Freelance vs. Full-Time Employment - A Closer Look

Time changes many things. These include trends, popular culture, fashion, and even the very environment we work in. As the world around us evolves, we choose new and different methods to solve our everyday challenges and make life decisions.

One such example can be found in the American workplace. The very fabric of our society and how we choose to interact with it has changed throughout the years. Traditional career advancement ideals have changed, thereby allowing employees to choose different ways to reach their goals.

By exploring the ways in which the workforce has changed, this article focuses on the psychology of the ever-expanding office and how our interactions with the world, in large, have affected how we approach work.

Psychological Background of the Traditional Workforce

We have all been groomed for our adult lives ever since we entered the school-aged years. We were instructed to do well in school, graduate and seek either specialized training or continue the education that would benefit us in our chosen field or profession. Upon completion of these steps, we were to find gainful employment, preferably with a company that offered an opportunity for advancement. The rest of our working lives were to be punctuated with promotions, deadlines and ultimately growth until we reach a specific goal that would allow retirement or whatever satisfactory conclusion we had anticipated.

Everyone’s journey varies; however, most would say this is an acceptable approach to viewing an appropriate career path.

With the advent of technology and the ability to easily interact with anyone from around the world, we have seen an increase in flexible employment options. We no longer have to be present at a job and merely undertake everything handed to us.

By looking at several studies conducted on the subject, we can come to understand the different viewpoints that break down the decision to seek flexible employment, as opposed to the assurance of full-time employment and a steady paycheck.

What makes these trailblazers tick? What are the benefits of leaving a steady paycheck behind in the pursuit of freedom or efficacy? Of course, ultimately, these answers vary for every individual and each field of employment. The general pros, cons, and psychology behind these decisions are important factors to consider if you find yourself in the conundrum that many individuals have.

Corporations also view those with a resume full of flexible positions differently as well. By exploring both sides of the coin, we can better understand this developing field of modern workers. 

Development of the Flexible Workforce: How has it come about?

Thomas W. Malone, Robert Laubacher, and Tammy Johns outline the benefits and downfalls of “hyperspecialization” in their article entitled “The Big Idea: The Age of Hyperspecialization”, which was published in the Harvard Business Review in 2011. They indicate that the success of the flexible workforce is accomplished in part because of the ability to “hyper-specialized” in a series of tasks or one particular thing. This grants workers the ability to choose projects that best suit their skillset and direction of their intended career. Companies like TopCoder, Mechanical Turk and CastingWords were all studied to understand several facts.

• What drives potential employees to these virtual employers?

Malone suggested that these companies have succeeded by chopping up larger projects into smaller pieces and disbursing the job to a large group of individuals who work separately to complete a single project in a shorter period. This is an attractive option for employees, as it allows them to choose what they work on and only wants assignments that meet their needs. As with a traditional employer, one employee may be responsible for a myriad of tasks that are time-consuming and ill-suited for that person's skill set. By allowing the flexibility to work on preferred projects, companies like TopCoder have been able to offer quality coding work to its customer by utilizing the worldwide audience of programmers. This business model allows jobs to be completed quickly and more cost-effectively for the consumer; however, how does this translate into a better scenario for the employee? TopCoder, in particular, offers incentives to its employees; whether monetary bonuses or competing for the top coding position, employees have found value in their work and enjoy working at their own pace.

•  Does focus on a particular specialization matter?

Hyperspecialization has its benefits and downfalls. While slicing a project up and offering it to those who do each piece the best, you can eliminate potential waste and employee fatigue by the efficient pairing. According to Malone, in the companies they studied, the quality of the overall projects was higher due to the nature of hyperspecialization. Companies have the world at their fingertips when engaging the services of a global community. Flexibility and freedom are the overall benefits for employees. People living in developing countries have also been able to benefit and take on previously unavailable jobs, thanks to these growing resources.

So, what are some of the downfalls of hyperspecialization?

