Author: Co-founder and CEO, Worksome, Morten Petersen
Co-founder and CEO of business-to-consultant matchmaking platform, Worksome, Morten Petersen explores the distinct differences between freelancers and in-house employees, and provides some much-needed clarity for hiring managers who are weighing up their recruitment options
Hiring managers have, at times, been poorly influenced in their recruitment decision-making by blurred information and a lack of transparency around the distinctly different advantages that both in-house employees and freelancers can bring to the table.
Of all the myths related to this, the most common is perhaps the fact that it’s even a dilemma as to whether or not you should hire a freelancer or a full time employee. Navigating through this decision might not always seem straight forward, but don’t be deterred, as the good news is there are some clear guides that can help you through.
Ultimately, full time employees and freelancers each add value in very distinct different scenarios.
Hiring a full time employee makes sense, whenever the role is 1) on-going, and 2) the skills of expertise needed are fairly broad.
On the other hand, a freelancer makes sense whenever the role is 1) time-specific, and 2) the role is very finely scoped.
For example, you would need a CEO to be a full time employee. That person would likely be employed for a longer period of time and would perform a variety of different tasks, such as monitoring economic performance, performing stakeholder management, and speaking at events.
But you might not need a GDPR specialist to be a full time employee. That person is more likely to be hired for a specific time period to go over your company’s documents and data in order to ensure GDPR compliance. That person would do nothing else besides focusing on GDPR. Once compliance is ensured, the job is done. For now at least. Thus, it makes sense to hire a freelancer.
Other common myths associated with the ‘freelancer versus full time employee’ conundrum include:
- Freelancers are more expensive
They’re not. You pay them a higher hourly rate, which can seem deceptive to some. But whenever a company hires a new full time employee other associated costs follow, such as on-boarding, training, insurance, and pension, etc. If you add up all of those costs, full time employees are actually more expensive. Undercover Recruiter shares some interesting insight around this, highlighting the true costs of a new hire in the UK.
- Freelancers show less commitment
They don’t. Remember that a freelancer’s income and reputation is highly dependent upon their performance. If they are lacklustre, they will decrease their chances of getting a job. And so if they are to succeed, they’re more likely to show higher commitment.Demonstrating this from our own perspective, the freelancers on Worksome are rated at an average of 4.9/5 and have an average of 15 years of experience. These are very highly skilled people, who have spent years developing their competencies.But there’s a host of wider studies that also show how freelancers are just as competent as full time employees. According to Workmarket’s 2017 Workforce Productivity Report, 83 per cent of business leaders believe that freelancers are more, or equally as productive as their full-time counterparts.
3) Knowledge doesn’t stay within the company
It depends on the type of role that the freelancer has. But knowledge has a tendency to be absorbed in the organisation no matter what. If the freelancers engage in a team effort, their knowledge and competencies are likely to spill over to their team-mates. Companies are never left with less knowledge from hiring a freelancer.
Real freelancer benefits
First of all, freelancers shouldn’t replace full time employees. Ultimately, a blend of full time employees and freelance workers leave companies more cost-efficient and is a very logical approach for a company’s long-term competitive health.
From a strategic point of view, and as mentioned before, freelancers hold the advantage whenever the specific task that needs to be solved is 1) time-specific and 2) very finely scoped.
Picture a company in need of a new app that will take approximately 6 months to develop. It wouldn’t make sense for that company to hire a full time employee for this specific task. Once the app is done, her/his work is pretty much done. And so, this is the type of scenario where it makes sense to hire a freelancer for a six month period, who can help conceptualise, code, and develop the app.
It’s true that from a cost point of view, freelancers are typically more expensive up front, because they have a higher hourly rate. But when you consider all of the hidden costs that come with hiring full time employees, such as recruitment and training, insurance and other benefits, office space and equipment, pay during sickness, etc. the cost issue might not just ‘level out’ but actually swing in favour of a freelancer.
There’s no denying that freelancers – like their full time counterparts – might also require an element of on-boarding, but it’s important to remember that they’re much faster at hitting the ground running, and require little management and oversight.
Once all of these different factors are considered, freelancers are way more cost efficient than regular employees, as indicated in Workmarket’s 2017 Workforce Productivity Report.
