The Next Boom For Entrepreneurs and Freelancers- What It Means For HR?

Welcome to the Vantage HR influencers podcast. This podcast is sponsored by Vantage Circle, the leading employee benefits and engagement platform. Despite the health crisis and one of the worst economic downturns in history, the number of new businesses increased in the United States last year. Turkey and the United Kingdom also saw an increase in the number of new entrepreneurs and freelancers in the market. So what does this mean for HR and organizations?

Susmita Sarma: Hi everyone, this is Susmita Sarma from Vantage HR influencers podcast, and today we're going to discuss the next boom for entrepreneurs and freelancers and what it means for HR. Today I have with me guest speaker Amy Smith, who is a business and LinkedIn strategist, helping service-based business owners to launch and grow their businesses online. Let's get started. Welcome to the show, Amy.

Amy Smith: Thank you so much for having me here, Susmita.

Susmita Sarma: Okay. So Amy, could you please begin by introducing yourself to our audience today?

Amy Smith: Yeah sure. So my name is Amy Smith. I'm the founder of Align Tribe and run AmyLSmith.com. And I guess primarily I work with people in the HR space that are making the leap into entrepreneurship. So my background is in HR, and I very much help them build their brand and build their business using LinkedIn.

Susmita Sarma: Okay. So Amy, coming to your topic today, that is about the next boom for entrepreneurs and freelancers and what it means for HR. We've been hearing so much about the freelance economy lately, and it has been predicted that it will become a multi-trillion dollar industry in the near future. I'd love to hear your thoughts on the topic.

Amy Smith: Yeah, absolutely. I guess it has exploded in the last few years. I think it's even up 22 percent from 2019. And there are a few different factors at play there, but primarily I think people are really looking for more flexible work options. And I think freelancing is such a great way for employees to be able to access the gig economy and actually create a side hustle or use their skills from a freelancing perspective. And then for business owners and for companies, being able to leverage people's skills globally and have that kind of flexibility around the types of project style work and engagements you can create through the freelance economy, I think is huge. And I don't think the trend is going backwards. If anything, we'll see it really accelerate even more so in the next couple of years.

Susmita Sarma: Okay. So yeah, I also read in new research from the massive freelance network Upwork that independent professionals are likely to be in higher demand in the future, with 47 percent of hiring managers now likely to employ independent professionals during the COVID-19 crisis. This approach could result in gainful employment opportunities for many, of course, and companies will also benefit from this. So do you believe that the freelance economy is a win-win model, and why?

Amy Smith: Yeah, absolutely. In my opinion, I think it definitely is. And I think the research is there as well to show that, as you just mentioned, the percentage of HR and companies that are actually really open to this model of working now. I think there's been a real shift in the perception of remote work and what that means and the way it's being used in companies. I remember even a couple of years ago, I was brought in to consult with a large education company here in Australia to help them with their leadership and management programs. And I remember talking to one of the managers as part of that program. He mentioned that one of his staff members, who just so happened to be a millennial, was asking to work remotely and work from home. Now this is going back two or three years, so pre-COVID, right? And this manager was saying that he didn't actually think you could work and be productive unless he could physically see you in the office. And I think now with COVID, and with other things that are happening and shifting the dynamics of the workplace, I think people's perceptions have really changed, to know that just because someone is working remotely, or if you are engaging a freelancer on a contract basis or a project basis, that doesn't necessarily mean the work's not going to get done. If anything, it can actually get done a lot more productively and a lot more cost efficiently for the organisation as well.

Susmita Sarma: So what are the catalysts for this change in people's working preferences? Is it due to the changing economic conditions because of the crisis, or are there any other significant factors?

Amy Smith: Yeah, I think there's a lot of different moving parts. It's kind of like the perfect storm, right? We've had, COVID is probably the most obvious one that's happened recently, and it's kind of been this huge change management experience, if you like, where I think we've had probably around five years of change happen within five weeks when it came to COVID. So there was that need to adapt by organisations with COVID. But I think if we put COVID to one side and look around at the dynamics of the workplace and how that's evolving, you've got the generational shift that's now moving through the workplace as well. Right now we have around 40 percent of the workplace, I know based in Australia, that is millennials, and 10 percent of the workplace is Generation Z. For that group, they strive for flexibility and a work life balance. So having such a high percentage of younger leaders in the workplace moving through is putting a lot of pressure on businesses needing to be more flexible, and on individuals wanting to work more flexibly as well. And so naturally, people do head to the freelance marketplace, whether they're looking for work or whether they're looking to employ someone. And I think the other factor that has made this all a perfect storm in the times we're in is just the use of technology, and the fact that we're actually enabled to work differently and to work flexibly. As a freelancer, for example, to be in control of your own hours, to be able to take payments from a client very efficiently using technology, to have the communication tools available as well. So I think there's a huge array of factors that have all kind of come together and that have really accelerated this industry.

