A feature designed to help freelancers win more jobs could actually be driving potential employers away. New research suggests that some tools introduced by online gig-work platforms to build trust and showcase workers’ abilities may have unintended consequences, making certain job seekers less attractive to employers.

As more people turn to freelance platforms for additional income or greater career flexibility, competition for projects involving coding, website design and other specialised skills continues to intensify. To help workers distinguish themselves, platforms increasingly offer features such as verified credentials, badges and financial guarantees. However, these tools do not necessarily improve hiring prospects.

A study led by researchers including Chenhui “Julian” Guo, assistant professor of supply chain and information systems at Penn State’s Smeal College of Business, examined how employers respond to new indicators of worker reliability. Published ahead of print in Information Systems Research, the study found that a feature intended to inspire confidence could instead raise doubts about a freelancer’s capabilities.

The research draws on “signalling theory”, which explains how people use available information to make decisions when important details remain unknown. In online hiring, employers rarely meet candidates personally and must rely on ratings, reviews, qualifications and previous work experience to assess their abilities.

Using anonymised data from a major online labour platform, researchers investigated a new feature allowing freelancers to attach financial guarantees to their job bids. The platform recommended a deposit equivalent to 10% of the proposed payment, intended to demonstrate workers’ confidence in delivering satisfactory results.

Workers received their deposits back if they were not hired or completed their assignments. However, those who failed to deliver satisfactory work forfeited their deposits, with the money donated to charity rather than paid to employers. Consequently, the guarantee offered employers no direct financial protection against poor performance.

Contrary to the platform’s intentions, freelancers offering guarantees were less likely to be hired. They also tended to receive lower ratings, experience fewer repeat hiring opportunities and take longer to complete assignments, suggesting that employers’ reservations were not entirely unfounded.

Researchers believe employers may have interpreted the guarantee as a warning rather than reassurance. Established freelancers with strong reviews and successful work histories generally have less need to demonstrate their credibility through additional commitments. Those with weaker records, meanwhile, may be more inclined to use such features to attract attention.

The findings highlight an important lesson for freelancers: offering additional proof of reliability does not automatically increase trust. Employers should also consider why workers choose particular signals rather than assuming that every guarantee or credential reflects greater competence.

For digital labour platforms, the study underscores the importance of testing new features before introducing them widely. Researchers suggest evaluating how employers interpret these tools and whether they genuinely improve hiring outcomes. Ultimately, a feature designed to strengthen trust may backfire when employers perceive it as a sign of uncertainty rather than confidence.

More information: Qiang Gao et al, When “Signals” Boomerang: Employers’ Reactions to a Novel Signaling Mechanism, Information Systems Research. DOI: 10.1287/isre.2023.0246

Journal information: Information Systems Research Provided by Penn State