Contract vs. Full-Time: The Benefits and Pitfalls of the Liquid Workforce

Contract vs. Full-Time: The Benefits and Pitfalls of the Liquid Workforce

By now, we are all familiar with the Liquid Workforce, originally dubbed by Accenture in 2016, describing the future of work as being freelance. According to Upwork, in 2023 64 million Americans freelanced, representing 38% of the U.S. Workforce. Freelance workers continue to be in high demand, and for many, this represents a perceived opportunity to control their own destiny or an opportunity to continue earning while looking for a full-time position.

All of this may sound dreamy, giving companies and freelancers optimum flexibility, but there are pitfalls to watch out for and smarter ways to design a contract workforce or to be a contract employee. Here are some things to consider:

  • Know the Difference Between a Consultant and Freelancer: Consultants tend to be more senior-level executives who sometimes do the work and sometimes hire out others. Usually, consultants have left full-time roles in more senior leadership positions and have been less hands-on than a junior freelance hire. Have a clear understanding of what you are getting when you are hiring a contractor, consultant, or freelancer and what this person will actually be doing versus what your team or additional freelancers will be doing. Sometimes, this can become a big expense without much output. As the consultant or freelancer, be transparent about what you are delivering and where your actual skills and hands-on work stop. Without transparency, you will end up with a contract that will not be renewed and looking for your next contract or full-time role.
  • Create Loyalty: Contract hires will dive into your work, but they are also always thinking about their next contract. When will this end? How will I earn? How many more clients can I take on? Full-time hires come with a level of loyalty that makes them committed to the business, the team and the company. There are many innovative ways to create loyalty with a contract workforce, including giving them perks like the ability to work from the office and providing benefits such as health insurance.
  • Show Commitment: With the economic shifts in the last year, there are a number of people who are out of work and are now contracting to pay the bills. It is important to understand if you are hiring somebody who is also looking for a full-time position or if you are hiring somebody who is committed to building a true contract business that you can pull in and out of your company, as needed. As a contractor, it is as important you are clear on what you want. Years can go by where you make good money as a contractor and then the well dries up. You risk not being able to easily find a full-time position because you haven’t been operating in a full-time capacity, proving measurable outcomes in a company, and the questions around you and what you can really deliver are real. As a contractor, it is important to be clear if your plan is to freelance long-term, as a new way of working, or short-term, while finding a full-time position. As a hiring manager, it is important to ask the question of how committed your contractor can truly be if they actually are looking for a full-time role.
  • Don’t Be Ageist: Great talent comes in all ages. Hire the best person for the job that fits within the budget scope you need. Be open-minded and meet with a number of prospective freelancers before finalizing who you will hire. The best person for the job may have years of experience under their belt versus somebody you need to spend time coaching and managing.
  • Don’t Be Egregious or Cheap: Inflation has impacted everyone, which means that people are asking more for their work and freelance budgets are unintentionally expanding. It is important to find the happy medium on both sides so that you are not overpaying for your contract hires, making you continuously question the relationship, and you are not underpaying, forcing the contract hire to pick up additional work to fill their personal financial gap, leaving less time for you and your business.

Lower headcount costs, the ability to bring on talent that quickly adds expertise to your team and control of how and where you work are all benefits of hiring freelance workers or moving your career in that direction. As the freelancer, it is important to understand the career impact you are making when you make the decision to become a contract hire and as the employer, it is important to spend time understanding who you are hiring, how they will be working with you and what they will deliver. There is a tremendous amount of freelance talent in the marketplace right now and taking the time to build your contract strategy, as both an employer and contractor, before you sign the agreement, will result in the most successful outcome for both parties.