Over and above cost efficiency, freelancers can bring additional benefits to the table: business leaders report that they experience greater efficiencies, are able to deliver specialised skills, and can seize new opportunities faster, by remaining flexible and nimble to changing market trends and conditions.
Integration is key
In order to get the most out of the skills freelancers can bring, businesses must focus on not merely making it a transactional relationship, but also on integrating the freelancers into the company.
Freelancers are hired for projects for the short term to fill a specific need. But merely partnering with freelancers won’t build expertise and knowledge. It won’t ensure that the freelancers will choose your company over your competitors in the future.
Therefore, it’s important to invest in creating relationships with the freelancers. Companies can do this by creating an employee experience that attracts the right kind of talent and allows them to be part of the company’s community.
This can be done by establishing a great employee experience for the freelancers. Provide the freelancers with sufficient on-boarding, integrate them into the team, and invite them to the Christmas party.
It requires some costs up front, but it’s a long term investment.
In today’s climate of competitiveness and change, it’s important for companies to think about safe-guarding their future by opening their eyes to alternative recruitment options and dipping into less traditional pools of talent.
Amidst these changing and uncertain times, freelancers will come to play an even more pivotal role in the British economy than they already do. Since 2009, the freelance economy in the UK has grown by 25 per cent and generates an estimated £109 billion a year, according to IPSE.
There are around 2 million freelance workers in the UK who fulfill a variety of roles in various industries. They represent an amazing pool of talent that can help companies suffering from the skills shortage.
Adding to the recruitment challenge is the fact that fewer workers than ever before want to be ‘retained’ by their employers. Therefore, companies need to futureproof themselves by thinking of talent acquisition in terms of access, not ownership.
As previously mentioned, there are great benefits to reap from employing freelancers, such as greater cost savings and efficiencies, access to specialized skills, faster time-to-market, and greater innovation.
In a time where technological developments are constantly changing skill requirements, it only makes sense for companies to keep themselves open to hiring new skills in order to stay competitive.
STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19
By Alex Balcombe, Partner at Harris Balcombe
The last few weeks has seen businesses in hospitality, tourism, retail, leisure and more forced to close their doors following the Government’s orders that they should close to prevent the spread of coronavirus.
While this is expected to flatten the curve and reduce the number of coronavirus cases, it will of course have an impact on businesses and employees alike. For small businesses especially, there are many concerns about how they can claim on their insurance to weigh the fall of this impact.
In response to calls to help struggling businesses, the Government has informed the public that companies who are facing turmoil will be able to claim on their business interruption insurance during this difficult time. For most, this is wrong.
The insurance industry has also been extremely vocal that there is no cover for any coronavirus-hit businesses during this tough financial period. This isn’t strictly true either.
How can businesses see through the mixed messaging and best secure their future and their livelihoods and reduce money worries? It’s an extremely stressful time for many companies, and confusion over whether or not they can be covered can only cause more unnecessary stress.
Since it’s a new disease, most businesses will not be covered for business interruption due to COVID-19. In fact, the vast majority of policies do not cover anything related to COVID-19.
That said – don’t rule out the idea that you may be covered. There is a chance that you will be covered against COVID-19, but not know it. This is a very small chance, but your current cover may already protect your business against the consequences of coronavirus, and the nationwide response to it – though those with this cover are unlikely to realise it.
How Could I Be Covered?
Not everyone has business interruption insurance, as it’s not a legal requirement. It is entirely up to the policy holder to weigh up the benefits of having it, and their ability to trade should a disaster happen.
To be considered for cover for COVID-19, there are two types of policy extensions to your business interruption cover that can potentially cover you for this situation:
Infectious Disease Extension
Many policies expressly state which diseases fall within the realm of being an infectious or notifiable disease. If this is the case, your policy will not provide cover. As it is a new disease, these policies will not have included COVID-19.
Other infectious disease extension policies will define the disease with reference to the actions of the government. Since the UK Government has named COVID-19 as a notifiable disease throughout the UK, it is possible that your business may fall into this definition, thus meaning you may be able to make a claim.
