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Banking Sector Layoffs May Drive Need for Contingent Labor

The boom of the job market may finally be going bust. As inflation, ongoing supply chain issues and a volatile overall economy have put the squeeze on industries everywhere, more businesses have been forced to trim their workforce – almost 30,000 jobs in September (an increase of 46 percent from August), according to one analysisAmong the sectors hit hardest has been banking, as a period of growth, salary increases and generous bonuses has recently been followed by banks tightening their belts including strategically trimming executive salaries. As such we could see banking sector layoffs in 2023.

Now, firms like Goldman Sachs are reportedly laying off mid-level bankers in high-profile divisions, which some see as a barometer for the flagging health of the job economy in the industry.

Yet even as banks dial back in response, they must also react to new opportunities and the changing landscapes of their existing ones in order to properly position themselves to move forward. That could mean bringing specialized teams and talent on board to handle short-term projects, or creating entirely new groups that can’t be fully staffed by moving around current employees. Even during lean times and amid rounds of layoffs, many banks will be driven to tap into the contingent labor market.

Why Banks Need Contingent Labor Even Now

One survey comparing priority issues in the banking sector found that cybersecurity was the top concern (26 percent) among respondents, followed by regulatory change (14 percent) and digital transformation (13 percent) as third- and fourth-highest. What do these elements have in common? They are tied to regulatory changes that are soon due to take effect – changes that will be difficult, if not impossible, to accomplish with banks’ existing staff alone.

Issues such as compliance related to data privacy are make-or-break for banks of all sizes and growth expectations, and many of those organizations lack the in-house expertise, specialized skill sets, or sheer manpower needed to efficiently and effectively respond to these orders. Regardless of the current economic challenges facing the industry, especially with potential banking sector layoffs on the horizon, a significant number of banks will need to lean on outside help – including consultants and contingent labor – to meet their priority goals and compliance requirements.

Optimizing a Contingent Workforce

Every bank has an individualized set of circumstances that requires a different deployment of labor than another – a strategy may need to be adjusted quickly to accommodate new regulatory changes, economic shifts, or business priorities. That’s where contingent labor – and the inherent flexibility it provides banks and other organizations – truly shines.

By building a strategy that includes a balance of staff and contingent labor – which may differ within each line of business or support function – a bank has the ability to fluidly react to specific situations with qualified specialists on short-term or open-ended contracts. PeopleCaddie has the network and platform to help your bank or organization find quality, vetted contractors who don’t require the riskier and more expensive commitment of hiring full-time staff. Reach out to let us help you start building your contingent labor workforce and strategy right away.

Looking to employ a contingent labor strategy? Here is how PeopleCaddie’s talent cloud can help.

sgruenBanking Sector Layoffs May Drive Need for Contingent Labor

Gig Economy Forecast: A Look Towards 2023 and Beyond

To properly forecast the gig economy, we need to first look at the current state of the U.S. economy. In a word, it’s volatile.

Inflation levels are at some of the highest rates we’ve seen in four decades. After raising interest rates by three-quarters of a point for the third time this year in September, the Federal Reserve boosted the overall borrowing target range to its highest level since 2008. Some experts predict at least one more rate hike before year’s end, and others warn that the economy will “crumble” if the Fed doesn’t stop raising rates. One analysis forecasts that the cost of certain goods and services won’t drop even under rising rates.

For all the market’s volatility, we know this: Business borrowing costs are tied to the Fed rate, which means companies should be expected to remain cautious about overextending themselves and likely will target cutting costs over growth in the near future. Rounds of layoffs have come on the heels of the post-pandemic hiring spree, and more are likely to be on the way.

It’s impossible to know how any given business will react to these developments, but given what we know about how companies have handled lean or unpredictable economic times in the recent past, we can reasonably forecast the gig economy ahead of the coming year.

Why Contract Labor Now?

