May 25, 2022

The Pros and Cons of Hiring Contract Employees

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In March 2022, the United States experienced a high number of job openings, with 11.5 million available jobs, according to the Bureau of Labor Statistics. Quits also reached a series high of 4.5 million, meaning there’s a lot of opportunity for job seekers and increased competition for employers that need talent.

Contract employees can be a positive solution for businesses that need talent now. Contract employees:

  • Work on a non-permanent, short-term basis ranging from around 3 months to 1 year
  • Provide support to full-time workforces, so permanent employees get the help they need and avoid burnout
  • The month of May be brought on full-time after their contract, depending on an employer’s needs and capabilities
  • Can save companies money and resources, due to less training and fewer benefits paid out

Statista reports there were 13.6 million contract employees in the U.S. in 2020, up from 9.6 in 2010. 

Contract positions can help you meet your deadlines and project needs. The following are some pros and considerations when hiring contract employees.

Pro #1: Adjust Quickly to Workload Fluctuations

Have a big project? A looming deadline? An upcoming busy season? Contract employees can help you meet high workload demands when you need them. They can offer immediate, precise expertise, which means you don’t have to take the time to train someone internally to get what you need complete.

For example, if you’re expanding your business and you’re opening up a new office, an HR contractor can help you with hiring and onboarding. If your accountancy firm needs extra help around tax season, contractors can come in and support your full-time team.

Contract Employees can help with unexpected workload fluctuations, too. Since contract roles are intended to be short-term (unless they’re specifically designed to be contract-to-hire), there’s no need to worry about over-hiring since you can adapt a contract role to the exact needs and timeframe you have in mind. You can match a contractor’s skills and talents to the role, so they can get to work quickly with less training time required.

Pro #2: Maintain Staffing Flexibility

Contract roles give you more control over your workforce. With contract roles, you can focus on developing and strengthening your full-time, permanent employees and supplement their needs with contractors. Contract Employees enable your full-time staff to focus on using their strengths at work, which can increase productivity and boost morale.

Other benefits of a flexible staffing strategy include:

  • Decreased hiring and onboarding costs
  • Quick adaptability to fluctuating business cycles and revenue
  • Fewer legal liabilities brought forth by permanent employee-employer relationships

Contract staff can save you considerably since you can part ways and bring on replacement contract talent much more easily compared to the process involved with permanent hires.

If you have contract Employees who go above and beyond and you want to hire them full-time, you have options. In the meantime, they can support your permanent workforce, which can boost your retention efforts.

Pro #3: Evaluate Employees Before Committing

According to Northwestern University, the cost of a bad permanent hire is at least 30% of the employee’s annual salary. There are plenty of expenses that go into hiring and onboarding a permanent employee, starting with recruitment, to the time and resources that go into an interview process, to training a permanent full-time worker to bring them up to speed.

With contract Employees, you can evaluate whether or not their skill set fits a permanent position. You also get the opportunity to learn how the worker may contribute to your company culture. You can get feedback from your permanent Employees before offering a contractor a permanent role.

Your time and resources are valuable. You can protect them by test-driving employees in contract roles before offering them more long-term positions.

Contract Employee Considerations

Contract Employees offer lots of benefits, including fresh perspectives and the ability to create a pipeline of talent in your workforce. There are also some potential drawbacks to be aware of when you’re hiring contract Employees.

  •    Retention: If you hire a contractor and they excel in their position, it’s on your company to retain them if you want them to work for you full-time. The contractor may prefer shorter-term assignments or may have plans to move on once their contract ends. That means you may need to offer them higher compensation or more competitive benefits to keep them on.
  •    Dedication: Since there’s no guarantee a contract position will lead to something long-term, a contractor may not put in as much effort as a full-time employee would to impress you with their production. Employers must work to keep contractors engaged and help them like they’re an integral part of the team so that they produce exceptional work beyond what’s expected of them.
  •    Teamwork: Because contractors are typically short-term employees, they may not be as motivated to integrate into your company culture or connect with your full-time staff. For companies that rely heavily on teamwork and brainstorming, it’s up to employers to motivate contractors to collaborate effectively with full-time staff.

Despite the potential risks, contractors offer a lot to companies that need flexible workforce solutions. You can assign contractors to the projects that will benefit from their talents and adjust your staffing strategies based on their performance.

If you’re interested in adding contractors to your workforce, contact AccruePartners for a free consultation on how our contract staffing solutions can help your business.

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