How managing freelancers can help companies improve internal talent management and mental health

Somedays we feel like marriage counselors.

As active and early members of the Center for the Transformation of Work, we meet regularly to discuss the open talent economy (gig/freelance/liquid economy). In that context, we have also talked a lot about the impact of Covid and remote work on mental health.

In these meetings, open talent platforms wonder why organizations have not been faster at embracing on-demand talent. “Why is it that the HR department and corporate bureaucracies oppose it?” they ask. “Don’t they understand that freelancers can save them money and time, bring flexibility and availability, especially in a time of high turnover and labor volatility?” When companies need an expert plumber, say, they hire them for a particular task but don’t bring them onto the staff payroll.

It is not as if we don’t have experience with the general model: One of the very earliest platforms matching “workers” (contractors) and “requesters” (employers) was Amazon’s Mechanical Turk, about 20 years ago.

Nor is the interest lacking on behalf of the talent. Today nearly 60 million Americans already work independently (about 36% of the workforce), and more seem to be choosing this path in the great resignation — for different reasons. According to MBO research, men want to be their own bosses, women seek greater flexibility, and GenZers want independence.

So what gives?

One of us works at a fairly conservative organization, for decades unwilling or unable to hire many freelancers putatively for payroll and logistics reasons. Habit plays a role, but so does fear: “we cannot control them,” the argument goes. “Freelancers are here today, gone tomorrow. Contractors don’t help us build our corporate culture.”

The other is a long-term consultant, who keeps on noticing that, despite claims to the contrary, companies still behold culture as an afterthought. In today’s emerging company trends, workers are demanding a better work culture and companies seem to be scrambling to uncover what this means for them and what changes they need to make to maintain a healthy company culture in our times of turmoil.

We hear the discord and feel the disconnect, but we see the potential for mutual support and learning.

A match made in Covid hell

Companies might want to consider that the risk benefits analysis for using open talent has shifted since the pandemic.

The World Health Organization just released its report on the state of mental health in the world. If we believe the statistics about mental health impairment in the general working population, workers are performing less because they are struggling and exhausted. In addition, for over a decade, according to Gallup, only about a third of them report being engaged at work. Most employees are at-will and can be let go immediately, and hence less loyal to organizations.

Companies responded to the mental health challenges of workers by increasing mental health support benefits and giving employees more time away from work. We’re improving mental health AT work by NOT having people at work through leaves, well-being days, sabbaticals, and corporate-wide vacation closures. We all need time to heal, care, and mourn those we have lost, including friends and miscarried children.

In addition to more benefits, employees also demand higher wages and leave at a higher rate.

Having time workers has gotten not just more expensive but also riskier — not just from a retention or presenteeism standpoint, but also legally. Some mental health conditions are covered under the Americans with Disabilities Act (ADA) and expose companies to potential lawsuits if the situation is improperly handled. Many of the well-being and mental health apps companies have invested in don’t have a proven scientific basis and are collecting data that should worry risk and compliance officers.

More generally, we will not solve for mental health at work if we don’t focus on the “at work” part. Managers, especially young ones, need to be trained for a different world.

Until then, there is an opportunity here for the platforms to argue that they provide workers when and as needed while enabling their clients not to bear the burden and the risk of worker mental health and burnout — or to contribute to it by limiting flexibility and managing poorly.

With an estimated 1.2 billion freelancers worldwide, so 1/3 of the total global workforce, major platforms have huge power and leverage in the labor market. They also have the leverage to provide support resources and think “community, not just platform.” For the talent to continue to perform, the talent platforms have begun thinking about providing benefits. The smartest among them will support the development of tailored benefits and adopt reward and recognition programs such as Blueboard.

A delicate dance

Companies, in turn, should pick platforms that provide mental health resources and communities of support for their freelancers in the spirit of fair sourcing and fair labor practices. Because unions and employment laws do not protect many platform workers, their pay may be poor and working conditions precarious.

To help platform workers and platform users make better choices, the Fairwork project, out of the Oxford Internet Institute and the WZB Berlin Social Science Center, ranks platforms according to five fair work principles:

• fair pay paid on time for all work completed taking into account the location and work-related costs and hours worked;
• fair conditions to promote health and safety:
• fair contracts, free of clauses that exclude platform from liability, etc.;
• fair management with due process for decisions affecting workers, for example; and,
• fair representation so that workers can organize into collective bodies with which platforms should be prepared to engage and negotiate.

In turn, companies can bring back to their own employees what they learn from managing freelancers, namely core practices that the World Health Organization believes actually lower stress at work: defining clear tasks at the right skill level that the individual can perform when it suits her best at an appropriate remuneration — with the ability to walk away and find a better client if mishandled. Companies can also think about building internal talent marketplaces that can improve fit and variety for current employees. They become better at orchestrating workforce ecosystems.

Finally, if platforms focus on fair work principles and companies perform value chain due diligence on labor sources, workers yearning for agency, flexibility, intellectual challenge, and freedom could blend the best of both corporate and freelance work. In doing so, they could also support their mental equilibrium and that of others around them.

Imagine the possibilities.

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Thank you for reading, we welcome your feedback. This article was written by Carin-Isabel Knoop and Chris “Link” Duarte with input from the Center for the Transformation of Work Advocacy Workstream.