The pace of hiring is slowing. Rising inflation and borrowing costs have squeezed many organizations in the short term – but business doesn’t simply stop when the economy turns crummy. Companies with sufficient runway understand that this moment may be an opportunity to pull ahead of struggling competitors. Others just hoping to hang on may find that they cut payroll too deeply. But taking on new staff would be a costly, and potentially risky, commitment.

Instead, expect many of them to turn to contract workers. With contingent labor already making up 30 percent of large organizations’ workforce, it’s likely that we’ll see that figure continue to grow as businesses seek more of the flexibility independent contractors offer.

Strength in Contract Workers

Not only are more workers than ever recognizing the benefits of contract work, but recent layoffs are also prompting many more to consider it for the first time. During a period when organizations are seeking ways to carry out business as usual without being forced to commit to W-2 employees, the contingent labor talent pool may be rising to an all-time high. That should make every company – even those attempting to streamline – stand up and take notice.

At Google, for instance, CEO Sundar Pichai has said he wants to make the company 20 percent more efficient – including potentially shedding labor after the tech giant overexpanded its headcount and became “slower.” Although Pichai spoke of downsizing labor, companies like Google still need to balance agility with sheer power – a workforce capable of handling big initiatives.

As SAP notes, “Organizations that face a shortage of local talent may end up outsourcing jobs internationally or contracting parts of their processes to a third party. If they lack in-house skills, they might also hire contract workers or turn to managed services to supplement their workforce. Organizations are also turning to contingent labor to right-size the number of employees on the payroll and give them the ability to flex. Using contingent workers or SOW-based contracts offers businesses the flexibility to act nimbly when business requirements change.”

And those requirements will change. Inflation is up and the economy is down, but they won’t remain that way indefinitely. Organizations that have properly prepared a strategic workforce plan – one that includes a significant helping of contingent labor – will be best positioned to take advantage when business opportunities eventually (and inevitably) arise.

For more insight into the evolving gig economy, check out PeopleCaddie’s blog.

sgruenGig Economy Forecast: A Look Towards 2023 and Beyond

The Perils of Flex-Washing to Attract Talent

Let’s face it: For companies currently scouring for new talent in this depleted job market, it’s rough out there. There’s a reason so many organizations are extending budgets and rethinking company policy to offer the best candidates higher salaries, perkier benefits, and more flexibility in their schedules and work environments. Attracting top talent is hard. But even if the struggle is real, some of those offerings may not be. It’s called flex-washing – the false advertising or misleading characterization of a company’s flexible work policies – and it’s more than just a harmless exaggeration in the battle to win coveted talent.

How to Identify Flex-Washing

As part of that ongoing fight, some hiring managers have been overzealous in their framing of “flex work.” A salary offer is a fixed, quantifiable number, and health insurance benefits, 401k, and paid time off are objectively measured. But just try pinning down the concept of “flexibility” in a job description. Not surprisingly, there’s a lot of wiggle room there.

Keep in mind, remote work or hybrid work may appeal to a potential employee, but neither should be confused with flexible work. Even remote and hybrid models prescribe (or at least clearly define) the terms of a schedule or work environment, whereas the definition of flexible work suggests a more dynamic agreement. But it’s that very fluidity that can allow a hiring manager to take certain liberties in over-selling a position’s true flexibility.

Employees should be prepared to pepper a hiring professional with pointed questions about flex work. What are a company’s specific expectations for days and hours worked? In the office or remotely? Unlimited vacation sounds great, but how does it affect workflows? Are all these terms subject to change? Do they differ by team or manager? The more specific answers you nail down, the less likely you’ll feel later that you were sold a bill of goods.

Why Flex-Washing Hurts Your Organization and Brand

Just as any business with long-term aspirations wants to avoid over-promising and risking the dissatisfaction of its consumers, hiring organizations should be mindful of painting a too-rosy picture for job candidates for similar reasons.

Judging by the reaction to line-in-the-sand edicts from leadership at organizations such as Goldman Sachs – where only about half of the company’s 10,000 employees showed up at headquarters after being ordered back into the office last February – good employees with solid prospects wouldn’t likely take well to bait-and-switch flex-washing tactics.

