What is the Hidden Workforce Epidemic?
The pace and flexibility of the new organisational model is ultimately the root cause of the hidden workforce epidemic, stemming from how easy it is to hire a freelancer for a project: Freelance marketplaces enable any line manager with a credit card to hire a freelancer.
The ease of hiring creates unchecked and mismanaged hiring processes, often bypassing existing HR and established onboarding processes, and results in an organisation having an unchecked, uncontrolled, and 'hidden' workforce.
When you consider, a typical large, enterprise-sized publisher, marketing agency network or media company can use hundreds, if not thousands, of freelancers, the hidden workforce is an epidemic.
As discussed in the guide to overcoming the challenges of managing a freelance workforce, the resulting problems include:
Apparent skills shortages
Without visibility of where and how freelancers are engaged in an organisation, it is possible for 'phantom' skills shortages to appear. For example, one department can have a number of freelance software developers engaged but underutilised, whilst another department could be struggling to find and hire freelancers with the same skills.
Frequently unnecessary hiring is a by-product of the apparent skills shortages caused by a lack of visibility. It's easy to see how an organisation, in it's desire to move projects along, can hire freelancers unnecessarily when they could have unseen, underutilised freelancers already engaged elsewhere.
Uncontrolled freelancer costs
Where there is a lack of visibility, no single point of 'truth', it's common for an organisation to be engaged with a number of very similar freelancers, doing very similar jobs, but paying very different rates. Of course, this creates cost inefficiencies (compounded by the unnecessary hiring and underutilisation factors).
It's possible to engage a freelancer with as little as a verbal brief. Without a formal contract or statement of work, this exposes the organisation to a risk of incorrect or incomplete work being delivered.
Unless there is a system in place to remove the freelancer from accessing sensitive business information when their contract finishes, freelancers with access to internal systems or those who are included on internal email distribution lists pose a data/information security risk.
An example of regulatory risk is the IR35 legislation in the UK. If a freelancer is deemed to be a 'disguised employee', both the freelancer and the organisation could be liable for financial penalties. Without the right checks being made, it is possible for a line manager to unknowingly create an IR35 risk by hiring a freelancer for a role that looks like employment.