Contract Staffing: Why Hiring Joe Contractor Makes Sense

Marcianne Kuethen

August 22, 2012

As a business leader, do you often wish for that magic bullet that will give you a competitive edge in the market? Of course, no universal magical solution actually exists! However, it may surprise you to know that, according to a study published in Decision Sciences, firms that used more contingent labor experienced significant increases in earnings, performance, and stock returns. Larger companies tend to regularly utilize contract employees to help control costs, meet crucial project goals, increase productivity, and minimize risk created by layoffs. Yet, due to misconceptions about contract staffing, many small- to mid-sized companies hesitate to utilize contract workers. Consider these common mistaken assumptions about using contractors, and the encouraging truth that lays them to rest:

Contract Employees Cost More

In hourly costs, it looks like Joe Contractor costs you more than Evan Employee does. You might be paying Evan $30 per hour as a Network Administrator, while Joe might cost $46 per hour for similar work. But when you stop to think that your operating expenses must cover Evan’s administrative costs such as payroll taxes and benefits (30 to 50 percent of his salary), Joe’s hourly rate is nearly equivalent.

And take into account your recruiting costs for a regular employee. Do you usually advertise, conduct assessment testing, pay travel expenses, or offer signing bonuses or incentives? Plus, think about your own loss in productivity every time you or your manager must halt your regular work to focus on hiring activities.

When you use Joe Contractor, the hourly fee includes payroll taxes and administrative costs. The assignment ends with the project’s completion, so you won’t have termination or other expenses, giving you more flexibility and fewer layoffs. The best part is the time you save because your contract staffing partner handles most of the activities you would normally do: recruiting, screening, testing, and prescreening candidates for your final interview and selection. You are able to maintain your focus on the work that makes your company profitable.

Since hiring a direct employee may take significantly longer than finding a contract worker, using Joe Contractor may also speed up project development times and help you bring in your project on time and on budget. For Joe’s comparable hourly fee, you could end up getting more specific experience and better results, ultimately reducing a product’s time to market. That’s not a magic bullet, but it’s a measurable difference to consider.

Contractors Won’t Be on the Same Page as My Direct Employees

It’s true that contract and direct employees are likely to approach the workplace with different perspectives. As an effective leader, you can encourage open communication and make these differences work to your company’s advantage. Often, direct employees have specific company knowledge and broader management skills that qualify them to manage the project, while contractors bring specialized skills to the table. Using your leadership skills, you can cultivate a partnership between the two by clearly delineating the role and contribution both groups bring to the project. Fostering personal rapport and a mutual learning atmosphere can create a win-win experience and increase productivity.

Also, every employee will be on the same page if you develop management standards so everyone is treated equitably. When tight deadlines are met, you might offer bonuses to every team member. Also, when possible, consider paying direct employees for overtime when they are working alongside contract employees who receive overtime pay. Most importantly, establish specific, measurable, and time-bound goals for each employee, and hold each one equally accountable.

Contractors Will Leave If a Better Offer Comes Along

Although most people are commonly motivated by money, Joe Contractor and his friends are a unique breed, largely motivated by the flexibility of contract work and the opportunity to learn new technologies. They enjoy the challenge and independence that varied assignments provide, as well as the freedom to choose the frequency and flexibility of their work schedule.

But they also recognize that with these privileges comes the need to be easily employable. Their reputation depends on keeping their commitment through to project completion. Joe Contractor knows that reliability is as important as competence, and he will work hard to keep you, his customers, satisfied.

Contract Employees Might Steal Our Acquired Intellectual Property

The technical staffing industry realizes that guarding your intellectual property rights is important to you. Joe Contractor is happy to sign a nondisclosure agreement legally assuring you that he will keep what you share with him confidential. When working on sensitive government projects, it is common to require contract workers to have security clearances.

Practically speaking, however, it is very unlikely that Joe will “steal” your intellectual property. First, contractors are placed on assignment because of their technical expertise in a specific area; when they finish their piece of the project, they leave. They don’t have the time or opportunity to piece together the big picture, even if they wanted to! The truth is, because they are the technical experts, your company will probably take away more intellectual property from contract workers than they will from you! That’s why you hired Joe, so take advantage of his knowledge to benefit your projects and improve the skills of your existing staff.

Contract Employees Don’t Seem to Be Managed By Anyone

On the books, your staffing agency is the contractor’s employer of record. But at your workplace, when Joe Contractor is on assignment, you manage him just like you manage your regular employees. When you hold project team meetings and process improvement activities or hand out project information, Joe should participate just like other team members. And just as you would with regular employees, make sure you develop SMART goals (specific, measurable, attainable, relevant, time-bound) for Joe, and then hold him accountable. By managing him as an integral part of your team, you will stay constantly aware of his progress and also help him to feel included.

Of course, you can rely on your staffing partner to handle certain responsibilities such as negotiating pay rate, notifying Joe when an assignment ends, and even handling disciplinary action, if needed. If the contract worker doesn’t perform as expected, ask your staffing provider about its replacement guarantee. Your staffing agency or internal human resource staff can help if you have questions about what task should be handled by whom.

Using Contract Workers Makes Sense

If you’ve previously felt unsure about hiring contract workers, addressing the truth behind these common misconceptions may alter your perspective about using them in the future.

Ultimately, Joe Contractor costs your company about the same as regular employees but gives you more flexibility. He is motivated to satisfy you, his customer, and is not a threat your intellectual property. Under your alert and capable management, he can be managed well as a part of your existing team and shares the same level of accountability as your regular employees. Although Joe Contractor is no magic bullet, he will bring unique expertise and energy to your team in a way that can help cut costs, meet deadlines, and speed up time to market—all factors you’ll want to take into account as you consider including Joe in your next hiring decision.

Do you need help acquiring top contract professionals? Let Amtec find you the best candidates to ease your pain points right away. Click here or call (714) 993-1900 to start your search.