Business must change with the times, and organizations reserve the right to update their policies – particularly when adjustments must be made based on extenuating circumstances. (See: Covid.) But a company that promises flexibility and isn’t prepared to follow through runs the risk of productivity issues, credibility loss with workers, and even employee churn. Moreover, damage to an organization’s reputation could make future hiring efforts even dicier.

How to Avoid Flex-Washing

Companies and hiring professionals that set out to intentionally mislead job candidates are probably rare. More likely, in a tight labor market, in which top talent is at an absolute premium, organizations are eager to put their best foot forward whenever they get a crack at a strong candidate. But as we’ve outlined above, there can be significant consequences from going too far to sell a prospect on a job.

To keep from crossing the line into flex-washing, start with a clear vision of where the company ultimately wants to go and be transparent about communicating it to your employees. If you’re reacting to changing pandemic conditions, let your workers know the challenges, disclose that the company may have to dynamically adjust and admit that no policy can account for every unknown circumstance. Review policies quarterly, stay agile in your decision making and keep staff in the loop.

You won’t seal the deal with every hot prospect, and you can’t please every employee with your policy. But, by and large, employees will respect and remain more loyal to an honest company, and your purposeful transparency will likely make them feel less put upon if and when changes need to be made.

Interested in learning more about how to manage your workforce? Check out PeopleCaddie’s blog.

sgruenThe Perils of Flex-Washing to Attract Talent

Reasons Contracting Beats Full-Time Work

Since the onset of the Great Resignation, many workers are approaching their careers, and employment in general, with a new outlook. Job candidates that may have only considered traditional full-time work in the past are now weighing the benefits of independent contracting. And there are many reasons contracting beats full-time work.

The flexibility and variety of contract work offers freelancers the ability to live life on their own terms – live where they want to live, work when they want to work, care for loved ones, travel, you name it. Although full-time employment works for some, anyone in the job market should be aware that there are other viable paths – some of them that may suit you best. With that, here are five ways contracting beats full-time work:

Schedule

The primary reason contracting beats full-time work is the flexibility it provides. Many contract positions are work-from-home setups, allowing contractors to skip the commute, take care of children or family, or just work in a comfortable environment. The ability to pick and choose contracts allows freelancers to build new skills and keep their work-life fresh while helping them carve out more personal time between projects if they like.

Compensation

Contractors typically make more money per hour than their full-time counterparts, but there are a number of reasons it pays to freelance. For instance, 1099 employees are able to deduct business expenses, which results in lower tax liability and more cash in their pockets. And because projects usually require specialized skills (and thus pay more), contractors can work fewer hours for the same amount of money – particularly in specific sectors, such as accounting and information technology.

There’s more: A full-time, salaried employee might work 60 hours per week and not be paid for that extra time. But a contractor gets to bill for every hour, so any overtime is compensated. And what about inflation? Full-time employees are stuck at a pay rate that won’t be adjusted for an increased cost of living (which, incidentally, we’re experiencing now). Meanwhile, a contractor can adjust their hourly rates as needed to earn the market rate and adjust for inflation.

Meaningful Work

Contractors have the ability to pivot to different projects and clients much more easily than traditional full-time employees. Whether you have a sense of duty or wanderlust, freelancing means never having to stay in one place too long.

Let’s say an IT professional wants to learn a new skill or broaden their experience in a specific area, and their best option is working for a company with a large carbon footprint. If protecting the climate is important to them, perhaps they contract for a short time – long enough to sharpen that skill – and then move on to a carbon-neutral employer when the time is right. Independent contractors have the agility to switch projects as they see fit, for any reason.

Advancement Opportunities

Contractors don’t necessarily have to jump from client to client to build their careers. While working for a single client, a contractor can take on increasingly higher-level assignments and potentially work their way up to the management level within a company. And for a contractor who finds the perfect fit, sometimes projects can even lead to a full-time offer with an employer who finds value in that employee’s work.