Susmita Sarma: So how far have you progressed in this journey for change? Are businesses deliberately looking to the freelance economy to meet their needs?

Amy Smith: Yeah, I think they definitely are. I think, like I said before, the mindset and perception around the freelance economy and actually tapping into that is very real, and it's sort of shifted over the years as well. When it comes to looking at it from a talent side of things, businesses sometimes don't have a choice. There's a real lack of talent sometimes locally in different areas. And when you look at the location restrictions around having to turn up to work and be sitting in an office and doing the traditional full-time nine to five, that model is actually becoming more and more outdated in the workplace. So I think there's a real shift around the way we imagine roles and the way work is actually performed, and I think that's only going to be accelerated as we move forward.

Susmita Sarma: Yeah. So okay, we accept that the freelance economy is now playing a great role in companies. So what about when we talk about, since Vantage Circle is an employee engagement company, and employee engagement or employee experience is a very hot topic nowadays, how does the freelance economy affect this, in terms of engagement and employee experience?

Amy Smith: It's huge, because businesses now and organizations now, employee engagement, employee retention, and being able to attract new talent, all of it is so important. And particularly on the engagement side of things, I read that Deloitte put out a study not too long ago where it actually said that two thirds of millennials who are already in their jobs, working full time, are actually thinking about starting their own business. So for businesses and organizations, if they're not able to harness that generation as an example, and this goes broadly across generations as well, it's moved from just being able to engage people in the work that they're doing, to now engaging them to actually come to work and work for a boss rather than working for themselves. So companies now, and organizations, not only have to focus on stopping someone from maybe moving across and getting a job with another competitor or a different industry, they actually have to engage them in a way which stops them from heading out there and starting up their own side hustle or their own business. So it's hugely important, and will be moving forward as well.

Susmita Sarma: Yeah, that means employee engagement still has its role in the freelance economy, right?

Amy Smith: Absolutely, absolutely. Because the bigger problem that starts to happen as well is now you have so many moving parts. So if you're a manager within an organization, you might have, say, ten team members that you're responsible for and that you're managing, and four of those team members might be freelancers, working contracts and different hours, with different KPIs and different expectations, and all of those sorts of things. And you also need to be able to connect them to the people who do have full time permanent positions. And I think more and more so, there's less of a separation, and there should be less of a separation, between someone working for you as a freelancer or on a contract basis versus a full time permanent staff member. So to actually get that engagement quite cohesive amongst the team, it's growing in complexity just due to the nature and the styles of working.

Susmita Sarma: Right, great. Okay, so coming next to the part of entrepreneurship. There is no doubt that the coronavirus pandemic has had a negative impact on the current economy. While the decrease in GDP and the rise in unemployment rate demonstrates the negative effects of coronavirus, it has had one positive impact on the economy, and that is an increase in entrepreneurs. As I read in a research paper, the US is currently undergoing a startup boom, as some refer to it, and probably that's right, because despite a raging pandemic and a dreadful recession, America is experiencing a surge in new business growth. Do you believe that people are taking entrepreneurship as a necessity or an opportunity?

Amy Smith: I think it's likely a bit of both as well. I think there's always people that step into entrepreneurship. I know for me, going back in my career, I always kind of had that entrepreneurial fire in my belly, and it was just about taking those steps and starting before you're ready to really make that leap. But I also think that now people have realized that there might not be the kind of job security that there once was. So I think if anything, COVID has really taught people to reassess where they're at, and to really think about whether this is the kind of work-life balance they want, the kind of money they want to make, the kind of environment they want to be in. It's really kind of hit the reset button for a lot of people. So I think for some people, yes, maybe if they lost their jobs, it became a necessity. Becoming a freelancer and being able to utilize your skills and get paid for that is awesome to be able to do. It's very great that you can actually do that these days. And then for others who are looking at starting a business, this is a real opportune time, where there is that flexibility and that change in thinking. And I think organizations should be, and are becoming, a little bit more open-minded about how to help people have the best of both worlds, where they can have a side hustle and a business at the same time as working for them. So I think there's definitely that bridge there where it is very appealing for a lot of people to start working in their own business or as a freelancer, because they've already sort of convinced themselves that it can be done, that they can work differently.

Susmita Sarma: So you believe that this pandemic situation can be, or is, the right time to take up a new business opportunity?

Amy Smith: Yeah, absolutely. I think any time in business it's going to be tough starting out. When you're starting something new, there's actually, when it comes to recessions and things, if we think back to the GFC, some of the biggest and best businesses were born during that time. So it's an opportunity where, yes, there is plenty of negatives to look at as well, but there's also plenty of positives that come out of it too. I think it does help people reimagine things, and it does help people get a little bit creative and resourceful in the way that they do things, and those are really, really good traits of an entrepreneur. Where you can see new problems arising, a great entrepreneur or business owner will look at those new problems and think, well, how can I solve that? There are new market demands that get created sometimes that didn't exist before. So I think there's always opportunity out there if you look for it.

