Article | 19 May 2015

Running A Company With Zero Employees?

Posted in Business, Alice’s Blog, Client,

In this age of outsourcing it's possible to grow a business without taking on any employees. But should you? Here I outline the case for ultra-skinny businesses. I was recently asked to be part of The Future of Work agenda, where we looked at how businesses will be structured in the next ten years.

Issues around how we would be working, from where and remuneration were all examined. We all agreed that the way we would work is going to change – to what extent was debatable.

Perhaps you’re surprised by the headline of this article but, depending on the type of business, then the answer is yes you could run a company without employees. Not by running it as the sole resource, of course, but by significantly reducing your core staff base - even to just yourself - and hiring freelancers, independents or contractors to make up a talented and flexible workforce.

It may sound extreme but this is the direction in which business is moving. Gone are the days of ‘Mad Men’ style firms with their rigid structures; if businesses want to have a competitive edge then thinking about different ways in which they can attract and engage with the best talent is essential.

By 2020, independents will be the largest work force with 65% of the UK labour market comprising of contractors, so it’s time for businesses to start thinking about how they can benefit from freelancers being a key part of their talent strategy.

Changing business models

There is a new breed of company emerging which has identified how they can be both lean and agile whilst still satisfying their customer’s requirements and promoting a happy workforce. Now instead of using freelancers on an ad hoc basis, they are using them as an extension of their business.

These firms operate as a virtual model, employing some key permanent employees and hiring freelancers on an ongoing basis with individuals taking responsibility and committing to accounts depending on how much available time they have, giving them much more control over their own work life balance.

For larger projects, freelancers can collaborate together and when they’re part of a network, there is always someone to step in in emergencies, taking away any potential risk for the business.

This enables firms to hire individuals they may not be able to afford on a permanent basis. Professional freelancers are often highly-skilled individuals, who also bring with them a wealth of knowledge from working with a number of different companies.

The firm is then able to ‘flex-up and flex-down’ making them more agile and with an immediate cost saving on those fixed overheads. There’s no reason then, in theory, why this couldn’t extend to one permanent member of staff with only freelancers making up the rest of the company.

More established businesses are also beginning to identify how they could benefit from moving towards this type of business model with eight out of ten employers now recognising that freelancers could be an important part of their workforce. However, it’s of course difficult to translate these commitments into action, especially for larger firms where changing a work culture or structure can be met with resistance.

As we all know, traditionally companies have hired on a permanent basis with fixed office locations, all of which are fixed overheads and don’t allow much flexibility. Yet this now sits at odds with what most individuals are looking for from work and life, which is more flexibility, freedom and a better work-life balance.

Moving towards a leaner model with freelance support can also address the challenges that both employees and employers face in this respect. By embracing working with freelancers, businesses can satisfy employer demands for flexible working whilst still retaining the best talent.

Problems and challenges

There are, of course, a number of hurdles that businesses must jump over in order to make this model work. First, there’s still a great deal of red tape in the way. Currently, a major consideration for the HMRC when assessing if someone is a freelancer is if a person works for just one business, in which case they may be classed as a permanent employee. This obviously makes hiring a larger number of freelancers more complex.

Second, running a business in this way requires a complete re-think of how to manage your workforce. Managing the consistency and quality of work becomes both more important and more difficult. Two things that are essential to making this work are good communication and the right technology, both of which complement each other.

Technology is enabling these conversations

As technology advances the world has never been smaller, and there’s no reason why a firm can’t hire top talent from around the world to enhance their expertise, the services they offer, and ultimately their attractiveness for prospective clients and customers.

What’s more, international expansion needn’t be for huge corporates with big office budgets. Through using a savvy combination of communications methods – conferences calls, Skype and time management tools - businesses of all sizes can tap into the worldwide talent pool in a cost effective way. Of course working relationships carried out solely by remote workers will be different to having staff in the office you can turn to to discuss things over a cup of tea, but different needn’t mean worse.

Ultimately, the firms that embrace communications technology will be the ones that operate most efficiently, with an improved workforce and often for a reduced cost. It has started to happen already and there are many great examples. If we dare look forward to the next ten years then I think this question will no longer be a surprise, but a norm and an option that all businesses consider.