Remote Work

Working remotely doesn’t necessarily mean working from home. Want to hit the beach? Bring your laptop! Remote work allows a contractor to move anywhere in the country (or even out of the country) and still work in a specific field. And for the remote worker who lives in a low-cost area but whose employer pays in accordance with the higher cost of living where headquarters is located, contract work can even translate to yet another financial benefit.

There are advantages to both full-time and contract work, of course. But if you value flexibility and the ability to modulate your life-work balance, contracting might be the better choice for you.

Looking to shift to contract work? Set up your profile on PeopleCaddie and start searching for contract jobs today.

sgruenReasons Contracting Beats Full-Time Work

Ways the Inflation Reduction Act Affects the Job Economy

The Inflation Reduction Act recently signed into law by President Biden is expected to create 9 million jobs over the next decade, primarily in the clean energy sector. That is, by all accounts, a positive development for the job economy. But it also presents some logistical challenges that will ripple across industries and keep businesses occupied creating solutions for the foreseeable future.

The Blue Green Alliance prepared a breakdown of the different jobs expected to be created by the Inflation Reduction Act, outlining the sectors where they’ll be added – including clean energy, clean manufacturing, clean transportation, efficient buildings, environmental justice and natural infrastructure. The upshot: The largest piece of legislation to date aimed at mitigating the effects of climate change holds the promise of more fulfilling jobs, greater skill development and higher pay for those employed in these sectors. But let’s first consider what it means to the companies tasked with hiring for all those jobs.

Impact on Employers

The first thing hiring organizations should know is that jobs created by the Inflation Reduction Act will be rolled out over the next decade. In other words, employers won’t wake up tomorrow to find themselves competing for talent in a job economy blown wide open by 9 million new positions.

However, concerns that the labor pool is thinning are valid: Baby Boomers are already retiring, and many more will reach retirement age soon – a significant knowledge and expertise drain as a generation with enormous numbers exits the workforce. According to CNBC, about 4 million baby boomers are retiring each year. Subsequent generations don’t have the same sheer numbers to meet the demands of newly vacant positions, let alone fill those that this legislation eventually will create. Employees who move into these new jobs will also leave vacancies elsewhere. And because international work visas have been reduced in recent years, fewer employees from abroad are available to help buoy the job economy and ease the transition.

A shallow labor pool puts a strain on the hiring apparatus of many companies, but employers aren’t completely out of options. One of their most flexible and efficient alternatives: independent contractors.

Good for Employees

For Generation Z, the verdict is in: acceptable terms of employment no longer begin and end at a competitive salary and good benefits. Many Zoomers crave the flexibility and variety they find in contract work. Gen Z, currently the youngest generation engaged in the professional labor market, also have made a priority of landing fulfilling jobs in industries that engage their passions. A top choice: climate change.

In the coming years, the Inflation Reduction Act will help create millions of positions in the climate change field – and not only for engineers and installers, but for accountants, auditors, and many other industry-adjacent workers. Growth and advancement opportunities will abound. And because highly-skilled contractors tend to place more value on work-life balance than past generations, the chance to contract for businesses in this space – maybe for a few hours a day, or for only six months at a time – figure to be wholeheartedly welcomed by a wave of workers due to spend the next 30-40 years in the workforce. That’s a boon not only for employees, but also for employers.

As organizations related to climate change siphon off workers from other industries in the years ahead, many businesses will need to stay nimble to fill the void left behind. PeopleCaddie’s talent cloud has the power to make quick, rewarding connections – whether you’re a contractor seeking work or an employer seeking workers.

Looking for contract work? Check out the jobs available in PeopleCaddie’s talent cloud.

sgruenWays the Inflation Reduction Act Affects the Job Economy

Navigating Workforce Challenges Post-Pandemic: Why Contractors Are The Answer

In most parts of the country, we’re dealing with heat waves and the back-to-school hustle. Who’s thinking about winter? If they know what’s good for them, it’s corporate leaders and hiring managers. In March 2020, as business and commerce ground to a halt due to the Covid pandemic, companies were forced to quickly implement work-from-home programs, restructure communications and make other adjustments to keep employees and the public safe. They also learned soon enough that certain changes to the workforce may be required, and contingencies built in to account for future restructuring, should it be needed. It provided a framework for dealing with public health challenges.

