Three Ingredients To Consistently Scale A Freelance Workforce

Diane Gherson and Lynda Gratton recently said in Harvard Business Review, “Freelancers are in huge demand today, and they know it”.

Yet, the adoption of a freelance workforce within large companies is hard. A leader explained it to me this week, describing it as similar to a hot potato. People understand the concept but there is no clear ownership, no one is getting promoted from embracing it, and it can be very risky if it doesn’t go well.

The core of the problem is threefold.

Freelance in itself isn’t the goal – unless your benchmark is staffing. The freelance economy is a technology-driven transformation, from default full-time, internal, and in-office, to default self-employed, external, and remote workforce. Yet, while over one-third of the U.S. workforce chooses to work this way, companies still get stuck viewing freelance talent platforms as just another vendor, or just another contractor, rather than seeing the full potential to unlock growth, innovation, and disruption.

There is no explicit freelance industry, definition, or position. Within companies, there is no Chief Freelance Officer nor defined function, which leaves Procurement, HR, or working teams to define the company wide freelance strategy. There are also numerous definitions used, with some overlap, yet no mutually exclusive definition solely used for a self employed, freelance workforce. Common terms used are gig, contingent, independent contractors or 1099 workers, a temporary workforce, a borrowed workforce, direct sourcing, fractional etc. And according to the Standard Industrial Classification (SIC) database, there is no such thing as the freelance economy or gig economy.

Lastly, and probably most impactful, there is no standard playbook for leaders to understand, pilot, and scale freelance workforces. There’s an existing external talent ecosystem with contingent talent programs and a comprehensive ecosystem of people, processes, and technology. However, freelance typically falls outside of these buckets.

So, what’s the difference between the successful implementation of a freelance workforce and being the victim of the previously mentioned three traps?

I’ve consistently seen three ingredients that lead to success in scaling a freelance workforce within large companies—the right person, with the right problem, executing the right plan. In this article, I’ll explain how your organization or your platform can ensure you have each ingredient.

Step 1: Have The Right Person

Bringing freelancers into a large company isn’t for the faint of heart. For most large companies, freelancers look like risk, repetition, and confusion. Risk is in the form of personal risk and company risk. Will I lose my job if this doesn’t work? Am I exposing my company to security concerns if I invite freelancers into a Teams channel or SharePoint environment? Repetition in that companies already have contingent talent programs, vendors, and internal leaders that freelance threatens to replace or add work to. Confusion in that freelance overlaps with many existing structures. Does freelance encompass gig work, direct sourcing, EOR, BPO, and contractor programs?

This creates an environment where long-term success is strongly correlated to the leader who owns and executes the freelance strategy, rather than a defined role. According to the CEO of Catalant, Pat Petitti, “The single most important thing is finding a leader who has the authority to set your platform up and for whom your platform will create significant value. From there you need to design your approach to fit how that organization works and make it easy for the company to adopt your product.”

What qualities make the right person?

First, ownership of a P&L, or access to budget. Preferably in a revenue, product, or operations department.

Second, they must have significant internal social capital. Typically, this means 10+ years of leadership within the company, along with experience working across legal, procurement, HR, and related business teams. Petitti mentioned that Catalant’s best client leaders are typically GMs, Head of Corporate Strategy, or Finance leaders.

Third, they must have a need for freelance that is tied to their own business rather than sourcing for the sake of sourcing. Usually meaning that their freelance success directly correlates to an OKR in their existing mandate.

A good example is Nuri Demirci Lopez of Microsoft. Nuri has been at Microsoft for over 20 years. Before his current role as a Principal Product Manager for Freelancer Growth Strategy and Delivery, he was a Technical Support Manager for Microsoft 365 EMEA. Because of his tenure, he deeply understood Microsoft’s business. Instead of advocating for freelance on its own, he could merge the benefits of freelance with the existing gaps in customer experience. The results are now a network of over 1,000 freelancers transforming the experience of how Microsoft can serve its customers. It’s been so successful that he recently released a book about it: Leading The Unknown: Strategies for Leading Remote or GIG Teams.

To sum it up, to satisfy step 1, ensure that there is a leader with tenure, budget, and OKRs that a freelance program directly impacts.

Step 2: Solve The Right Problem

Freelance has multiple benefits. On the surface, it is a quicker, cost-efficient, and abundant talent source.