Hyperspecialization, like most things, has its own set of worries as well. Malone, et al., outlines the problems arising from so-called digital sweatshops, in which people work for much less than they would if employees work full-time. Pay depends upon several factors, including the company, field of employment and complexity of tasks. Another issue with employment is dealing with the potential of somewhat unclear goals. Because the functions are so split up, workers may not be aware of the end purpose of a project. While it may definitely not be the norm, the possibility still exists for questionable assignments to be passed along. Finally, Malone et al., points out that when cut into too small of a piece, projects can become monotonous and without satisfaction if no real challenges are being met. Workers should be aware of work performed “on spec”, meaning without a guarantee of payment, and the increased surveillance of workers. While these are not new issues, freelancers should be aware of which companies provide the best services and have happy employees.

• How Do Companies Attract a Talented Workforce?

Companies like InnoCentive offer cash incentives for the most efficient problem solving provided by individuals. TopCoder also operates this way, but features its site’s top coders, thereby giving people an incentive to take on more difficult projects and come up with creative solutions. While an individual will want to keep an eye on how much he works vs. what he is paid, the potential for bonuses and other incentives is a very motivating factor for freelance workers.

What Types of Industries Are Changing the Face of their Employees?

Many industries have been found to be able to effectively function with this virtual workforce. Studies conducted in San Francisco in 2013 looked at the impact of Uber drivers on the traditional transportation field. Ian Hathaway explores these findings in his article, The Gig Economy is Real if You Know Where to Look. He found that there was an uptick in non-payroll employees from 2009 - 2013. Hathaway specifically notes that the software industry was one of the first to begin this approach, followed quickly by the transportation industry upon the advent of Uber.

Hathaway’s study focuses on Uber and Airbnb in the San Francisco area. He found several interesting factors.

1. There was a marked rise in the industries from 2010 - 2013,
2. traditional salary employees in similar fields did not drop and
3. the transportation industry was leaning towards contract workers, instead of salaried employees, before Uber.

This study, while more specific in industry and demographic is a good example of the gig economy in play, especially in bigger cities. New information and statistics are now available that show the rise in the freelance market. Independent consultants are on the rise in many industries across the board.

What Does Success Look Like In the Gig Economy?

To better illustrate, we look at a recent article that came out in the March/April 2018 edition of the Harvard Business Review. In this particular article, individuals were interviewed who worked either as an independent consultant or variation of a freelancer in several fields, or the coined phrase, the gig economy, as used in the article.

One interviewed consultant suggested the importance of maintaining a network of individuals that can help you cope with the inevitable downfalls, challenges, and failures of working in the freelance sector. She points out that even though you may appear to be on your own, maintaining a close-knit group of people is key to successfully staying the course and is a more effective way to fight discouragement and isolation.

Petriglieri, et al., found that the two fastest-growing industries for freelancers are knowledge-intensive industries and creative jobs. This article explores a study of 65 “gig workers” of various ages in some different sectors. Despite age and careers, the freelancers were found to face similar challenges and concerns while working in this chosen profession.

For example, most experience some level of anxiety without the reassurance that comes with traditional employment. Even more interestingly, was that despite the stress of having to constantly find the next project, most were very content with their quality of life and enjoyed the flexibility of being independent of the traditional 9 to 5. This was an important finding, as it contributed to the overall mental health and well-being of the individual. This suggested that steady monetary gain was not the key factor in happiness, but that freedom and independence play more heavily into the quality of life for an individual.

Another intriguing finding of this study concluded that individuals who worked with the stress of freelancing had also learned to navigate stressful situations with better understanding and more courage than those who remained in the traditional workforce. Because these people could choose their projects and work, the study also revealed that those interviewed portrayed the stakes of independent work to be extremely high. Not only in regard to finance, but also in regard to their overall perception of their value compared to the output of the work product.

