors. "There's usually a serious lack of control and accountability, which ultimately leads to unpleasant experiences," says Aaron Lin, managing director of Ignitive, a web design company. "I prefer the reliability of having traditional employees as opposed to freelancers...[because] they are far easier to manage, control and direct."
Employers, like Lin, have to trust that their contract workers will treat their business information with the utmost care and can represent their company in a professional manner.
Compliance issues are another concern for small business owners, many of whom worry about the likelihood of freelancers violating company policies or becoming victims of cybercrimes.
"When things are getting done at a remote location by a freelancer who is not associated with your company, there are a lot of legal issues there," notes Jesse Harrison, founder of Zeus Legal Funding. "If the freelancer's computer gets hacked...and your client's information gets into the wrong hands, you would be responsible."
In many cases, employers have little to no control over their gig workforce's hardware, creating legal and security nightmares for small businesses that are increasingly vulnerable to cyberattacks.
Other business owners question how contractors will contribute to their company culture. Because gig workers are typically hired for short-term projects, they often don't have the chance to engage with the rest of the company.
"Traditional employees help to build a company culture, professional community and collaborative spirit that transcends the office walls," says Steve Ryan, CEO and founder of RyTech. "They're dedicated and invested in the mission of the business and committed to its overall growth."
Why Small Businesses Should Leverage Gig Workers
With the exception of a few bad apples, the majority of freelance workers provide a number of tangible benefits for small businesses.
For companies with limited resources, hiring a contractor can reduce the cost of recruiting and hiring a traditional employee by 7 percent, according to a McKinsey Global Institute report. Gig workers eliminate the need for extensive on-boarding resources and employers often don't have to worry about purchasing additional office equipment to accommodate contract employees.
Online talent platforms like Upwork make it easy for employers to quickly find employees with the desired skills needed for a particular task, and negotiate compensation that works for both parties.
Gig workers also bring a diverse array of talents to the table and can handle work that a full-time employee may not be qualified for. Especially if a task is not a central part of your operations, such as web development or graphic design, hiring a freelancer can help businesses preserve budget that would've been spent on filling a permanent role. For small businesses in particular, the freelance community can provide a quick, expert resource without expanding payroll or offering benefits.
The gig economy is expected to encompass nearly half of the American workforce in a few short years as job seekers look to regain control over their own work schedules. And while major enterprises like Facebook and IBM currently employ contingent workers, small businesses have been slow to embrace the freelance community.
Faced with mounting competitive pressure to minimize expenses and hire top talent, small business owners will need to overcome their hesitations and consider the many ways freelance workers can help fulfill their growth objectives.