ANALYSIS: How to use freelancers in a cost-effective way

For many a hard-pressed PR agency or in-house team, hiring freelancers seems a good way to get an extra pair of hands. But how does their cost compare to full-time staff?

Considering freelance help is so widely used within the PR industry there is relatively little research available on its cost-effectiveness.

A survey commissioned by freelance provider Xchangeteam, carried out by the London Business School, aims to redress the balance. While Xchangeteam would seem to have an interest in encouraging the use of freelancers, the study nonetheless makes a persuasive case that freelance help is more cost-effective than generally thought.

After canvassing the opinions of seven agencies and two corporate in-house departments, the survey identified a widely held view within the industry that freelancers are more expensive than full-time staff.

However, it also discovered that this view is generally based on comparing salary and fees alone.

The study found that other expenses, such as National Insurance Contributions, pensions, paid holiday and administrative support brings additional costs of between 30 and 50 per cent per employee. Agency fees for freelancers generally work out at about 15 to 25 per cent of daily rates.

Moreover, Xchangeteam CEO Emma Brierley cites studies showing that most UK marcoms agencies generally work at about 80 per cent of capacity - meaning freelance help could be vital in helping them staff their business requirements more cost effectively.

Where are freelancers most likely to be used? The traditional view is that in-house departments, with their more limited pool of resources, buy in general help in areas such as media relations, while agencies - able to call on a field of general expertise - hire specialist cover.

To a certain extent this remains the case, with agencies generally paying more for freelance cover as a result of their demand for niche expertise.

But Brierley says the pattern is increasingly changing as in-house departments become larger and more sophisticated. 'Demand is highest in the middle-range of experience,' says Brierley. 'The range at the senior end is very broad, going from £500 a day to £2000 a day - but they're used on a piecemeal basis.'

She says Xchangeteam's senior freelancers include a founder of a top 20 agency and a former corporate affairs director of a large UK retailer.

Internal comms is another area of rapid growth. The fact that there are very few freelance junior specialists available, and a general shortage of internal comms experts put the prices up, says Brierley.

This means that, while a freelance account manager without niche expertise may charge £150 to £180 a day, specialists in fields such as healthcare - where demand hugely outstrips supply - have been earning up to £350 a day.

Lewis partner Clive Booth says the tech specialist typically uses a small number of freelancers with whom it has built up a long-term relationship for expertise in specialist fields that isn't required '365 days a year'.

Yet, Booth advises that any company hiring a freelancer should look deeply into whether the person was genuinely able to commit the necessary time to the job. 'It's a golden rule of freelancing that you don't turn down work. I'm not sure that's always in the hirer's advantage,' he says.

Ellen Sarewitz, director of Burson- Marsteller's healthcare division, which makes extensive use of freelance cover, says temporary help is excellent for providing cover or project work, but warns against over-reliance.

'Team work, commitment and a strong identity is very important for an agency. Too many freelancers really distort the balance,' she says.

From the in-house perspective, O2 head of comms Glenn Manoff says a big disadvantage of using freelancers is that they don't have 'the relationships, internally and externally' that in-house staff have built up. But once a long-term relationship has been established, that situation can change and freelancers can work without extensive briefing, he says.

'Most firms carry very little extra flab these days, so it does make sense to have a reliable network of freelancers, particularly for ghosted articles, press releases and other written work, although to a lesser degree for PR work and campaigns,' he says.

Manoff also warns that, while it can be cost-effective to have a freelancer when an organisation can't afford to hire full-time, he or she can sometimes end up staying so long that it would have been cheaper to hire a member of staff. However, he acknowledges that the costs can be reduced by the willingness of many freelancers and agencies to negotiate reduced rates for long-term contracts.

Having said that, no amount of negotiations can provide the impossible.

'In one case we were asked for a woman, living in East Anglia, who spoke Italian and Japanese and understood car engines,' said one agency staffer.

However hard they try, there are times when even the most resourceful recruiter finds itself stretched.

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