Susmita Sarma: Okay, great. So what is the impact of rising entrepreneurship and freelancers on human resources and companies, that you believe?

Amy Smith: Yeah, look, it's a tricky one, right? Because it really does come down to being able to attract, engage and retain your workforce, and it's shifting. I think for HR departments, traditionally there's been very much a compliance focus, where you follow the rules and you have to dot the I's and cross the T's, and there's absolutely nothing wrong with that. But I think for HR to be able to perform effectively as a department moving forward, with these shifts happening in the workplace, HR departments really need to put on their innovation hat to keep up. Because if they're not at the forefront of what their employees are thinking, what their employees are doing, where their employees want to be, and how to actually engage them in a way that enhances their professional life as well as their personal life, because we have this whole work life integration approach now, then if HR departments aren't able to effectively do that within businesses and companies, and very much have a strong brand and a strong culture that people want to be a part of and will choose to be a part of, over being their own boss or having ultimate levels of flexibility in their own business, then they're really going to struggle moving forward. Because really, the future of work we hear about, robots stealing people's jobs and all these sorts of things, but the reality is it's already here. So I think in some cases HR departments can be a little bit on the back foot, whereas the changes in how fast things are moving now requires them to really get a wriggle on and become more innovative.

Susmita Sarma: Okay, so are there any other challenges that HR departments are facing right now? Or how are they rethinking their roles?

Amy Smith: Yeah, I think you just said it there perfectly, it's just rethinking their roles, moving from the compliance focus to more of an innovative focus. It really does take you to think differently. And also within departments, I know working in HR, sometimes when it comes to recruitment, as an example, someone leaves an organization and then you're looking to replace that person in that same job, the natural instinct is just to pick up that old job description that you've had there for the last five, ten years and then just go out and look for someone that matches that description. What is required now is for HR departments to build a really strong employer brand, and work with the marketing team to do that, to be visible online so that people are attracted to working with them, and actually rethink and reimagine these roles, so that you don't just dust off a job description from five years ago and say that will do, let's find this person. You actually need to think about how you're going to attract the new type of worker, how you're going to be able to create this role, and maybe look at whether it works to have someone work two days a week from home and the rest in the office, or whether it's full time from the office, and really think about mixing things up to stay ahead of the curve.

Susmita Sarma: So it's basically not only rethinking their own roles, but other people's roles as well in the organization, right?

Amy Smith: Absolutely. And stepping up as leaders as well, from the department. I think for years HR has always said that they want a seat at the table when it comes to being in the board rooms and being able to make real business decisions. So I think the more that HR departments can connect themselves with the vision of the business and the business strategy, it's actually going to be much more effective than what some HR departments are right now, if they're only focused on compliance. And I say that, but there are some great companies, great organizations out there whose HR teams are at the cutting edge of business. So it's really a varying scale, but I think it does take reimagining what the role of the whole HR department is, and then also how that flows down and trickles down to other roles within the business as well.

Susmita Sarma: Great. Okay, so what would be your suggestions for our HR listeners?

Amy Smith: Yeah. So for HR listeners here, I think something that's really important is to really focus and look at the trends of where things are going, rather than just thinking about the day-to-day, because it's so easy sometimes to get stuck in business as usual, where you're fighting fires and trying to deal with situations week by week or day by day, or even meetings hour by hour. So I think sometimes it takes you removing yourself from the environment, or having a day where you're doing some strategic thinking, or some visionary thinking, about how things could be different, and really looking at yourself as a leader within the organization, to help build an online presence and the visibility of the culture of the brand, so that you can showcase it to future employees and build a great talent pipeline. There are all of these sorts of things that do take you getting very comfortable with new technologies and new ways of working. So I think for HR departments, and people who work in HR, it's just awesome to be able to step out of the day-to-day and business as usual, and just start to think a little bit more creatively.

Susmita Sarma: Okay, amazing. So finally, how can our listeners reach out to you?

Amy Smith: Thank you for having me. You are welcome to connect with me on LinkedIn, that's probably where I'm most active. So you can find me at Amy L Smith Coach on LinkedIn. You can also find me at AmyLSmith.com. And I'm also on Facebook and Instagram at Amy L Smith as well.

Susmita Sarma: Okay, we'll put that up in the show notes for the podcast. That was great talking to you, Amy. Wish you all the best for your future, and thanks a lot for joining me on the Vantage HR influencers podcast.

Amy Smith: Thank you so much for having me.

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