However, again, it’s not always that simple. Many policies require the disease to have been on your premises, while others specify a radius from your premises in order to qualify.
Denial of Access Extension (non-damage)
Denial of Access Extension (non-damage) policies may cover you if you’re prevented from accessing your property. This could be due to an event, or by the actions of a competent authority, which could cause your business interruption cover to engage.
If covered by this clause, there are often very subtle differences in wording in your policy. This could depend on the insurer or policy. You may well be covered, but it will depend on your particular circumstances, and the specific policy wording.
It’s clear that the Government needs to do more in ensuring there is clear messaging for businesses, and to help the insurance market look after policy holders. This is an unprecedented situation, and with many people looking to claim on their insurance, we’re already seeing major delays which could have a domino impact.
People throughout the world are understandably facing all kinds of worries because of the current pandemic. Our ways of living have changed, and many business owners will not have experienced a situation like this in their life times. If you own a business and are unsure about whether you can claim for business interruption, or are confused about ambiguous wording, get in touch with a loss assessor.
These claims are not simple, but loss assessors will be experts in business interruption insurance, and will specialise in large and complex claims. They will be able to help and guide you along the way, check your wording and work on your behalf to make sure you get everything you are entitled to.
HARNESSING ANALYTICS IN THE FIGHT AGAINST FRAUD
By Anna Lykourina, EMEA Fraud Analytics Expert at SAS
In the past, the fight against fraud has been a bit hit-and-miss. It has relied on auditors to identify patterns of behaviour that just didn’t quite fit. They often only detected problems months after the event. And then organisations had to claw back stolen funds through legal processes.
In a world where transactions happen in under a second, however, this is no longer acceptable. We need to be able to detect fraud immediately, if not before it happens. Customers want safe and protected data that is not vulnerable to identity theft through company systems. But they still want to be able to pay online and in seconds. The stakes are high, but fortunately new tools and techniques in fraud analytics are enabling companies to stay ahead of fraud.
Trusting machines to do the work
Machines are much better than humans at processing large data sets. They are able to examine large numbers of transactions and recognise thousands of fraud patterns instead of the few captured by creating rules. On the other hand, fraudsters have become adept at finding loopholes. Whatever rules you set, it is likely that they will be able to get ahead of them. But what if your system was able to think for itself, at least to a certain extent?
New approaches to fraud prevention combine rules-based systems with machine learning and artificial intelligence-based fraud detection systems. These hybrid systems are able to detect and recognise thousands of fraud patterns and learn from the data. Automated analytical-based fraud detection systems can reveal novel fraud patterns and identify organised crime more consistently, efficiently and quickly. This makes them a good investment for businesses across a wide range of sectors, including public sector, insurance, banking, and even healthcare or telecommunications.
How, though, can you harness analytics as a tool in your fight against fraud?
Identifying needs and solutions
The first step is to identify which options you need. Probably the best way to do this is through a series of company-wide workshops with the fraud analytics experts to determine what analytics you need, which data to include and techniques to use, and what results to report. They can also identify the ideal combination of rules-based and AI/ML approaches to detect fraud as early as possible.
Companies looking towards advanced analytics for fraud detection will need to make a number of decisions. They will need to optimise existing scenario threshold tuning, explore big data, develop and interpret machine learning models for fraud, discover relevant information in text data, and prioritise and auto-route alerts. There may be industry-specific decisions to make, too, such as automating damage analysis through image recognition in the insurance sector. By automating these areas, companies can both significantly reduce human effort – reducing costs – and improve their fraud detection and prevention.
Benefits of an analytical approach to fraud detection and prevention
Companies that are already using an analytical approach for fraud prevention have reported several important benefits. First, the quality of referrals for further investigation is better. Investigators also have a much clearer idea of why the referral has been made, which improves the efficiency of investigation. Analytics also improves investigation efficiency by reducing the number of both false positives (that is, alerts that turn out not to be fraud) and false negatives (failure to spot actual frauds). This improves customer experience and reduces risk to the company.
Analytics makes it possible to uncover complex or organised fraud that rules-based systems would miss. Companies can group together customers and accounts with similar behaviors, and then set risk-based thresholds appropriate for each scenario.
