John Jonas offers his Online Filipino Specialists benefits like 13th month pay, health insurance, and paid time off even though they're independent contractors. He sees them as voluntary incentives to cut turnover and show care, not as a legal requirement. New employers don't need to offer benefits when starting out.
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Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at working with OFS. This is episode 280. Why give an OFS benefits if they're not an employee? So I get this question asked of me all the time. Hey, John, if your OFs are independent contractors, right? Because if you give them benefits, that makes them an employee. And I've talked a lot about giving people benefits and I've talked a lot about people. The people in the Philippines are independent contractors. And. And so most people only give benefits to full time employees, which employees. And so I understand the confusion. So let me just clear the air here. Number one, it does not matter what you do with people in the Philippines. They are an independent contractor, period. End of story. If you can figure out a way to make them an employee, then you let me know. But the Philippines government will not allow you to call them an employee unless you have a a legal physical entity and presence in the Philippines, which you do not. They are independent contractors. They're independent contractors in every sense of the word. That's it. So let's talk about the word benefits then. In the US we've come to come to associate the word benefits with legally required things an employer must do to retain their employees. That's what benefits means. It means paid time off, it means insurance. It really has kind of a negative connotation. It has a really big negative connotation. To me, the word benefits. Because to me these aren't legally. I mean with the Philippines, they're not legally mandated, they're not required, they are completely optional. And the only thing they are is a benefit to my team to hopefully incentivize them to stay, to work better, and then for me to feel like I'm treating people well. This is kind of like at my favorite restaurant where I go there regularly and I often get the same server. And when I come in, I get treated really, really well. And, and so I tip really well. And probably they treat me really, really well because I tip really well there and then they treat me really, really well. And so like they'll do things they don't do for other people and they do things without me having to ask. And it's just really, really nice. I have a really great experience. That's kind of what benefits are. It's something that you do to either reward people who treat you well or to incentivize people to treat you well or to do good work. That's what benefits are. My business has grown a lot because of the work my people in the Philippines do. So I pay them a salary and then I also pay them the 13th month because that really incentivizes them to stick with us. And I give them health insurance so that they don't have to worry about it. So that when they're sick they go to the doctor, they get better so that they come back to work. I want them to be healthy and happy and financially stable so that they're not struggling all the time and worried about where their next meal is going to come from. They can worry about how could I do this thing at work better? And to me that's what benefits are. It is things that help them benefit me. Obviously all these things help them. Paid time off and holidays and bonuses and whatever. It obviously benefits all of them, but it benefits me. So there's a bunch of consequences from offering things like this and from treating people really well. You have less turnover if they're freelancing, they're more likely to prioritize your job over someone else's. If you offer them a full time position, they're more likely to take it and work exclusively for you because they know they're going to be treated well. And this comes with not just offering benefits because if you're a jerk boss and you're trying to make up for that by paying more, well the Philippines doesn't respond super well to that. So now to finish this, let me put some caveats into this. If you're just starting out, you don't need to offer benefits. There's nothing you need to do. Just hire someone and get them started working for you and pay them what you have agreed to. Second, if benefits are preventing you from hiring someone because it's confusion or it's something else or it's one more thing you have to worry about, stop it. Just hire someone. Benefits are completely unnecessary. When you hire someone and they take something off your plate. Now maybe you'll have the capacity to think about paying them the 13th month or maybe paid time off or holidays or whatever it is. But the point is just hire someone. Do not avoid hiring someone because you're worried about being benefits. Benefits are to reward loyal long term people and if you don't have someone working for you, well you don't have anybody to reward. So benefits are a non talking point. The person you're going to hire would much rather have a job with no benefits than no job at all. So obviously you can tell there's something I'm passionate about. I really, really dislike the word benefits in our culture, in the US culture where it's where people won't quit a job to start their own business because what about benefits? Benefits or When I got When I was getting married, my wife always grew up being told you want to find someone with a good education, a good stable job with good benefits. And then she got me and I don't have a good stable job with benefits. I've given her everything in life that she wanted and hoped for and there's nothing stable or benefit about it. Whatever you want to do, just hire someone. If you want to provide benefits. Awesome. Do it. We have a whole thing inside of your onlinejobs ph account about how to do this. The whole thing, every possible thing you could do. You do not need to do all of it. There's just a bunch of options. Log into your onlinejobs account. Scroll down. It's on the left side. It's in the guides that you get with your account.
