Freelancing is the new workforce megatrend

If you’re a regular reader of this blog, you’ll know that I’m passionate about the future of work. I love thinking about what it means for organisations today, and how we can all prepare for the very exciting changes that we’re likely to face over the next 5-10 years.

In thinking about the future of work, freelancers have recently captured a lot of my attention (as you may have seen last week on this blog). My recent interest has been prompted by the freelance stats published in the latest Mary Meeker Internet Trends report.

Like many people – I was surprised when I saw the numbers on just how many people are currently freelancing. But what I think is equally significant is what this growth means for the broader workforce.

Freelancing is officially huge (and continues to grow)

In the US, 34% of the workforce is now freelancing in some capacity (that’s the equivalent of 53 million people). For millennials, that figure rises to 38% of the workforce.

There’s clearly a range of freelancing going on here – not all of these 53 million people are freelancing full time:

• 40% are independent contractors – doing freelance, temporary or supplemental work on a project-by-project basis
• 27% are moonlighters – doing freelance work in addition to a primary job
• 18% are diversified workers – with multiple permanent and temporary sources of income
• 10% are temporary workers – with temporary employment through a single employer, client, job or contract
• 5% are business owners – who employ 1-5 people, to support a growing freelance workload

Perhaps the most powerful statistic here is the overall growth of freelancing as a proportion of the US employment market. Over the past 10 years, the number of freelancers in the US has grown by over 10 million people (that’s the equivalent of nearly 25% growth over the period).

While Australia and New Zealand might not yet be reporting these big numbers in the freelancing market, my guess is these two countries are not too far behind.

There are a number of reasons that freelancing has seen such strong growth:

• Economic drivers.
  Some of the freelance growth is about the economy. The business environment through the GFC has forced many people to start freelancing as permanent positions have been retrenched.

• Technology drivers.
  Through ease of finding work and better collaboration, the Internet has had a transformative effect in facilitating the freelance economy. 65% of freelancers said the Internet makes it easier to find and deliver work.

• Lifestyle drivers.
  I think it’s a telling statistic that more than half (53%) of current freelancers began freelancing by choice not necessity. The numbers indicate that much of this choice is about flexibility – in the same survey 32% of workers under 35 indicated they believe they’ll be working mainly flexible hours in the future.

These growth drivers aren’t likely to go away any time soon – which means that ongoing growth of freelancers is set to continue. And whilst clearly not everyone is going to be a freelancer, this does mean big changes in the workforce and the way we all work.

What does the growth of freelancing mean for the future of work?

I think more freelancing is great news for everyone in the workforce. It has the potential to benefit both employers and employees, whether freelance or more permanent.

Here’s my reasoning on why freelancing has such potential to reshape the workforce (for the better):

Freelancing helps to solve the purpose problem

Freelancing is a naturally healthy way to work. You produce deliverables, and for those deliverables you get paid. There’s a clear connection between what you put in and what you get out. That connection drives purpose.

In today’s workforce, many salaried employees have lost their sense of purpose. I think a lot of this comes down to the lack of clarity around how they’re really adding value.

Freelancers have complete transparency over their value. That’s rewarding and will lead to a working population that’s on average more engaged.

Freelancing makes the trade-offs in full time work clear

For most workers today, full time work is the ‘default’ choice. This is great for many, but it does involve trade-offs. You’re accepting a wage that’s significantly lower than what you’re potentially worth, in exchange for increased security over the medium-term.

Increased availability of freelance work makes this trade-off very clear. For those employees who choose to work in a full time job, this becomes a deliberate choice to seek security. Better alignment between employees and employers leads to healthier, more transparent workplaces.

Employees must take responsibility for their own growth and development

In an economy with more and more freelancers, every worker has to take responsibility for their own growth and development. Whether you’re freelancing or working in a corporate environment, the only person who’s completely got your development interests at heart is you. In a world dominated by freelancers, everyone is their own L&D department.

Freelancing drives better management

As I wrote in this article, successfully managing a freelancer forces any manager to learn effective performance management.

Management of independent freelancers is hard, and requires rigorous and regular performance management to succeed. A manager’s ability to get value from a freelancer depends entirely on how effective they are at setting clear expectations and delivering feedback.

The value of a manager is their freelancer network

You face a lot of uncertainty when you work with someone for the first time. Regardless of how well structured the hiring process is, there’s a lot of uncertainty that’s not resolved until you’ve actually worked together.

Due to this uncertainty, there’s big value in a manager who has worked with great freelancers previously. They have a known freelancer network that’s a known quantity – saving the organisation time and money.

Better systems and processes

Plugging talent into the organisation frequently on a task specific basis means that you need great processes. For example: if the task takes a week, but it takes a week to onboard (and three months to pay) there’s a big disincentive to using a freelance workforce.

Freelancing will force more organisational agility

Organisations using more freelancers will move faster. But this cuts both ways – leveraging a talent ‘cloud’ means the organisation can scale up faster. But there’s also less cultural infrastructure holding the organisation together over the long term. Organisations without great systems and processes have the ability to fall apart quickly as well.

As freelancing continues to grow we’re set for an exciting few years

The ongoing growth of freelancing is exciting. I think more freelancing is pushing us down the road to happier, healthier and faster moving workplaces.

Freelancing is a force for good in the working world. Overall we’re going to have more natural organisations, where more people are connected directly to the creation of value. That’s a great thing.

All organisations need to start thinking about how they’re going to make the most of the freelance revolution. For large organisations, it’s time to start experimenting with freelancers. If you do, you’ll be ensuring you’ve got the right organisational capacity to compete successfully into the future.

I’d love to hear about your freelancing experiences. Jump into the comments below or join the conversation on Twitter (@cognology).

Jon Windust is the CEO at Cognology – Talent management software for the future of work. Over 250 Australian businesses use Cognology to power cutting-edge talent strategy. You can follow Jon on Twitter or LinkedIn.