Winter will force us indoors and closer together, and ultimately create viral conditions we can’t ignore. While companies are identifying workforce challenges post-pandemic, they can’t ignore the fast-spreading BA.4 and BA.5 Covid variants and the newly declared public health emergency of monkeypox. Companies may again have to confront the task of adapting and reorganizing a workforce on the fly. But this time they’ll know what’s in store.

What’s Coming This Winter?

In addition to Covid and monkeypox, flu season is nearly upon us and is among the public health challenges that companies may have to overcome. Health experts are looking to Australia to determine how severe the U.S. flu season will be – and the news is not good. The current flu season in Australia is its worst in five years, with children being hit the hardest.

We can assume that a percentage of American employees will come down with a flu virus that sends them home and removes them from a company’s operations for at least a short time. But more may be forced to stay home with sick children, or perhaps elderly relatives in their care. And when combined with other viral threats, and given the effects of long-tail Covid, the flu could leave some companies short-handed for long enough to make a contingency plan a must-have going into the winter.

Creating a Plan for Workforce Challenges

While committing to prevention measures, such as having employees stay home when they or a family member contracts a virus, companies must also keep the trains running on time, so to speak. A flexible workforce will be key to ensuring that projects stay on track and the needs of clients are met.

Example: Let’s say an employee tests positive for Covid but is asymptomatic. That worker can work from home until they’ve tested negative for the virus and can return to the office. In this same vein, parents who are Covid-negative but need to stay home to care for family may still be able to work, given that the infrastructure is there for most companies to accommodate work-from-home options.

Additionally, a hybrid work schedule might help slow the spread of these viruses within companies, reducing the time that employees spend face-to-face and allowing staff to spread out physically while sharing time in the office.

How Contractors Can Help

There will be times when employees are not only unable to come into the office but are also too sick to work. In these situations, it might be necessary to pull in a contractor or freelancer to take over for the sick employee. For instance, a CPA tests positive for Covid and is symptomatic. Even after testing negative for the virus, this employee might need to continue to recover at home, either because their symptoms are severe or they’re suffering from long-tail Covid. Public health challenges are very dynamic. 

This is where PeopleCaddie shines. Employers can access the PeopleCaddie talent cloud and select independent contractors to fill in for staff employees who are out of the office. Managers will know they are selecting from vetted contractors, and they may be able to select contractors that have worked with the company in the past. Some companies will even want to bring one or more freelancers on board in advance of the winter as a sort of insurance policy, onboarding and training contractors to gain experience and work on a limited basis until (and only if) there is a need to ramp up their hours to backfill while other workers are out.

Like it or not, winter is coming – and with it we can expect more cases of Covid, monkeypox and the flu. Companies that prepare now, putting the necessary contingencies in place, will be in the best shape as these challenges arrive.

Contractors are the next generation of employees. See how PeopleCaddie is attracting them to its talent cloud.

sgruenNavigating Workforce Challenges Post-Pandemic: Why Contractors Are The Answer

Resume Red Flags to Reconsider When Hiring

The labor market remains tight, which puts the onus on employers to review more candidates and perhaps open their minds to new possibilities – including former resume red flags or blemishes in a different light. Accordingly, examining resume blemishes has taken on new meaning.  

Whether it’s a prospect who bowed out of the job market to care for his children during the pandemic or an applicant who was let go under odd circumstances from a previous job, these resume blips may contain just-below-the-surface context that renders them moot. Being open to diverse applicants and digging into these circumstances during the hiring process can unearth quality candidates whose potential may not be expounded on their resumes.

In addition to recognizing the signs of false resume red flags, employers can use PeopleCaddie to help vet applicants prior to hiring, opening the talent pool to even more candidates.