With these individuals taking on new ownership of their work, they found that freelancers receive more out of the actual completion of each project, as they held a higher personal responsibility. Most individuals felt that they were able to tap into the essences that make them unique and essentially be more like themselves as opposed to those working in the traditional sector.

Petriglieri, et al., found that even with new-found independence and purpose, individuals were still concerned about their reputations and anxiety over landing new gigs. An author they interviewed explained that some of their stress was due, in part, to the need to remain relevant by putting out successful books each time. They also indicated that one must be willing to accept failure that would inevitably come.

This study also found that one of the main challenges for freelancers was not simply the successful completion of work product, but maintaining the environment of a workplace. Psychologically, this is very interesting, because this suggests that the mindset of a workplace was more important than actually putting out the work. Humans are creatures of habit and structure is necessary to achieve a strong focus and reach a higher potential. This study concluded that as individuals confirmed the need for an organized structure to one day, maintaining a designated workspace and routine were among the most important factors in achieving this balance. Defined as a holding environment, this study found that without proper implementation of a workspace environment, one could easily lose the focus and drive to continue to perform in a way that ensures their continued success.

In addition to actual space, those interviewed stressed the importance of having a set routine that allowed them to focus on the tasks at hand and complete all that needed to be done for the day. Simple tricks were even implemented to encourage productivity and continue to work from day to day. One author stated that leaving an incomplete sentence in an unfinished manuscript helped them pick up where they left off the day before.

When you oversee your own schedule, you have to remain motivated, which has proven to be a key challenge to those who participated in this study. Visualization and purpose were the key common factors to success in this study. Each person would visualize their goals, intended outcomes and projects to be prepared for the common freelancer challenges.

The purpose is necessary to keep up their motivation. By being able to choose projects that carry value, purpose can become a focus more than it could in the traditional work environment.

“Purpose creates a bridge between their personal interest and motivation and a need in the world.” - Petriglier, et al.

Finally, social isolation vs. interaction was the key to maintain a healthy work environment. Not all interaction needed to be peers, but a balance of a well-placed network of individuals who help encourage and motivate each other was the most effective. Several interviewees also indicated that having this social interaction aided in various anxiety issues that arise from time to time. Having the right kind of people in your life to encourage, motivate and challenge you is extremely effective and necessary.

From the Traditional Company’s Perspective

We have discussed the pitfalls and paradise of the growing market of freelancers throughout various fields. However, what about the companies that they have left behind? How do traditional companies view these pioneers when they themselves do not utilize their services?

We have addressed that for some companies, money can be saved by hiring freelancers as opposed to paying full-time employees, but plenty of companies exist that would prefer to have individuals who learn the specifics of their organization and maintain full-time employment status.

 Elisabeth Dutschke and Sabine Boerner conducted field studies in the topic by providing several companies with resumes of qualified candidates that had most recently come from the flexible work sector and desired to re-enter the traditional workforce. The study took place over several companies in Germany that agreed to review fictional resumes and rate each individual as the likelihood of setting up a job interview and ultimately hiring said individuals.

Imaginary candidates were reviewed for employment in the sales and distribution department of a company. While two field studies were conducted, the results were similar. Overall, the companies preferred those that were coming from a full-time work background instead of those with primary experience in the freelance world. While variances occurred, it was ultimately denoted that those who were classified as “part-time” employed, as opposed to independent contractors, were considered the least desirable for full-time employment.

Conclusion

New studies and literature are becoming available on this developing topic. As more and more individuals leave the traditional workforce in search of a more flexible and fulfilling life, companies can benefit from the ability to reach wide-networks of experts with a singular goal in mind.

Quantifying all the factors may not be possible at this time, but one can determine what would work best for their industry. If you are a company seeking to diversify your workforce, independent contractors may be the best solution for you.

Reports across the board gave higher life satisfaction to those who are able to pursue their dreams. As for companies, independent consultants just may save you time and money.