Our guest today is Dawna Boone, Owner of Valet Maids.
Dawna, Lyft and Uber paved the way for many on-demand business models. At the same time, there are legal implications when independent contractors are involved. Why do you hire gig workers and freelancers?
There are a few options when trying to grow a company. A business owner can choose contractors or employees. This distinction is actually defined by the IRS and is not just simply a personal decision. Deciding whether to use contract workers or employees has implications as far as taxes and what the worker can and cannot do. Before making the decision as to whether to use contractors or employees, a company should make sure that they understand the guidelines set up for both methods. Treating contractors as employees is a significant business mistake and business owners much be aware of this. A business owner must make the decision based on what is best for their company and their business situation.
When I started my cleaning service, Valet Maids, in Dallas, I was given the advice to use contract cleaners. Contract workers come with both advantages and disadvantages. As far as advantages, they are more willing to work a more flexible, on-demand schedule and understand the importance of high-quality work as a pre-requisite for obtaining more work. Additionally, as a young company, we are unable to offer our cleaners a full 40 hour a week schedule. Using contractors allows flexibility on both our end and on theirs.
There are many disadvantages that I had to consider when choosing to use contractors instead of employees. I am unable to offer them benefits or require them to wear specific uniforms. Additionally, since they are independent, they are able to work for other cleaning companies, if they wish to do so. Therefore, it is important on my end to hire experienced cleaners who I can rely on. During my hiring process, I require them to do a test cleaning before I ever send them to a client’s home. This makes sure that I am sending a quality, punctual, and friendly cleaner to the client’s home. After all, that is what our clients are paying for.
Often companies who choose to hire gig workers have a limited vetting process and this can lead to many problems down the road. At my company, we do test cleanings and run thorough background checks before sending them to a client’s home. Even though they are contract workers, they are representing my company and I want to be represented well by them.
Being represented by gig workers is not necessarily riskier than being represented by demotivated employees. Are freelancers and contingent workers less motivated and loyal than full-time employees?
That has not been my experience. Contingent workers are just as (or more) motivated and loyal as full-time employees because they know that their opportunities for more assignments are contingent upon their performance. I do not think that being a full-time employee makes someone any more loyal to the company than if they were a contractor. In today’s economy, everyone is self-employed. The only difference is that some people have one client (employer) and others have many clients (freelancers). Everyone is motivated to represent themselves in a positive manner.
Often full-time employees are not that loyal themselves. Companies are no longer loyal to employees and therefore the employee has become less loyal to the company. Therefore, there is less and less difference between loyalty and motivation between freelancers and employees.
I have found that contract workers are actually more efficient than hourly or full-time employees. This is because we pay the contractors based on the job and not based on the hour. Therefore, their hourly rate is based on their personal efficiency.
Many cleaning companies use contract workers. These contingent workers often work with several on-demand services such as TaskRabbit and others to help fill up their schedules. The difficulty with working with many different companies is to make sure that the cleaner has their schedule up to date at all times and that they make sure not to double book themselves on appointments.
Working for TaskRabbit, Valet Maids and also having long-term clients of their own is understandable as contingent workers need to secure a stable income flow. Do you think that freelancers having more than one client add value to the company by bringing in fresh ideas and innovation?
Yes, by having experience with various standards, contracted cleaners often perform very well. By law, independent contractors have to be able to work with other companies and cannot have an exclusive agreement if they are freelancers. This does bring benefits to the company. People who have worked at other companies have seen other systems and processes and are able to understand what best practices are. I have received input from my cleaners on things that may make the company run more smoothly or help with scheduling issues. I take this input very seriously because they have worked with more cleaning companies than I have, and they have seen many different ways of doing things. Companies always need fresh ideas and innovation in order to grow. Using the insight of a contractor or a freelance worker is a great way to gain this insight.
Most freelancers work with several clients to secure multiple sources of income, but this can be the way to go for employees, too. Full-time jobs are no longer making promises of either professional or financial security to today's workforce. Do you think that the gig economy is the future?
I do think that the gig economy is the way of the future. Today, full-time employment is no more secure that contract/freelance work. Many companies are going the way of gig or contract work. Uber and Lyft are some of the most famous examples of doing this. The same model is also used by food delivery services such as GrubHub and UberEats. These companies have been able to grow and scale as quickly as they have because of the gig economy.
On a larger scale, many people have full-time jobs yet are still underemployed. The gig economy provides people an opportunity to quickly make an additional income to supplement the salary they receive at their full-time job. Although it is not an ideal situation to work multiple jobs to meet expenses, it appears to be the way the economy is headed. It does not appear as if the gig economy is going anywhere any time soon. If anything, more and more companies will look towards this model to be able to grow and scale.
About the author
Lilia Stoyanov is CEO and angel investor at Transformify. A fintech and digital transformation expert, she is also a professor at Zigurat Business School and expert evaluator Horizon 2020 at the European Commission.
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