Resume Red Flags That Shouldn’t Stop You From Interviewing a Candidate

Job Discontinuities

It’s August 2022, and a mid-career worker is attempting to reenter the workforce. She has spent the past 18 months caring for her father, who has been slow to recover from long-tail Covid. Her resume shows this stretch only as a gap in her employment history. But this gap had nothing to do with her job performance or employer’s satisfaction with her work.

In a post-Covid world – especially one with the limitations of a tight labor market – job discontinuities shouldn’t be immediately disqualifying for a prospect. A closer look at certain candidates with seemingly suspect work histories might reveal character that can rarely be identified on a resume or in a job interview. Examining resume red flags and asking for explanations regarding job discontinues could ensure good candidates aren’t lost based on inaccurate assumptions. 

Non-Traditional Employment History

Traditionally, hiring managers target applicants with recent references, while also looking for any evidence or indication that a candidate was let go by a previous employer. They might also keep an eye out for applicants who had been demoted, or for other perceived red flags – brief stints with employers or step-down moves. These are strategies that, in the past, may have been part of a reasonable early-stage culling process in a candidate search.

But as more of the talent pool turns to independent contracting, and as many workers reprioritize their work-life balance, these “blips” aren’t – or shouldn’t be – the disqualifiers they once were. Contracts are often meant to be temporary and short-term, and some applicants may balance contracts with other responsibilities, demonstrating a tireless work ethic. An employer may do their company a disservice by failing to fully clarify these details.

PeopleCaddie Vets Applicants 

With PeopleCaddie, our clients benefit from insights that can make or break their candidate search. Contractors in our network have been through a face-to-face interview in order to better understand their qualifications and work history, and every applicant who is put in front of a PeopleCaddie client has undergone a criminal background check. If a candidate has worked for other companies in our network, their profile may feature reviews that offer hiring managers additional information about a worker’s character and performance.

With unemployment still low and companies facing a dearth of top-quality talent, a deeper dive into resume blips, or discontinuities, should be part of the process of investigating any worthy independent contractor. At the least, a conversation around context – a step that PeopleCaddie takes for its clients – can help a company avoid the mistake of overlooking or writing off an excellent job candidate.

PeopleCaddie can help hiring managers examine resume blemishes. Find out how by clicking here.

sgruenResume Red Flags to Reconsider When Hiring

Should You Quit With a Recession Looming?

We’re in a booming job market, with an unexpectedly high number of jobs (372,000) having been added in June. Yet most economists agree that circumstances are ripe for a potential recession. Some workers who don’t remember the economic times of 2008 might be wondering what job hunting will be like, and whether or not it’s wise to make quit during a recession.

Even in light of the “Great Resignation,” the current bullish job economy is not sustainable. If the tide begins to turn, how might the fallout affect workers who are considering making a career move?

What Happens to Jobs in a Recession

In the economic recovery phase following the initial waves of Covid, jobs have been readily available for those seeking work. The unemployment rate has dropped as low as 3.6 percent, while compensation has increased and employers have bent over backwards to attract and maintain talent. It may not feel quite like boom times (thanks, inflation), but workers are indeed enjoying a moment.

A recession, on the other hand, tends to prompt instinctive belt-tightening around many industries. In 2008, for instance, companies and workers faced hiring freezes and layoffs. The unemployment rate ballooned, ranging from 5-10 percent. It’s not unreasonable to presume that a recession in 2022 or 2023 could lead to similar outcomes.

Preparing for a Recession

Although economists’ predictions of a recession looming range from 30-50 percent, workers would do well to prepare as if a recession is likely. This leads to the question at hand: Should an employee quit their job with a recession looming? The answer isn’t a simple one, but here are a few takeaways that can help:

