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Remote Employees or Freelancers: Which One Is Right for Your Company?

Improvements in both internet and tech have now made it possible for companies to hire freelancers and remote employees. Until recently, many assume that they are one and the same. But with the passing of AB5 in California, it’s clear that they’re not.

In case you haven’t heard, the new California law AB5 is taking effect on January 1st, 2020. It has several implications for California-based businesses and workers, but we can only assume that other big cities like New York and Washington could soon follow.

For those who need a quick summary of the new law, it’s been nothing short of divisive. 

Opposing opinions have mentioned the AB5 could either be the gateway for independent contractors to enjoy more benefits that were only awarded to full-time employees in the past – or it may only be an added burden to the businesses who rely on these independent workers, and a loss of said contractors’ sought-after freedom and flexibility.

Regardless, as a business owner, you may be affected by this law one way or another – and if not now, then possibly in the future.

In this post, we’ll walk you through the fine line that separates remote workers and freelancers, and then help you determine which might be the better option for your company.

Table of Contents

Distinguishing remote employees and freelancers

With a law like the California AB5 hovering over us, the distinction between remote employees and freelancers must be made clear.

Remote employees are considered employees of the company – the only thing that sets them apart is their location. Your company might be based in New York but have full-time remote staff in Los Angeles, Canada, or even as far as China. They enjoy all the benefits your company already has, including insurance perks, vacation leaves, and the like.

On the other hand, freelancers are completely independent of your company and instead render services in exchange for an agreed-upon rate. Freelancers typically work per project or by the hour. 

Usually, you and the freelancer agree upon project deliverables and timelines, and your working relationship with the freelancer ends if deliverables have been rendered in full and no upcoming work is expected.

Key factors to consider when deciding on either remote employees or freelancers

As you can see, there’s an apparent difference between remote workers and freelancers. And while you’re deciding which ones may work best to exponentially grow your company, we’ve outlined a few key factors you may want to consider when you’re weighing each option.

The location of your business

The location of your business might tell you if freelancers or remote workers work better for you.

For businesses based in cities with the highest job growth, you might be fine with hiring freelancers for projects. On the other hand, if the specific talent is a little hard to come by, you can consider taking on full-time remote workers with the specific skill set you’re looking for.

Where your virtual staff is based

Whether or not you want to work with remote workers or freelancers, you’ll need to know where they’re based and what that might mean for your business.

For example, hiring a remote worker in other parts of the world may mean being more sensitive to time zone differences. So you can’t expect instant replies about project updates if it were, say, midnight in your virtual employee’s time zone. 

Scope of work you’ll be assigned

Because you won’t be meeting your workers on the regular in an office, assigning different tasks and projects needs some advanced planning. First, evaluate the kind of work you want each member to be responsible for, determine how much work and effort the role requires, and then you can determine whether or not you ought to hire full-time remote employees or part-time freelancers.

Rulings and regulations

As mentioned before, the California AB5 is one of the laws that might affect your decision to either go with freelancers or remote workers.

Assuming you are affected by the AB5, because the law has stipulations that reclassify independent workers as employees assuming they meet certain criteria, you may be better off hiring a remote team instead of a team of freelancers.

How to build a virtual team

One thing in common if you’d work with remote employees and freelancers, however, is the fact that you’d be managing a virtual team. And handling a completely remote team means having some essential benchmarks, metrics, and steps for success. Here are 6 of our top tips.

Establish the right foundation

When you decide to implement a remote team model, your entire company has to revolve around it. This means everything from top to bottom in your plans must reflect this mode of working and is not just some way to entice talent to come work with you.

Determine your remote team model

Part of building a remote team geared towards the growth of your company means knowing the kinds of team models available to you.

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In this first example, the independent model organized by flows and features has each person assigned to handle tasks in that workflow.

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In this second example, the functional model organizes people in a more structured way, where one person reports directly to somebody else.

You can read more about growth team models and see which you’d like to implement in your own company here.

Create the description for each remote team member

It’s crucial to be very clear about the roles and responsibilities each member has in their team. When you’re planning out your company structure, outline the kinds of responsibilities you believe each person should have, so you know how to attract and then onboard the right candidate.

Conduct a video interview

Aside from their convenience and necessity when working with remote workers, video interviews have more benefits than you might first think. For one thing, they’re more cost-efficient – both with time and resources. And another, it’s a way to get to know somebody behind a portfolio or resumé.

And according to the Association of International Graduate Admissions Consultants (AIGAC) in a 2014 edition of its MBA applicant survey, many applicants feel that their skills and capabilities are better represented if they’d been interviewed via video. 

This is a good thing for companies looking to use more video calls in their hiring process – a candidate’s confidence in their interview can mean getting to know their qualities and skills in the best possible light.

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Take them for a test run

It’s fine if you choose to give test assignments or probationary periods to see how well your new hires adapt and fit into the remote role. Be sure to have metrics in mind in order to measure their performance.

Instill a growth culture

A team with a growth culture should have a collaborative spirit and operate on a basis of trust. You’re all working towards one end goal that benefits the company – and, ergo, everyone in it.

Having a growth culture means being able to work on diverse platforms, cross-function, and to be good not just in one specific skill, but to learn how to incorporate marketing and sales, analytics, engineering, networking, and product management into your team. 

Tips to manage a virtual team

Once you have your virtual team, you’ll need to manage them to make the most of your time and resources. We have here 6 tips to help you become the best virtual team manager you can be.

Make sure your leaders are on board

Your leadership team needs to be on board with your decision to employ virtual workers, else you might clash heads, slow down progress on projects, or, worst, have resentment growing in the background.

If needed, train your leaders and managers to handle remote workers, and constantly remind them of the importance of hiring additional help.

Evaluate their performance

You can see how well your remote team is working if you’re able to determine whether their performance furthers the growth of your company. You’ll need to align with your HR department to evaluate these remote workers with fair criteria based on their responsibilities. 

Provide the right tools

A team is only as good as the way they can work together seamlessly, so employ different tools to help you communicate clearly, collaborate on work, and hit your milestones. Luckily, software developments have allowed people to work remotely, and almost without friction.

Consider also business tools that drive your company forward, such as a business website where, more often than not, domains are tied to different tools and software like email. On average, the cost of maintaining a business website can balloon at about $400 to $60,000 per year, so it’s best to factor this in when you’re budgeting for tools.

Have an onboarding process in place

Once candidates come in, make the onboarding process as seamless as possible. Use guides and handbooks that you can share virtually, create workflows and processes to explain how their tasks fit into the big picture goals of your company.

Set expectations early

Roles, responsibilities, and expectations ought to be made clear from the get-go – even as early as the interview process. Let workers know their deliverables, how often they should report back to their department heads, and how they might be able to ask for support when needed.

Communication is crucial

Remote teams are only as effective as the way they communicate. Have tools like Slack and Google Meet to reach out to others better. Google Suite also lets your team collaborate on projects seamlessly. Keep everyone in the loop with new developments, align with team members Constantly, and keep those communication lines open.

Key Takeaways

Hiring remote workers and freelancers at the end of the day requires the same effort and focus – the only difference lies in the way they’re integrated into your company. Keep in mind factors that may affect your decisions when building a remote team, then prepare to onboard and manage these remote workers accordingly.

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