We know that agencies leverage freelance recruitment when they need to find a talent given the current shortage crunch. What we don’t know is what we call the “Freelance Factor.” Continue reading to find out how Freelance talent impacts your bottom line. We’ll also review best practices to ensure fair pricing that aligns with procurement benchmarks.
If you work for a company where everybody seems reasonably happy to come to work in the morning, you probably aren’t in advertising.
So What is the Freelance Factor?
Let’s start with a little background on the industry and trends. Morale has been low in advertising for a while now. In 2015 an article was published in Fortune titled “Why up to 70% of advertising industry employees want to quit.” And to summarize, the culture with agencies is rotten.
Agencies have always been in a bind looking for new and upcoming talent, and they tend to push out older staff out the door when they do. Poor management and work-life balance have taken a toll. This is causing key talent to leave at an increasing rate. Which only adds to the already existing talent crunch.
Agencies have created a culture to drive away key talent. They’ve shot themselves in the foot. Repeatedly. And with that, they are then being forced to hire external staff (freelancers) to fill the constant gaps that they are themselves creating.
More than 53 million Americans are participating in freelance work, according to a new, landmark survey conducted by the independent research firm Edelman Berland and commissioned by Freelancers Union and Elance-oDesk. That’s 34 percent of the entire workforce.
Benchmark Spend is on the Rise
(Check out this article on Digiday for more information).
The Freelance Factor muddies the waters of agency assessments. They’ve created a moving target and you’ve got to hit the bullseye to know what you are really paying. Since trying to assess daily or hourly rates that change with each project isn’t the easiest thing to do. Complicating this is the definition of a workday. What is the standard – is it 8 or 10 or even 12 hours?
To make matters worse, the agencies are then trying to capitalize on this. They’ve decided to pass anywhere from 25-50% mark-up on these costs. That’s only if they aren’t already paying a mark-up to a staffing firm or recruiter. You could say their rates are as clear as mud, but a lead block seems closer.
That doesn’t mean you don’t have the tools to address these issues. Quite the opposite in fact. Sometimes you just need to tweak an old solution to fit new problems.
Don’t be discouraged that you don’t have full transparency in this new freelancer marketing trend. With the support of the right business partners and tools, you’ll still be able to gain insight into what the agencies are charging. It just might take you a little bit more time to be able to figure it out. Here are some tips in figuring out the breakout of freelance benchmark costs.
9 Best Practices in Assessing Freelance talent:
1 – Request freelancer are listed on the staffing plan at Net Cost
2 – Insist the agency provide the mark-up on top of Net Cost for transparency
3 – Net costs of the freelance rates should be competitive to benchmark rates
4- Assume the freelance talent cover their own benefits and OH costs within their rates
5 – Do not allow a set mark-up on freelance rates
6 – If you have to agree to a mark-up, clearly define net cost/rate and mark-up applied
7 – Review title and years of service to mitigate “title inflation”
8 – Make sure freelancers are from the market as being billed (i.e. agencies could “offshoring” the work to inflate profit)
9 – Make sure the terms and conditions for employing a freelancer, are clearly defined in your MSA