How to include Freelancers in your Employer Value Proposition

A guide to understanding how to create your Freelance Value Proposition and why you need one

Employer Value Propositions are an effective asset in an organisation's toolkit. They help reduce hiring costs whilst attracting the best talent. But now it's time to create your Freelancer Value Proposition.

In this guide:

  • What is an Employer Value Proposition (EVP)?
  • It's time to consider your Freelancer Value Proposition (FVP)
  • Should you have an FVP or a freelancer-inclusive EVP?
  • FVP = Employer brand principles + Freelancer specific rewards
  • 5 steps to creating a Freelancer Value Proposition

What is an Employer Value Proposition (EVP)?

An Employer Value Proposition (EVP) defines the reason why a person should choose to work for your organisation above all others. It is a clearly defined set of rewards, benefits and standards that communicate what an employee of your organisation receives in exchange for their skills, experience and commitment.

Having an EVP is important because:

  • There is an extremely competitive market for talent
  • You can reduce your cost of hiring
  • You can improve retention of new hires

Competitive market for talent
The REC says the average time to hire is now 68 days, and the CIPD state counter offers are on the rise, with up to two thirds of want-away talent receiving a counter offer.

A simple search for "java developer jobs" shows the sheer number of positions available to people with in-demand skills.

Having an effective EVP gives you an edge in the competition to attract the best people.

Reduce your cost of hiring
Research by Gartner has shown an effective EVP can reduce the premiums of hiring talent by up to 50%. As the cost of a new hire, according to ACAS and Oxford Economics, is on average £30,000 (recruitment fees, lost productivity, temp costs, etc) making a 50% saving equates to a considerable amount of money.

Improve retention of new hires
The Society for Human Resource Management estimate a third of new hires quit within their first 6 months. Gartner's research also showed an effective EVP can increase commitment from new hires by up to 30%.

It's time to consider your Freelancer Value Proposition (FVP)

Accenture, PWC, and Deloitte all predict 30% of UK workforce and 50% of the US workforce will be freelancers by 2020, so as the number of freelancers you need to engage with increases, so does the need for your organisation to attract and retain them effectively.

Competition for talented freelancers is just as fierce
Freelancers are in as much demand as their employed counterparts. While employment contracts can mandate a notice period that provides an element of safety, freelancers can move on very quickly at the end of their contracts, making it even more important to attract and retain the best freelance talent.

What is an FVP?
This need to attract and retain the best freelance talent has created the Freelance Value Proposition (FVP), also known as the Contingent Worker Value Proposition (CWVP).

Similar to the EVP, the FVP defines the reason why a freelancer should choose to work for your organisation above all others. It is a clearly defined set of rewards, benefits and standards that communicate what a freelancer receives in exchange for their skills, experience and commitment.

Should you have an FVP or a freelancer-inclusive EVP?

You might be asking yourself, "why should I create a separate FVP, surely I could create an EVP that includes freelancers?".

There are some merits to that thinking, after all, people are people. We all want fair pay, incentives and meaningful rewards, regardless of whether we are employees or freelancers.

However, there is one very important consideration for why an FVP needs special treatment.

Freelancers are not employees
Freelancers are typically self-employed and offer their skills under a contract for services. Freelancers can also work through an intermediary, for example their own limited company or an employment agency.

A freelancer will not be employed by your company and will not have employee status.

It is essential for tax and employment law purposes that any freelancer you work with is clearly not an employee, or you may fall inside the IR35 legislation and be liable for things like tax and national insurance.

Of course, receiving employee benefits, incentives and rewards is an indicator a freelancer might be a disguised employee.

The very specific nature of the engagement between a freelancer and your organisation makes it necessary to have a specific FVP that covers for all the nuances of freelancing.

FVP = Employer brand principles + Freelancer specific rewards

The key to developing a Freelancer Value Proposition is to apply a freelancer's lens onto your organisation's employer brand principles and to factor in some specific rewards for talented freelancers.

For example:

Employer brand principles

- Fair pay
Pay that fairly reflects the value of the individual's contribution to the organisation's success. Depending on the nature of your engagement with freelancers this might be expressed as a rate per hour, day or unit of work. For example:

Java developer = £500 per day

Content writer = £250 per article

- Comfortable environment
Could be as simple as providing on site parking or dedicated hot desks for freelancers.

- Transparent comms
Freelancers, due to their short-term temporary engagement with an organisation, are often kept out of internal communications and updates. Using an FMS's talent pool to keep freelancers up to date with important information is a simple way to make freelancers feel part of the team.

Freelancer benefits
As part of your FVP, the rewards and incentives you offer to freelancers needs careful consideration. This is to ensure they are both interesting and unlikely to cause any compliance or regulatory issues.

Here are a couple of examples of rewards/incentives you could offer freelancers as part of your FVP:

- Payment terms
60 or 90 day terms on invoices are common for larger organisations but for a freelancer, not getting paid for 3 months can present serious cashflow issues. A simple reward for talented freelancers could be expedited invoice payment.

- Endorsements
Working with a large organisation presents a huge opportunity to a freelancer to generate more work. But often, it's difficult to be able to access other departments or projects. A great benefit for a freelancer would be to get endorsed to other hiring managers in an organisation.

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5 steps to creating a Freelancer Value Proposition

The steps to create an FVP are very similar to the steps you'd take to create an employer value proposition:

  1. Qualitative research: Surveying and polling your current freelance workforce to understand the current opinion, sentiment, perceptions and wishes.
  2. Quantitative research: Analysis of current freelance engagement, including skills used, types of project, length of engagement, new vs returning engagements.
  3. Align the FVP with your overall corporate and employer brand.
  4. Publish and communicate your FVP with the wider organisation and your current freelancer community.
  5. Implement the FVP across all HR processes, including the recruitment, onboarding and development of freelancers.

Review and optimise
Once your FVP is operational for a period, for example 6 months, you can repeat the same qualitative and quantitative analysis to see what impact your FVP has made on your organisation's use of freelancers.

Useful resources

The Rise of the Liquid Workforce

Gone are the days of the rigid organisational structure, today's forward thinking organisations are adopting a resourcing model that's much better at flexing and scaling.

Buyer's Guide: FMS Pricing Options

There are a number of factors to consider when assessing the right pricing model for your freelancer management system. Learn how to select the right one for your organisation with this guide.

Why an FMS is not a marketplace

This guide looks at the main differences between freelancer management systems (FMS) and freelance marketplaces.