Big Business Gets Comfortable With On-Demand Work
In the quest to be more agile, more companies are using freelance platforms to find and manage contractors — but not without careful planning.
Rich Postler is about as corporate as it gets. He’s spent 31 years at Procter & Gamble, most recently as the consumer products conglomerate’s vice president of human resources, global shared services and global information technology.
But get Postler talking about how P&G has embraced on-demand work and he sounds more like a guy working at a Silicon Valley startup than at a 108-year-old corporation.
That’s because for the past two years, Postler has spearheaded a drive to rethink how P&G gets work done. A cultural shift to be more responsive to market demands has seen the consumer products giant switch some project-based work from full-time employees or large third-party vendors to independent contractors hired through freelance platforms.
The results speak for themselves. In the first fiscal year of a pilot to hire freelancers through the platforms, the time it took to source talent for projects dropped from 90 days to roughly four. On top of that, the quality of the work improved 33 percent and costs dropped 60 percent, Postler shared in a presentation at the 2017 HR Technology Conference & Exposition in Las Vegas.
A multimedia presentation Postler commissioned for his HR Tech talk is an apt example. A freelancer produced it for $1,200, a fraction of the $20,000 he estimates a larger agency would have charged for the same work. “You get value from cost savings, but you get more than value. The new currency for me is speed,” he said.
P&G isn’t the only big company discovering the value of on-demand labor. “I’ve talked to Google, Hallmark, Facebook, Samsung, IBM, HP, and everyone’s trying to figure out how to do this at the enterprise level,” Postler said.
The shift is transforming freelance platforms. Small- and midsized businesses long have used the cloud-based matching services to find writers, designers and other contract help when they need it, and SMBs still represent 80 percent of customers on Upwork. However, larger companies are the platform’s fastest-growing user base, including 20 percent of the Fortune 100, according to Eric Gilpin, Upwork senior vice president of enterprise sales.
Corporate America is no stranger to outsourcing work to third-party staffing agencies and independent contractors. The new wrinkle is using platforms instead of agencies to manage scores of independent contractors who provide myriad services and work either onsite or remotely. In addition, responsibility for managing those relationships is shifting away from procurement departments, which historically managed outside vendors, to human resources personnel or interdisciplinary teams.
Figuring It Out Through Trial and Error
When Postler kicked off P&G’s on-demand work pilot, he confessed that he “winged it.” Through trial and error, he figured out that he needed to have things like purchase orders, contracts, indemnification and other legal issues as well as privacy and security concerns squared away. This is in addition to having potential contributors pre-vetted before marketing the opportunity to use freelance platforms to hire temporary help to P&G departments. “So I could go to a team and say all you have to do is pay for it. And if they want to spend $50,000, I’ll put $50,000 in the system,” he said.
P&G created a cross-functional team with representatives from HR, labor relations, procurement, legal and a steering committee to figure out how the new service would work and to coordinate with Upwork and the four other freelance platforms the company ultimately partnered with.
One challenge of the shift has been getting managers to think about work in terms of projects rather than job descriptions. Managers have to put more thought and planning into how things get done, what the milestones are and what the time frame will be because all of that has to be translated into instructions that can be shared with potential contributors. That’s different from just being able to call somebody on staff to jump on a project, Postler said.
Hiring temporary help through platforms also requires managers to be comfortable supervising remote workers. If they can get past that hurdle, the upside is finding talent they might not be able to hire locally, Gilpin said. “We have customers in Silicon Valley that are pinched for information technology talent, so they hire (freelancers) in Middle America, India and Latin America. If location doesn’t matter, there are skills all around the world that you could tap into,” he said.
In addition to proper coordination, it’s important to get buy-in from top executives, or “someone who’ll fight for this, otherwise it’s just an HR thing or a legal thing,” Postler said.
Postler also recommends approaching every contract with individual platforms as a pilot project to test the concept. If it doesn’t work, move on, and if it does work, continue using it, he said.
The Downside of On-Demand Labor
There are downsides to using contractors, as Twitter learned the hard way when an independent contractor shut down Donald Trump’s account for 11 minutes in early November, sending the social media universe into a short-lived tizzy.
In the long run, though, the cons of on-demand labor could be more severe for the labor side of the equation than for employers. Freelancers can run the risk of being treated as employees but paid as independent contractors, a situation that’s given rise to an avalanche of employee misclassification lawsuits. By law, independent contractors don’t receive the same health benefits, contributions to 401(k) retirement savings accounts, paid family leave or other benefits and perks as employees.
Some experts have floated the idea that platforms could eventually pick up some of the slack by making benefits available to freelancers. So far, though, freelancers have shown little interest. While groups such as Freelancers Union offer health care insurance to members through an affiliate, the organization’s own 2017 survey, conducted with Upwork, found that 70 percent of freelancers prefer purchasing benefits over buying them through a client or platform.
That’s not to say they’re not thinking about benefits. “Freelancers are not more worried about health care than non-freelancers — everybody’s worried,” said Upwork Chief Executive Stephane Kasriel. In a future where fewer people are employees and more are freelance, benefits is an issue that both private and public sectors will need to address, Kasriel said.
The rise of freelance nation could help explain why wages aren’t rising as quickly as expected given government statistics show an economy nearing full employment. If the price tag for Postler’s presentation is any indication, freelancers might be underpricing themselves, which could depress aggregate earnings for self-employed workers and contribute to stagnant wages.
Still, all indicators point to more U.S. workers opting to work for themselves in some capacity in coming years, and more companies like P&G figuring out the best way to tap into that talent.
“The world is changing,” Postler said. “Companies don’t want to hire full-time employees and fire them three years later when their skills aren’t needed.”
Michelle V. Rafter is a business journalist in Portland, Oregon, reporting on workforce and technology for Talent Economy and other publications. If you have a comment or column idea, email firstname.lastname@example.org.