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Your Value: Maximizing Your Compensation (Part 2)

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There’s a common misconception that total compensation means something you focus on when interviewing for permanent employment. While that’s true—and covered thoroughly in Part 1 of our series—there are many opportunities for freelancers and salaried staff who love their jobs to get better compensation. More true than ever considering the overall unemployment rate is at a record low and the number of contingent (read freelance and contract) talent in companies across the world is high. As Intuit’s CEO Brad Smith has indicated, "The gig economy...is now estimated to be about 34% of the workforce and expected to be 43% by the year 2020.”

Don’t Freelance for Free

In a gig economy, compensation is as big a factor with freelance as it is with those salaried employees. As more people are looking for the opportunity to do new work and/or diversify their creative portfolio, to get different—often more well-known—brand names on their resumes, they’re often turning to freelancing. It’s a great way to experience different work environments while searching for that “perfect job.” Looking at an hourly rate, plus benefits offered, you may be surprised at just how good the freelance life is.

1099 vs. W2

Yes, there are tax benefits that come with a 1099, but it does take work. And possibly a Schedule C or two (the name of the IRS form to calculate the yearly profit or loss of your business). From your home office to your business travel, there are some excellent tax deductions for independent contractors. You’ll just want to ensure you’re the organized type (or have a very patient CPA) to avoid tax-time woes. Working as a W2 for a staffing agency does offer the certainty of guaranteed week-end payments, instead of spending the end of the month chasing down someone in finance.

One of the main reasons people choose to work freelance is for the...freedom. For creative talent, working a 9-to-5 often just doesn’t make sense. Negotiate for flexibility. Do you prefer to work on your deliverables with a weekly or bi-weekly cadence? Don’t stuff yourself into an illogical hourly rate—ask to bill in a way that fits how you work.

Hourly vs. project

The great debate among freelancers—should you charge by the hour or by the project? Many would (and do) argue that there is a big difference between telling a client you are going to charge them $150 to complete a project and telling a client you cost $150 per hour for that kind of work. Even though the work may take you an hour, telling someone that you charge $2.50 per minute can be hard to swallow. Best of all, if you work fast and efficiently, project rates reward you for your efficiency.

On the other hand, if you bid a large project and hadn’t properly scoped it out, you could end up making much less per hour than you planned, taking time away from other paying client projects and may leave you hating yourself at 3 a.m. when you are proofreading your work. And, let’s face it, some clients like to ask for more revisions than needed. Getting paid by the hour will let you know exactly how much you’re making while you’re working (even if the client asks for 50 revisions).

Benefits

When you’re working on your own, your benefits are, well, your own. Fortunately, ever since the Affordable Care Act came into effect, freelancers have been able to secure health insurance through the healthcare marketplace either as an individual or as a small business. And many times it is a “no brainer” if your spouse or partner has benefits.

But that doesn’t mean those are the ONLY benefit options for freelancers, especially if you’re working through a staffing agency. Health benefit offerings in particular vary widely in plan types, coverages offered, and the percentage of the premium covered by the staffing agency.

Make a list of what you need including:

  • Health coverage
  • Dental
  • Vision
  • Coverage for spouse/partner and children
  • Specific insurance coverage preferences (e.g. infertility, autism, naturopathy)
  • FSAs
  • Retirement savings (trust us, it’s never too early to start!)
  • Professional development

Do your research to make sure the plans you’re being offered actually meet your specific preferences and needs.

Schedule management

Many freelancers struggle with managing their schedules (not to mention billable hours). Often you’re buried in work and other times cleaning your bathroom instead of hunting for clients. It’s worthwhile to make an investment of time, and possibly money, to get your schedule under control and your life in balance. Working with a staffing agency can help manage your schedule if you’re looking for a set number of hours of work a week by partnering you with multiple clients with similar needs. In fact, agencies can keep you freelancing while you’re looking for that ideal staff job (be sure to read this blog in future weeks to understand how to work with recruiters even when you’re not looking—it’s all about being prepared).

Guaranteed hours

One of the joys of freelancing, especially when it’s hourly, is a much more balanced schedule that gives you flexibility for non-work needs. Chances are you have a salaried friend who has run the calculations on how “little they earn” once they figure out they’re working 60+ hours per week. For projects, this may not always be the case. Make sure you’re clear about the amount of hours you’ll devote to the pieces of a project so you don’t end up making pennies on the dollar.



Changing Compensation, Not Jobs

Just because you want to stay with your current company, doesn’t mean you can’t negotiate better compensation. In fact, if you’ve been doing excellent work, you should have the ammo you need. While you may not get the salary bump others might when they switch companies (Forbes pointed out a few years ago that the average raise an employee receives for leaving is between a 10-20% increase in salary), there are ways to increase your compensation without switching employers.

Better pay / better balance

While you may not have as much opportunity to discover better health benefits, there are many other ways to increase your compensation on the job. First is, of course, an increase in salary or a bonus. If you’re a top performer but your boss and/or company isn’t in a good place to give you more money, they could instead reward you with opportunities for better work/life balance: more flexible start and end times to avoid rush hour traffic, the ability to work remotely one or two days per week, or even let you work a four-day week. Since you get the work done anyway, it doesn’t affect their bottom line and may encourage other staff to become high performers, too!

How to negotiate while working a permanent job

When you’re a star performer, review time is your time to shine. Make sure you’re prepared with the right information. Even if you’re a creative who runs screaming from a spreadsheet, you need to understand and use basic business acumen in order to make your case for better compensation.

To start the negotiation, know the goals and KPIs for your department and how you’ve helped your team reach them, including how your specific work has stood out. All this, of course means keeping track of the work you’ve done all year. If you haven’t done that already, you’ll need to set a date with yourself to make sure you’ve taken inventory. You may surprise yourself how much you’ve accomplished!

Remember this cardinal rule of negotiation: always keep your attitude upbeat and constructive when asking for better compensation—everybody appreciates positivity!

Whether you’re interviewing for a new job, freelancing, on a long-term contract, or happily at the same company for 10+ years, don’t shortchange yourself when it comes to getting the best compensation package. While we’re focused on workforce issues, everyone’s aware there’s so much more to life than money. Make sure you’re getting everything you need to keep your self, your family, and your client or company happy!

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