Hiring 4 min

Remote Employees vs. Freelancers: Which Makes More Sense for Your Business?

July 6, 2020

With remote work becoming the default solution for many organizations during the COVID-19 pandemic, some will be wondering how to move forward once the dust settles. Should they continue to have full-time work-from-home employees in all situations? Or will there be some cases where it makes more sense to hire a freelancer instead of a remote full-time employee?

The question isn’t whether independent contractors are better than remote employees. It’s whether one is a better fit for the specific work your organization needs done. And there is no single right answer. Every organization will have to find the balanced workforce that makes sense for them.

There are reasons to consider both types of workers, including flexibility, cost, loyalty, and relationships. Ultimately, whichever you choose, you’ll want an integrated team with a variety of workers. The following comparisons will help you make the decision.

The question isn’t whether independent contractors are better than remote employees. It’s whether one is a better fit for the specific work your organization needs done.

Exclusivity vs. Flexibility

It’s no secret that freelancers usually work for multiple clients at once. Depending on how in-demand they are, a freelancer may have limited time and attention to offer. If you have a seemingly endless list of very demanding projects in mind, especially if these projects require an insider’s understanding of your business, a full-time hire probably makes more sense.

A full-time employee, even if they work remotely, is available during a predictable time frame every day. Managers can count on quick communication and the ability to call on a dedicated employee whenever work needs to get done. This exclusivity also means that the manager can decide which projects take priority, ensuring the most important things get done on time.

Is your HR team ready to face a post-COVID-19 world?

On the other hand, freelancers are great for small independent contractor jobs or filling in similar gaps. They are more flexible with their time, so you don’t have to find something for them to do for 40 hours every week. Freelancers make the most sense for intermittent tasks that don’t necessarily have to be completed each day or don’t take up a full-time schedule.

An independent freelance worker can also be a great fit if your business’s needs grow unexpectedly in the short term. Working with a contractor means you can get the extra help you need without going through a lengthy hiring and onboarding process.

While they’ll be more in demand, successful freelancers do tend to be good at estimating their availability based on their current project schedule. So even if their schedule isn’t as predictable on your end, if a freelancer tells you they can meet a deadline, you can hold them to that. In the event that your favorite freelancer isn’t available, you’ll need to have a plan B. A rotating team of contractors ensures that one is always there when needed.

Dedication vs. Cost Efficiency

When considering which type of worker best meets the needs of your organization, you should think about what outcome matters most and the resources you’re willing to put in. Do you need someone who will be fully invested in the team and the organization? Or do you need to scale up for quick projects and can’t afford to hire a full-time person?

To be successful, an employee relies on the success of the company they work for, so a dedicated employee is likely to be invested in your organization’s values and future growth. Their investment will extend to team members, making collaborations smoother and more efficient. Despite not being in-office, remote employees are more integrated into company culture than freelancers. Remote workers spend time in meetings, participate (usually virtually) in “water-cooler” chats, and bond over shared experiences with co-workers.

Learn how to keep your remote employees engaged with our Remote Employee Checklist.

With this level of integration, of course, comes certain costs. Hiring and onboarding a remote employee often incurs the same overhead costs as a traditional office employee. Organizations often provide a computer, pay for web access, and any software needed to get the job done. They typically foot the bill for a health care plan and other benefits that full-time employees expect or are guaranteed to receive by law.

And even when training is handled with smart remote learning tools, there is both a physical and time investment associated with getting employees up to speed on your business’s procedures, from cyber security to specific project management processes. Hiring someone new is a big commitment.

Freelancers or consultants are paid a high hourly wage because they don’t have the same protections and benefits as salaried or full-time employees. But here are some ways that freelancers save you in hiring and onboarding costs:

  • Businesses doing the hiring aren’t typically responsible for training, taxes, or providing equipment.
  • You’re not responsible for contributing to a freelancer’s health benefits.
  • You only pay contractors when they send you an invoice for freelance work, instead of contributing a fixed annual salary.
  • It’s also easy to sever ties if things aren’t working out: simply don’t renew the contract.

These cost savings can be attractive to an organization looking for expertise without necessarily needing employee-level dedication. And while freelance workers aren’t as likely to be loyal to your brand, the best freelancers are dedicated to putting out high-quality work regardless of who the work is for. They rely on word of mouth to grow their own business, so they have every incentive to give you their best effort.

Managing Remote Workers vs. Freelancer Reliability

While many companies moved to remote work during the pandemic, these same organizations likely realized managing remote workers isn’t quite the same as managing in-office workers. Management issues with remote employees mostly stem from poor communication. It takes a bit of effort to keep dialogue flowing when employees and their superiors are rarely face-to-face.

Here are some ways to prevent these missteps with your remote workforce:

  • Set clear expectations, both on the part of employers and employees.
  • Have clear policies for remote work in place (e.g., are all departments/positions eligible, or just some? How will managers communicate with their remote employees? How will teams stay in touch?).
  • Be consistent with those policies to help everyone meet the standards they should.

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Hiring freelancers can help bypass some of these issues while also expanding an organization’s talent pool. In most cases, a business doesn’t need to be intensely involved in managing independent contractors. Apart from approving project proposals and ensuring that projects are completed as needed and on time, managers can pass things off and expect that they’ll get done. If the freelancer doesn’t get it done, they break their contract and risk losing out on payment.

On the other hand, relying on freelancers can leave you flying without a net, so to speak. If you’ve found a great freelancer, then you get quality work without having to worry too much about micromanaging them. If you hire a freelancer just because you want to cut costs and you do so without checking previous work and references, you’re rolling the dice on the quality and timeliness of their work.

Luckily, there’s a whole network of freelance job sites to help you find the right contractor. Once you find someone who seems right, do your due diligence like you would for any new hire. Some questions that are helpful in determining if a freelancer is a good fit include things like:

  • What critical skills do you bring to the table for our specific needs?
  • Can you meet this timeline?
  • What similar projects have you been part of?
  • How do you handle working remotely?

Always ask for references and a portfolio of previous work. A freelancer’s portfolio says a lot about their capabilities and style.

If you hire a freelancer just because you want to cut costs and you do so without checking previous work and references, you’re rolling the dice on the quality and timeliness of their work.

Talent vs. Relationships

Best estimates put the percentage of gig workers between 25 and 30 percent of the U.S. population. While people predominantly work in traditional jobs, that still gives you a large freelance workforce to choose from, with the addition of other freelancers available around the globe. This can help your organization expand its reach to span time zones and languages as needed.

Freelancers, however, aren’t tied to the organizations they work for, which makes building long-term client relationships tougher. On the other hand, an employee will typically stay with a business for about four years. The longevity of a traditional full-time employee means that your clients and patrons can rely on familiar faces and working styles day in and day out. Similarly, well-trained and prepared internal employees are the future leadership of many organizations.

Choosing Your New Normal

As we all slowly move toward a new normal, hiring may look different than it has in the past. The traditional model of building a nine to five workforce for every needed position isn’t the only option anymore. Instead, putting together teams that include traditional employees, remote workers, and freelancers builds a strong company that is prepared to weather the economic storms that will undoubtedly continue to come.

Striking that balance is a matter of asking the right questions and filling positions based on the skillset, flexibility and longevity needed. So, freelancer vs. remote employee? The real question is: Why not both?

Marie-Reine Pugh
Copywriter

I’m a copywriter at BambooHR with six years of writing experience. I focus on making HR easier for professionals and anyone wanting to make a difference in the workplace.