But these metrics typically aren’t enough. What’s common across my conversations with Airbus, NASA, Microsoft, and UST, is that leaders promote growth, efficiency, or innovation-related benefits to support long-term change.

Regarding growth, Mina Bastawros of Airbus was able to tie freelance directly to increasing growth for sales and account teams. Mina’s team built a talent pool of former Formula One designers who could build custom airplane graphics in a matter of weeks. In his words on the Human Cloud Podcast, “I looked at the imagery and it was just incredible. Absolutely incredible. It looked like it was a real photo. That allows me to be very flexible in saying, ‘Okay, I’m speaking to a customer in the next couple of weeks. Instead of sending them a generic aircraft, why don’t I just make something that is theirs?’” Likewise, consulting and professional service firms are winning work by highlighting their freelance experts’ hyper-specific subject matter expertise in proposals and RFPs.

Regarding efficiency, freelance is an elastic workforce model where freelancers can scale up or down in line with market demand. The result is speed, flexibility, and material cost efficiencies. As Jon Garvey, former Global Financial Services & Digital Assets Leader at PwC put it, freelance “allows for a smaller permanent employee base and minimizes the use of expensive long-term contractors and staffing firms. The savings are huge (as is the flexibility, which is something you lose in a strategy where contractors are simply converted to employees).”

Regarding innovation, freelancers can unlock new products or features like Intuit’s TurboTax Live. Leveraging the scalability of a freelance network that Stanford calls Flash Teams, TurboTax Live can embed tax accounting experts into their product experience using elastic networks and talent pooling technology. Similar applications are Squarespace Marketplace, Webflow Experts, and IKEA’s acquisition of TaskRabbit.

Freelance also activates the ingredients to encourage innovation. As Bastawros of Airbus put it, freelance “allows us to fail fast, test fast, and prove value.”

To sum it up, to satisfy the first two steps, the right leader needs to align freelance with the right problem, typically tying it to growth, efficiency, or innovation rather than existing staffing, talent acquisition, HR, or Procurement related metrics.

Step 3: Have The Right Plan

The third step is creating a reasonable, compliant, and company-wide plan.

Enterprise adoption, unlike that in startups and small businesses, progresses slowly. It relies on relationships and necessitates a profound understanding of an enterprise’s unique requirements. Tony Buffum, VP of Upwork Enterprise and former CHRO, says “In the freelance economy, Enterprises and small businesses can feel like two entirely separate industries. What an Enterprise needs, a small business might not need. What an Enterprise values, a small business might find too cumbersome. Yet Enterprises are a massive opportunity for the industry, and if you can understand what makes an Enterprise work, freelancers unlock an agility that every Enterprise needs in today’s economy.”

Enterprise adoption must balance two competing forces—risk and user experience.

Risk generally has three components, legal, security, and culture. Legal risk is Microsoft’s $97 million dollar Permatemp lawsuit or Nike’s potential $530 million dollar misclassification. Security is the IT implications of remote individuals accessing company infrastructure. Culture is the HR implication of freelancers impacting the full-time workforce. Worst case, Google’s 2018 walkout of 20,000 contractors and employees or accelerating the existing attrition within full-time employment.

User experience is the process for hiring managers to hire freelancers. Hiring freelancers is a new concept for most leaders. Should employees create the job description? Should employees shortlist the hundreds of freelancer applications they might receive? Should employees run the interview loop? How many interviews are ideal for freelancers? Should employees go through their existing TA lead or HR process? Should learning and development be devoted to helping employees hire freelancers? As Microsoft’s Report ‘Stuck in the middle with you: The transaction costs of corporate employees hiring freelancers’ in 2020 shows, hiring freelancers is tough for Enterprise hiring managers.

For the sake of brevity in this article, the best plan for Enterprise adoption is one that’s reasonable, has company-wide support, and understands the risks present in terms of compliance, security, and culture.

In the next article, we’ll discuss the fundamentals of having the right plan.

Continuing On

The freelance economy is quickly maturing. In MIT Sloan Management Review and Deloitte’s 2023 Future of the Workforce global research project, they found that external workers were performing 33% of the work. 86% of global business leaders said that the effective management of external contributors was critical to their organization’s overall performance.

Freelance is also quickly bridging the gap from an isolated and innovative talent solution to an approved external talent channel.

As NASA said, “There is no doubt that the gig economy is here and having an enormous impact on the workforce”.

Now it’s up to you, are you ready to unlock the Enterprise freelance economy?