Part of Kathy Caprino’s series “Supporting Today’s Workforce”
As many of us have heard, recent data suggests that the great resignation is coming. The term “great resignation” was coined by Anthony Klotz, a Texas A&M University associate management professor who has studied the exits of hundreds of workers. In his interview with Bloomberg Businessweek, Klotz shares his prediction that many more people who had hung onto their jobs during the pandemic because of uncertainty are now readying themselves to quit.
Throughout the pandemic, workers have become accustomed to the flexibility of remote work, and are realizing that rather than being pushed back to an office or held to certain hours, the opportunity to work for themselves as freelancers is ideal. In fact, freelancers are projected to make up more than 50% of workers by 2027.
How will this shift to freelance work impact the overall job market? And what do corporate employees need to understand to make the right decisions about moving to freelance work?
To learn more about how professionals can determine if freelance is the right direction for them, and how companies can prepare for the freelance revolution, I caught up with freelance economy expert Shahar Erez. Erez is a co-founder and the CEO of Stoke, an on-demand talent platform empowering companies to adopt a hybrid workforce model that scales as quickly and efficiently as needed.
A tech-scene veteran in Israel and Silicon Valley, Erez has fifteen years of executive experience in engineering, product and marketing under his belt at companies like HP, VMware and Kenshoo and has built a reputation as a strategic thinker who leads organizational change and drives growth by developing talent and promoting a learning culture.
Here’s what Erez shares:
Kathy Caprino: Shahar, from your perspective, what is the best way people can determine if they should become a freelancer or work full-time?
Shahar Erez: To determine whether or not you should become a freelancer, it’s important for people to think about what makes them happy in their jobs and workplace. I like to recommend that people ask themselves a few key questions.
First, what type of working environment best suits your personality? If you thrive in an environment that is predictable, or cannot get comfortable with instability, then freelancing may not be for you—and that’s okay. For some people, the unknown and ability to chart their own course every day is exhilarating—it helps them feel empowered when they have full ownership over their projects, workload, and income. People who work well under pressure, have ambition, and can navigate the unknown seamlessly often excel as freelancers.
Second, it’s important to think about whether or not you are truly a self-starter. As a freelancer, everything boils down to the work you do—the projects you get, the hours you keep, and where your next paycheck is coming from. The most successful freelancers have enough direction and drive on their own to succeed without a manager over their shoulders. However, if you need a team environment to motivate you or guide you, going out on your own as a freelancer may not be the best career move.
The third and most important question is why you want to freelance. Becoming a freelance worker gives you a level of autonomy you simply cannot get in a traditional employment setting. But it will take time before you’ll only work on projects or campaigns that you are passionate about, or those that leverage your unique skill set.
It takes time to build a name for yourself and gather enough customers so you can pick and choose your project. Until you get to that position, you’ll need to do projects that might be less than ideal and work with people or companies that might not be a perfect fit for you. The freedom to choose your customers as a freelancer may not translate to working only with people or companies you love as it’s a matter of supply and demand, but still gives you more of a level of choice.
Caprino: What are the full pros and cons of freelance work that people don’t necessarily understand?
Erez: Most employees believe that becoming a freelance worker will give them complete freedom to do as they like. It is true to some degree as you’ll have more control over your schedule and you will be able to decide who to work with and who not. Freelancing takes flexibility to a whole new level, since in most cases you are not dependent on other people to do your work and can decide where to work from and when.
Freelancers also have the opportunity to become an expert in a niche area since they work in the same area across many different industries or companies—which also allows them to work on a diverse set of clients. After developing this expertise, experienced freelancers have the potential to earn a lot more as they are paid for results and not time.
However, as a freelancer, you need to build a reputation for yourself so you’ll have enough customers to pick and choose from, and that is not easy. Many experts need to invest a lot of time to market themselves and the impact of their work to ensure they’ll be in high demand. Many freelancers report it can feel like a constant job search.
In addition, you’ll need to deal with a lot of administrative work that employees are not aware of like complex tax calculations, taking care of insurance, collecting late payments from customers and more. Not to mention you’ll need to build a financial plan as most freelancers experience busier and slower months which are not always predictable, and you’ll need to build vacation into your annual income as you won’t enjoy paid time off anymore.
Caprino: How can companies better prepare for the freelance revolution?
Erez: Similar to other processes, the first and most critical step is admitting you have a problem. All tech companies are complaining today they are unable to hire the talents they need due to a tech skills gap, but they are not changing their strategic workforce planning.
Most companies view their workforce as employee-based and hire freelance talent for specific projects per demand and not as part of their strategy. This means that HR teams are almost entirely focused on employees and there’s no strategy or processes implemented around sourcing, onboarding and managing freelance talent. This impacts the productivity of leveraging freelance workers.
Once there is a team within the organization focused on managing freelance talent, then it will be easier for the organization to identify the freelance talent needed, source them, onboard them per all tax and legal compliance requirements, manage them, and pay them.
If companies do not have the required tools and processes to properly manage their freelance talent, they will not be able to leverage them in a productive manner.
Caprino: What is the hybrid work model in existence today and why isn’t it sufficient to keep employees as full-time workers?
Erez: The main motivation why so many employees are interested in becoming freelancers is to gain freedom—the freedom to work wherever they want, whenever they want, on projects they feel passionate about, and with people they enjoy working with.
The fact that many companies are now transitioning into a hybrid model—meaning working some days from the office and some days from the home—will increase employees’ flexibility to some extent, but it isn’t enough to keep most freelance-want-to-bes as full-time employees because they have grown accustomed to more flexibility during the pandemic, and still crave that.
They want to work on their own time and from their own homes to achieve a better work-life balance. In many cases, executives think a formal return-to-office plan is best, but workers don’t…