How Do You Decide Between Contract Employees and Full-Time Employees?
The popularity of using staffing agencies as a go-to resource for creative talent has boomed in recent years. In large part, this is due to the rise of contract recruitment and contract hiring as a flexible hiring option for creative jobs.
Staffing agencies provide a solution to hiring challenges during economic uncertainty and changing consumer demand by supplying skilled workers on a temporary basis. Often this is better than having to hire someone full-time and then have them leave after a year or two.
In a rapidly shifting market environment, should your company focus on contract recruitment?
In this article, we take a balanced look at the issues involved in deciding if contract recruitment is best for you.
What Is Contract Recruitment?
Contract recruitment is a different way of recruiting staff. It works by providing a company with temporary staff who are contracted to work for a specific project or for a specified length of time.
The staffing agency you use to hire contract staff is their employer. You don’t pay the contractor’s wages or provide in-work benefits to them. While you focus on providing the contract employee with their tasks and duties, all things payroll are the remit of the staffing agency. You simply make a single payment per pay period to the staffing agency, and they do the rest.
When Should You Use Contract Recruitment?
Contract recruitment is often the best option when you are looking for someone with specific skills or experience to work on a specific project or fill a gap because of a temporary staff shortage. It can also work well for startups and SMEs that are trying to grow their team without the commitment of a full-time hire. However, it’s not just about hiring contract staff ─ it can be used as a way of sourcing candidates for permanent positions too (contract-to-hire arrangements).
Typically, contract recruitment works well if you:
- Require specialist knowledge, experience, or expertise for a short time or to help complete a specific one-off project.
- Need to hire and onboard staff quickly, without an extended hiring process.
- Wish to improve the flexibility of your business to react to peaks and troughs in demand in an evolving and uncertain marketplace.
- Require interim cover for staff absences, such as a key person quitting halfway through a business-critical project.
- Wish to upskill your existing employees. A contract employee can share their experience and expertise in a coaching or mentoring role.
- Have a restricted payroll budget. Often contract employees are not directly attributed to the payroll budget. In addition, you won’t have the added costs of compensation elements such as health, medical, and life insurances, workers compensation insurance, and payroll taxes.
When Is It Better to Hire an Employee?
Depending on the nature of the work, the skills that are required, the financial situation of your company and its business strategy, it may be better to hire an employee rather than use contract recruitment to fill vacant roles.
It is often thought that employees have a personal stake in their company’s success and will be more committed to its goals. Because they are employed, they have more loyalty to the company. And certainly, you can give them greater direction (but then again, when you hire contractors, you hire the skills that enable more autonomous work).
Usually, the salary you pay an employee will be lower than the wage you pay to a contract hire, though when other elements of compensation are included the costs of employing a permanent member of staff can be higher than those of hiring a contractor.
As you can see, there are both advantages and disadvantages to hiring full-time employees rather than contractors. The following are examples of when it is usually better to hire a full-time employee:
- The work you need to be done must be completed under supervision
- You require full control over the employee’s hours and terms of work
- You have a need for a long-term, strategic hire
- The hire is essential to the long-term health of the business, and will be expected to grow with the company as well as help it grow
- The vacant role is at a senior level, either a senior management or C-Suite position
The Bottom Line
Contract recruitment is a terrific way to find the right person for a temporary position, but there are some instances when it might not be the best option.
If you need someone who can commit to a long-term contract, or your company is in the process of long-term expansion, or you need to fill a strategic, high-level role, then you should consider hiring an employee.
On the other hand, if you need:
- expedited hiring;
- to fill a short-term need;
- to hire specific skills for specific project work;
- to help upskill existing employees;
- or you require staffing flexibility for reasons of financial or marketplace nature;
then a contract hire is likely to be best for you.
In truth, most creative and technology companies have a need for both contract and full-time employees. Often, though, the exact need can be clouded. Which is another reason staffing agencies have grown in popularity.
Here at TECHEAD we help clients to achieve their strategic business goals through strategic hiring across contract, contract-to-hire, and direct hire. Your success is our success.
To learn more about how we help our clients obtain the best talent and future-proof their high-performing teams with our creative staffing solutions, contact TECHEAD today.