There are several sector-specific benefits too. For example, insurance firms can identify fraudulent claims faster to prevent improper payments from going out. Claims investigation is likely to be more consistent because claims are scored through technology, algorithms and analytics, rather than by people. Finally, it becomes possible to shorten the claims process through automated damage analysis. It is no wonder that organizations across a wide range of sectors are placing analytics at the heart of their anti-fraud strategy.
THE CO-BRAND CREDIT CARD MARKET – SINK OR SWIM
By Chris Vinnicombe, VP Financial Services at Acxiom The co-brand credit card market is the result of the partnerships between...
HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES
While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash...
NEW IVALUA STUDY SHOWS TECHNOLOGY CHALLENGES ARE HINDERING PROCUREMENT TEAMS FROM ACHIEVING BUSINESS OBJECTIVES
Lack of system integrations and actionable insights are stopping organisations from accurately measuring performance Ivalua, a leading provider of global...
WHY DIGITAL TRANSFORMATION IN FINANCIAL SERVICES IS ABOUT CULTURE FIRST, TECH SECOND
Stuart Templeton, Head of UK at Slack In today’s world, there’s no such thing as a ‘non-tech fin’. Every...
STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19
By Alex Balcombe, Partner at Harris Balcombe The last few weeks has seen businesses in hospitality, tourism, retail, leisure...
BRAVE NEW WORLD: A FUTURISTIC VISION OF PAYMENTS
James Booth, VP, Head of Partnerships in EMEA for PPRO Over the last ten years, the retail e-commerce ecosystem...
A PROPTECH FOUNDER’S BEGINNING, THE START OF KLEVIO AND HOW ACCESS-TECH IMPROVES FACILITIES MANAGEMENT
An interview with Klevio’s CEO and Co-Founder, Aleš Špetič What is Klevio? Klevio is a smart intercom that allows...
HERE’S HOW YOU CAN LEARN TO TRADE RISK-FREE DURING THE COVID-19 MARKET CRASH
Trading app BullBear has launched new features to support budding investors looking to hone their skills against the backdrop of...
ENTERPRISE BLOCKCHAIN: DRAGGING INSURANCE OUT OF THE DARK AGES
Ryan Rugg, Global Head of The Industry Business Unit at R3 The history of insurance traces back to the development...
DISPELLING BIOMETRIC MYTHS AND MISCONCEPTIONS
By Lina Andolf-Orup, Head of Marketing at Fingerprints Gangsters cutting off enemies’ fingers to access secret locations and spies lifting...
FUTURE FX PROMO
FOUR WAYS OPEN BANKING AND AI WILL REVOLUTIONISE ACCOUNTANCY
Ed Molyneux, CEO and co-founder of cloud accounting software company, FreeAgent It’s been just over two years since the...
HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK
By Alex Saric, smart procurement expert, Ivalua UK businesses have never been more dependent on their suppliers to help...
TWO TO TANGO? MARKET DATA AND OPINIONS IN INVESTMENT MANAGEMENT
Sebastien Lleo is Associate Professor of Finance at NEOMA Business School (France) Analyst views and expert opinions matter. They...
AN ULTIMATE GUIDE TO TURNING YOUR EARLY RETIREMENT DREAM INTO A REALITY
Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. ...
WHAT EVOLUTIONARY AI MEANS FOR FINANCIAL SERVICES
by Babak Hodjat, VP of Evolutionary AI at Cognizant Many banks and other financial services institutions (FIs) are beginning...
HARNESSING ANALYTICS IN THE FIGHT AGAINST FRAUD
By Anna Lykourina, EMEA Fraud Analytics Expert at SAS In the past, the fight against fraud has been a...
ERSTE BANK HUNGARY IMPROVES AND SECURES THE REMOTE BANKING EXPERIENCE WITH ONESPAN MOBILE SECURITY
Leading Hungarian bank deploys OneSpan’s Mobile Security Suite to one million customers to make mobile banking convenient while fighting fraud...
HOW WILL LENDERS TREAT THE FINANCIAL SYMPTOMS OF COVID19?
COULD the coronavirus pandemic spark a financial crisis similar to that which was seen in 2008? Tim Kirby, Group Commercial...