  • There’s an old adage that has some value here: It’s easier to get a job when you have a job. Employers are looking for established employees who are willing and able to go with the flow as industries and the economy change. Equally beneficial: during periods of high inflation, which can precede a recession, there’s opportunity to generate competition for your services amongst employees. That results in higher pay.
  • More than ever, focus on producing quality work. If layoffs do become necessary, companies will prioritize holding on to the more proactive and productive members of their staff.
  • Evaluate job opportunities with longevity in mind. Until now, workers knew that if a particular opportunity didn’t pan out, several more would likely be there for the picking. In a recession, that’s less likely to be the case. A position with better security or long-term prospects may be more valuable during a recession than another job that is more fulfilling or that pays slightly more.
  • Situations may present themselves where quitting a job is a necessity during poor market conditions. If a company offers attractive severance packages in exchange for voluntary resignation, it becomes easier to capitalize with emergency savings in hand. Even better, one could turn to contract work and a talent cloud like PeopleCaddie. That allows these people to collect severance in addition to a contractor’s salary. With PeopleCaddie, when contractors work at least 30 hours a week, they gain access to our benefits package which includes health insurance. 
  • While a recession may slow full-time hiring, it may open up opportunities on the contingent labor side. Examine how you can leverage the benefits of contract work to secure opportunities with companies engaged in full-time hiring freezes. 

Should You Quit During a Recession?

A move or career change might seem like a good idea now, but as the possibility of a recession draws nearer, job hopping could be a risky choice for those who depend on a steady, reliable income. Job numbers are expected to decrease in the coming months, and the reward for those who sit tight in the interim might be remaining gainfully employed when companies start cinching those belts.

Of course, what comes at a premium during any recession is stability. Full-time work is binary. A layoff reduces income to zero. Contract work can provide more security during times of economic upheaval because a “40-hour work week” could be allocated in pieces to different companies. 

Lose one of those jobs and you haven’t lost your entire income. Essentially, contract workers hedge their income by diversifying risk across a number of different companies. 

Interested in learning how you can do so? Join our talent cloud to see the opportunities available to you. 

sgruenShould You Quit With a Recession Looming?

Pitfalls of Contract Work and How to Avoid Them

Freelancing is often sold as a dream job. “Be your own boss!”Set your own hours!” Although those elements are certainly part of the package, the reality is that there is a downside to independent contracting. Some of these hazards are avoidable, some are less so. But being prepared offers a freelancer the chance to live their best life. Here’s how to identify and, when possible, avoid the pitfalls of contract work.

When Demand Dries Up

In most situations, an agreement between contractors and employers will outline the expected duration for any given assignment. Occasionally, this information isn’t available, and often circumstances can change. Example: For event-related freelancers such as graphic artists, event coordinators and performers, 2020 proved to be a black hole due to the pandemic. Most of these contractors expected to earn a certain level of income throughout the year, but when on-site events disappeared, so did their work. Circumstances changed.

In a less dramatic example, an accounting contractor who expects 40 hours a week from a client may suddenly learn they’re needed for only 10. How do they adjust to this new reality? While these scenarios are sometimes unavoidable, it helps to secure work well in advance and include scenarios such as these in contracts so they are accounted for when planning bills and finances.

When the Cup Runneth Over

When trying to plan finances around freelance work, some contractors have a tendency to overcommit. Avoid putting yourself in the position of stretching your bandwidth to the breaking point – particularly if it means doing so to keep up with a lifestyle beyond essential expenses.

No judgment – we all like nice things! – but a freelancer risks a lot more than a few luxury items if they come up short on a project. Failing to deliver, or late delivery, can be a reputation-killer. It could cost you future work with that client and may even end up in non-payment, depending on the severity of the situation. Take care to commit to only the amount of work that can be reliably delivered on time and at a high level of quality.

When the Taxman Comes Around

When receiving money as a 1099 contractor or freelancer, it’s important to set aside money for the IRS and to educate yourself on tax laws and procedures. This will help avoid being stuck with a huge tax bill (plus penalties) come April 15. Paying expected taxes quarterly and putting away 25-30 percent of earned income will help prevent an unwelcome surprise at tax time. It’s also advisable to consistently track business expenses and keep documentation. Hiring a CPA can help.

When Payment Is a Problem

Freelancing comes with some risk, depending on the clients a contractor does business with. Sometimes payment arrives late and the worker must make a choice: continue working and wait for payment or cease working. Although it’s tempting to keep working to avoid losing the contract, the client has breached the freelancer agreement. Hauling the client into court shouldn’t be your first instinct, but it’s important to hold them accountable and steer clear of clients who are late or absent on payday. Chances are, it won’t be the last time.

