WOULD OUTSOURCING WORK FOR YOUR BUSINESS?
Are you considering using the services of an individual who helps businesses with specific duties and projects via their own business rather than being employed by you? This arrangement, more commonly referred to as freelancing, might seem very tempting for a one-off project. You might also consider a regular, but part-time, arrangement with admin staff, which can be a great solution for any business facing regular absences over the summer months. However, outsourcing does come with some inherent challenges so let’s explore the 3 major pitfalls and how you can avoid them.
1 Managing Expectations and Early Planning
Before you decide to outsource make sure that you are clear about your own management needs and expectations and those of your business. Outsource arrangements are often put in place at great speed to fill a gap but for the relationship to be successful you need to work out both what that gap is and how it can be filled before you hire. It pays to draw up a plan of duties most suitable for these short term arrangements together with clear written instructions and guidance in a short ‘how we do this’ manual so your precious management time doesn’t get used up bringing someone up to speed on the basics.
Before you even think about hiring and before selection follow a clear process, similar to employee recruitment, which include :
- exactly what you want the freelancer to do
- time limits/deadlines
- required results
- examining alternative ways to achieve what you need/want to minimise disruption and further demands on any other staff and management time
2 Responsibilities and Accountability
Outsourcing requires clarity of responsibilities and obligations so that your business continues to run smoothly and efficiently. Outsourcing is about delegation as, even with a service provider, you continue to take full responsibility for the work they carry out including their behaviour with other staff members and customers or clients.
Whoops I thought that had been done!
It is often tempting to allow an efficient freelancer to “get on with things”. It’s also easy to believe that what you have asked to be done is being done. You will need to check, just as you would with any new staff member, to avoid nothing being done or two people duplicating effort.
Clear boundaries are also vital – it’s easy see how a competent but perhaps over eager freelancer could, for example, place an order for products which you have not approved by not being aware of your internal processes. All core processes should be in the manual and form part of the contract with the freelancer to avoid problems.
Make it easy on yourself
- Have a written agreement which sets out responsibilities and obligations and ensures everyone understands their role
- Make sure that the outsourced member of staff understands the way the business operates and provide access to your internal handbooks and manuals (don’t forget confidentiality)
- Maintain good communication
- Regularly review things with outsourced staff
3 Freelancer Status
Whilst you may feel it’s obvious that a freelancer is independent of your business, the danger is that they may inadvertently acquire an employment status. For example, any freelancer may acquire worker status when
- you secure the services of a named individual freelancer and you insist that the individual can’t send someone else in their place (limiting their right of substitution)
- you start to rely on the freelancer so they are almost exclusively spending their time providing services to your business thus failing any HMRC test of self employment
Whilst a “worker” does not have as many legal rights as an employee, they are entitled to some rights, such as paid holidays and rest breaks. Also remember that where HMRC considers there is a “blurred line” in outsourced status they may determine that you are an employer and make you responsible for PAYE retrospectively.
Make it Clear
- Avoid this by signing a clear and robust agreement with the freelancer before they commence working with you
- Make acceptable compromises, such as agreeing a process whereby you feel assured that any substituted individual would be able to deliver the same level of services.
Outsourcing, despite all the planning and checks to ensure things run smoothly, can be an excellent way of managing your budget by utilising point of need services. The planning and effort needed up front pays dividends long term for most businesses wishing to save on fixed costs. Talk to us about how to minimise the risk of using freelancers by calling us on 01244 300413 for a free chat.