Retention

Freelance platforms are trying to steal your top performers

Retention is tough; the appeal of independent work might be making it even more difficult.
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· 4 min read

As HR leaders grapple with retention amid a potential recession and volatile talent market, another challenge is emerging: Employees are increasingly choosing to work independently.

Independent workers make up approximately 36% of the US workforce, up from 27% in 2016, according to McKinsey. And it’s not just younger workers: Though millennials perform gig work at the highest rate (34%), baby boomers aren’t far behind (26%), per a 2021 report by MBO Partners. Some freelance out of choice, while others do so out of necessity.

The availability of freelance work for specialized jobs with high pay—like on Catalant, a platform for independent contractors who specialize in strategic consulting—is what corporate HR leaders are often up against in their constant battle for talent.

“The average age of the consultants in our network is about 46, and the average earnings are anywhere from $150 to $600 an hour,” Patrick Petitti, CEO of Catalant, said. “The projects on our site are on average anywhere from $80,000 to $90,000, and about 40% of those extend…We have people who make over a million dollars per year.”

New needs, new people. “Covid has made executives think pretty differently about how the company is going to get work done,” explained Petitti. As the corporate use cases for freelancing expand, so have the platforms for hiring from this talent pool.

Petitti said Catalant has seen spikes in demand for talent specializing in mergers and acquisitions, supply-chain management, and strategic planning from its large corporate clients. Small and medium-sized businesses in the US, meanwhile, are increasingly using contractors for administrative, consulting, and creative work, according to a recent report from HR software firm Gusto.

Now that employers are seemingly more willing to hire remotely, freelancing can become a larger part of workforce planning, as HR Brew has reported. For workers with aptitude in the aforementioned areas, opportunities to go independent are increasingly available—and attractive.

“If you’re amazing at supply-chain transformation, why would you work full-time at one company?” Pettiti said. “If you’re amazing at that, that means you have more control and leverage to work the way you want, work with who you want, on what you want…turn work on, turn work off. I think the fact that that exists as an option has become more of a magnet for the best people.”

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Why they do it. While the idea of “being your own boss” might sound attractive, independent work comes with challenges—chief among them a lack of financial stability.

But the rapidly-evolving nature of work—more remote, global, and skills-focused—along with the emergence of platforms like Catalant and A.Team, is changing the math. Raphael Ouzan, founder and CEO of A.Team, a freelancer platform with $60 million in funding from Tiger Global, Spruce House Capital, and Insight Partners and counts the Wharton School’s Adam Grant and Harvard Business School’s Joseph Fuller among its advisors, offers another reason why freelancing is surging.

“The social contract that we used to have with companies, that you could tell me where to be, what to do, when to do it, with an exchange—you would give me stability—that illusion is becoming more and more broken,” Ouzan said during a panel at Web Summit in Lisbon last month, pointing to employers’ pandemic responses and the recent spate of layoffs as examples of the precarity many workers have experienced over the past three years.

With his company, he’s betting that more high-performing workers will find freelancing more attractive than having a full-time job. His pitch also includes the opportunity to align mission and work, contribute to a diverse array of projects, and earn as much—if not more—than one might in a full-time job.

And the flexibility can’t be beat.

“The best people have been like, ‘Screw it, I don’t want to be at big company X anymore,’” Petitti said. “They’re deciding to take more control over how they work.”

The battle continues. HR leaders still have many levers at their disposal—from how they handle the return to office and inflation-related salary adjustments, to parental and office benefits—as they continue to refine their company’s employment value proposition.—AK

Editor's note 12/08/22: This article has been updated since it was first published to correct the title of Spruce House Capital.

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HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.