Finding the right talent is crucial for any business’s success. But with so many options, it can be challenging to decide between contract staffing and traditional hiring
What is Contract Staffing?
Contract staffing is a type of hiring strategy where individuals are hired only on terms specified in a contract. Most times, this is usually short term and they come in to perform specific tasks. Also known as an independent contract, a contractor provides her or his services to an outside business.
What is Traditional Hiring?
In traditional hiring, most times the candidates manage the whole process independently – from sourcing for open roles, sending resumes, availing themselves for interviews, and onboarding paperwork. The process can often be quite tedious, especially if you consider that the candidates are sometimes interviewing for multiple positions.
When it comes to the company side, traditional hiring does not get easier. Recruitment teams have to first come up with a recruitment strategy, source for the right channels, outline the job description and then start posting the jobs.
Today, in order to have access to a wider range of talent, companies are starting to turn to staffing agencies and recruiters. These ‘middlemen’ allow businesses to hire and onboard personnel on a contract which is not only faster but more flexible.
So which is the better option? We’ll take a look at the pros and cons of each!
The Pros of Hiring a Contractor
There are a number of reasons why more and more employers in 2023 are preferring to hire contractors. They include
No need to provide equipment
When you hire a contractor, most of the time the arrangement is BYOD (Bring Your Own Device). Unless a company demands that work must be done on specific custom software for example.
It’s very cost-effective.
Hiring a contractor can be a lot cheaper because you only need to pay their wage and nothing else. You do not have to worry about benefits, putting money into a pension, or anything of this nature. You are now able to operate in a much more cost-effective way than when hiring permanent employees.
Little Exposure to tax issues
Employees have a wide array of rights under state and federal laws — and therefore, a variety of legal claims they can potentially bring against their employers for violating those rights. Because contracted staff are more like independent businesspeople, they are not protected by many of these laws.
You get to hire as and when needed
Another benefit of hiring a contractor is that you can use their services as and when needed. You can scale up or scale down your operations depending on the projects and work at hand. So, if and when you do have a drop in demand, you do not have to use or pay for their services during this period.
Experts at your fingertips
Contractors, consultants, and freelancers tend to be experts at what they do. Therefore, they should be able to get up to speed with what you need quickly. They manage themselves and stay up-to-date with the latest regulations and trends. After all, they are competing with all of the other contractors out there!
The Cons of Hiring a Contractor
Everything has its drawbacks and contracting is no different. So what are some of the cons of hiring a contractor?
You may not be their sole client
Perhaps one of the main drawbacks is the fact that contractors are free to work with anyone else. In some cases, your contracted professional might have 2 or more jobs and you might feel like they are not giving you the personal attention you may need. Again, this can always be discussed. Often, you find some clients don’t mind it as long as the work and hours being done are sufficient.
Risk of Unethical Contractors
One of the drawbacks of going the contracted route is engaging with an unethical person. He or she might not be forthcoming with aspects as time worked, and may take advantage of the remote work set-up to not give 100%. As a business owner, it’s important to do your own background checks to ensure that the person you are hiring is ethical.
Your work or project can be subcontracted
Another drawback is that in some cases, some contractors can then subcontract your project or tasks to someone else, in a bid to reduce their own workload or reduce their costs. Of course, you can always clearly state that you do not want your work subcontracted but it’s always so difficult to know.
No long-term continuity
Another drawback of hiring a contractor is the lack of long-term continuity. You may start to form a great relationship with him or her but once the project is up, then you have to part ways. It’s not uncommon for contractors to have their contracts renewed or to be absorbed in some capacity, however in most cases once the job is completed you have to part ways and this can be quite frustrating at times especially if they are too busy to work for you again.
You might not be their core focus
When deciding to lean towards contract staffing, you might have to accept that you will not be their sole focus. Again, it’s worth noting that contractors have other clients, so do not expect them to focus all their attention on your business and projects.
Keeping track of them might not be as easy
In most cases, contracted employees, especially today, work on a remote basis. While we’ve got a host of collaboration and communication tools today, it’s not always easy to keep track of your remote contractors. Most times this can be mitigated by agreeing on how to give updates and standups, however, it’s not as easy as having permanent employees.
The Pros of Hiring a Permanent Employee
There are a number of advantages to choosing to stick to the traditional methods of recruiting and staffing. Some of these advantages include:
You’re in full control
When it comes to full employment, you have the power and are in complete control of what is being done and when. In cases where a contractor would set their own hours, for example, most permanent employees come in between the hours of 8 AM and 5 PM.
You set the standards
Permanent employee engagements mean that the investment from both parties is high. That way, as the business owner, you tend to set the standard from the gate with company values and mould your employees and train them to achieve certain set goals and targets.
Commitment works both ways
Both you and the permanent employee set out to commit to each other once the contract has been signed. He or she is committing to come to your place of business every day from 8 AM to 5 PM and adjust to your needs and wants. As an employer, you’re committing to creating a space for your employees, investing in office space and equipment and even training. This is in contrast to contractors where the engagement is short-term.
This is still in line with the commitment. Another advantage of hiring employees is that as a business owner, you can set out a development plan for your employees and gradually upskill them over time until you build a high-performing team. When contract staffing, even if you want to help train and upskill the hire, he or she won’t be there long enough so it’s hard to do so in a manner that feels productive and useful to your company.
Finally, one of the greatest advantages of hiring permanent employees is that they become your very own brand ambassadors. Unlike independent contractors who might support your business while promoting themselves, it is in a permanent employee’s best interest to help your company develop and grow.
The cons of Hiring a Permanent Employee
We’ve looked at the benefits of going the traditional hiring route and hiring permanent employees for your business. So what are some of the drawbacks?
The Commitment is huge
Choosing to onboard permanent employees means that you are committing to paying them a salary every month regardless of how the business is doing. This can often be a much bigger commitment than contract staffing because, unlike permanent employees, contractors are paid for the actual work done. When the business is not operating at a high capacity, you can choose to suspend operations for a later date. You can’t do that with permanent employees.
It’s often more expensive.
Permanent employees are much more expensive to have in comparison to contracted employees. The cost of maintaining an office space alone takes most of the expense and you have to cater for benefits and paid leave as well.
Permanent employees come with more entitlements
In keeping with benefit pay, permanent employees are also entitled to more things like holidays, and other allowances that you may not have to incur with contracted staff. Where a contracted worker would just take a sick leave and count it as a day or hours not worked, a permanent employee will still have to be paid during these days.
Permanent employees do not give your operations as much flexibility as compared to contracted staff. In cases where one can scale their operations up or down depending on the work with contracted staff, it’s not possible to do with permanent staff.
The recruitment process is often longer and quite tedious
Perhaps the biggest drawback of hiring permanent staff is the tedious process of sourcing, vetting, interviewing and onboarding new hires. Some processes can take up to three months and sometimes you may even fail to agree on terms, forcing you to start all over again.
So there you have it: an insight into the differences between contract staffing vs permanent employees. We hope that this has helped you get a better understanding of the pros and cons so you can figure out which solution is going to be right for your company. At Superbhire, we take the hustle of sourcing and vetting potential hires. Once we’ve got a sense of the type of candidate you are looking for, we take care of everything and all you have to do is show up for the final interview and decide whether you want to hire the candidate or not. We also handle payroll processing for you, helping you save on time, and costs, allowing you to focus on scaling your business.