Taking on a new employee is a huge investment. There’s the time spent on recruiting and interviewing, there’s the cost of efficiency lost during training time, there’s money spent on overhead, on salary, on taxes, on securing their benefits, professional development, and more. Ultimately, the cost of an employee typically ends up being 18%-26% more than their base salary.
But there are often cases where your team needs outside support—maybe they’re working on a big project and need more staff, or they’re exploring a new industry and don’t have the right skills. Should you hire a new employee then? In situations like these, we recommend turning to the contingent workforce, a vast network of contractors, freelancers, consultants, and more. Hiring on contract can get you the expertise and support you need without the expense—in both time and money—that comes with full-time employees.
So when does it make sense to hire on contract? We’ve created a 6-point checklist for you.
1. You’re exploring niche skillsets or new technologies
2. You need support on a short-term project
From a resource management perspective, it doesn’t always make sense to take on the cost of onboarding and developing a new hire for work that isn’t long-term. Sometimes when your team feels particularly overloaded with work, a new full-time hire feels like the obvious solution, but take a moment to step back and look at the scope and duration of your projects. You’ll find that contractors can come in to provide support to your team during the time that you need it.
3. You don’t offer benefits
It’s often the case for smaller firms or startups that they lack the resources to offer the same caliber of benefits that larger, more established companies can offer. This can put you at a disadvantage when it comes to hiring, as talented applicants may favor full-time positions that offer enticing benefits.
In this case, hiring a contractor can be a smart choice, especially if it’s done through a recruiting agency. Not only do you not need to worry about offering benefits to contractors, but many staffing agencies, like VanderHouwen, offer full benefits including healthcare and 401k to contractors themselves. This can help your contractors feel like they’ve landed a full-time position with full benefits while shifting the burden off of you to provide it.
4. You have budget or headcount restraints
Full-time hires are a huge investment. Onboarding, benefits, and professional development are all costs incurred by new employees, and that’s certainly not feasible for every organization. If your team has a limited budget or restraints on hiring new people, that doesn’t mean that you’re out of options. Contractors—who are paid hourly—can be a simple solution.
5. You need a fresh perspective
Contractors tend to be highly skilled and specialized within their field—and for certain companies in which teams are siloed or management needs a fresh perspective, they can be a necessary catalyst for change. When choosing to consult with a contractor, you can put your trust in their subject matter expertise. This can be especially crucial if management tends to be stuck in their ways. Contractors can serve as an external motivator that helps companies stay up-to-date and competitive.
6. You want to give a candidate a test run
It can be difficult to fully glean the potential success of a candidate based on their resumes and interviews alone. This can work both ways: Candidates who look great on paper may be missing the soft skills necessary for success in their new role or they might not mesh well with the rest of the team. On the other hand, candidates who may be lacking the right experience can end up being fast learners with great interpersonal skills.
If you want to give a new hire a test run before they’re fully onboarded, that’s when it makes sense to hire on contract. The most common case for this is an agreement known as contract-to-hire, in which candidates have the opportunity to work on contract during an initial period for their new company. If the contract period ends up being a success, they then come on full time.
And, if you are working with a staffing agency, that process becomes even more seamless as they handle the quality assurance (hiring and letting go) for those contractors. If you hire someone on contract-to-hire and they don’t end up working out as successfully as you’d hoped, the agency can help you have that tough conversation with that candidate and manage their transition elsewhere.
If you decide that you’re satisfied with your contract-to-hire placement and are ready to transition them into full-time employees, that’s even better! When you make a great choice on a hire, you’re building community and loyalty within your team. Great hires can move up the ranks, take leadership roles, and end up being a worthy return on your investment. When you take the time to nurture your employees and let them grow holistically within your organization, they become advocates for your business and your brand.
Need help choosing a contractor? Here’s our blog on how to hire the right staffing agency.