Freelancing can be a dream job, but it’s important to watch out and prepare for the potential pitfalls of contract work. PeopleCaddie can help by making it simple to find work, structure agreements, get paid consistently and on time, and take care of taxes and insurance, allowing independent contractors to sidestep some of their toughest challenges right out of the gate.

PeopleCaddie can help you navigate the pitfalls of contract work. Contact us to find out how.

sgruenPitfalls of Contract Work and How to Avoid Them

The Unique Value of the PeopleCaddie Ratings System

The Unique Value of the PeopleCaddie Ratings System

One of the more difficult aspects of job seeking for independent contractors has been conveying the value of skill, experience and past results to hiring professionals. Creating and updating resumes and portfolios takes time and effort, which can add up for workers on shorter contracts. Companies don’t always invest in or track the performance of contractors as they would their full-timers, leaving them at a disadvantage when attempting to attract future employment. For a contractor, putting your best foot forward often feels like an elaborate game of Twister.

And it’s no picnic on the other side. Recruiters increasingly rely on algorithms to sort through the first wave of job applicants. Even the old stand-by – references – are no longer a reliable resource. The transparency of information from candidate-provided sources has always been suspect at best, of course, but companies have also become skittish over time about potential legal liability, most commonly defamation.

PeopleCaddie has an answer to the problem: a unique ratings system that helps recruiters who access our talent cloud to better understand what a candidate may provide their company after hiring. Rather than relying on the vague qualitative analysis and uncertain motivations of traditional references, PeopleCaddie’s rating system quantifies the hiring and job-seeking process, transforming crowdsourced data into insights that help both employers and employees. Here’s how they work:

Quantitative vs. Qualitative: Making Hiring More Reliable

The varied priorities and personalities among managers and supervisors might lead one to draw dramatically different conclusions about the strengths and weaknesses of an employee than another. Rather than basing the hiring process on subjective criteria and opinions – qualitative analysis – PeopleCaddie is reinventing traditional hiring using standardized quantitative measures. And because every PeopleCaddie contractor is required to accept our terms of use, all reviewers are indemnified against any liability related to their feedback, allowing them to provide ratings without fear of legal ramifications.

The PeopleCaddie ratings system covers three key areas:

  1. Quality of work
  2. Timelines of work
  3. Contractor professionalism

Contractors are rated by former employers on a scale of 1-5 stars within each of these categories, and PeopleCaddie combines those scores to assign the contractor a composite star rating. This helps employers searching for contractors to quickly identify top candidates and compare them against one another.

Trustworthy References: No More Unverified Sources

Under the traditional hiring system, checking references was a difficult, time-consuming process that often couldn’t be verified. A hiring manager might know that a candidate worked at Company X, but they couldn’t be certain who that candidate worked for or reported to directly. A candidate had the ability to cherry-pick their best references – perhaps even peers or friendly colleagues willing to speak in glowing terms.

On the PeopleCaddie platform, however, a candidate’s rating must come from a person who was responsible for approving their timesheets or directly supervised the contractor at a previous employer. Our database even indicates how many ratings a contractor has received from employers within our network, as well as who within each company provided that contractor’s rating. And if a candidate hasn’t previously worked for a company in the PeopleCaddie network, we take the necessary steps to verify the person identified as the candidate’s supervisor, leveraging resources such as our proprietary user network, LinkedIn, Zoominfo and others in order to ensure that our clients have the benefit of full transparency.

Hiring is an inexact science. The stakes are high and the success rate historically has tended to be lower than most employers care to think about. But with a quantitative candidate evaluation system and reference verification, PeopleCaddie clients have the resources to remove the guesswork from hiring to bring on contractors confidently.

Interested in learning more about the PeopleCaddie ratings system? Contact us!

sgruenThe Unique Value of the PeopleCaddie Ratings System