contractors vs. permanent staff: the pros and cons

Businesses today have a huge range of needs and projects – and sometimes your permanent staff are at capacity or do not have the right skill sets to meet those niche business needs. 

To get around this issue, many businesses are utilising the expert and specific skill sets of contractors to ensure their requirements are met to the highest standards and in a timely fashion. For example, a number of businesses are employing contractors such as business analysts and program managers, to take on a specific need or project within their business for a set period of time.
  
But what do businesses really gain from hiring a contractor and what downsides are there to employing a contractor vs. utilising a permanent member of staff?

contractor: pros


There are a number of reasons why hiring a contractor can benefit your business, here are some positives to take note of: 

enhanced specialisation.

One of the perks of hiring a contractor is that you can benefit from the best of the best, you can choose from an expert or specialist in their field to tackle an area that you are not able to manage in-house. This means you can get back to running your business know that you have made a cost-effective decision that achieves the best results.

save on payroll and benefits.

One of the most recognizable benefits when employing a contractor is that you save on payroll and benefits. While you may have to pay them a little more per hour, you do not have to commit to a salary and their contract can be utilized during the period when your need is at its highest. The contractor will know in advance that the contract will only last a certain amount of time, and you won’t have to worry about finding a way to pay them after the work has slowed down.

less commitment.

If you find that a contractor doesn’t meet your needs or doesn’t deliver on a job you are able to manage their performance more easily and can be more transparent about the results that you can be with a permanent member of staff.

save on insurance.

Contractors are covered by their recruitment agency and will not need to come under your own insurance policy, for example Randstad holds both Public Liability Insurance as well as Accident Compensation Corporation (ACC) for their contractors. So, in the event of any unforeseen circumstances your contractor is covered but not at your expense.

 

contractor: cons

may have to wait for service.

If you want a particular contractor who is excellent in his/her field, you may be at the mercy of their calendar and may have to wait until they have time to work for you. If you want to re-hire your favourite contactor but find they are booked up and your job cannot wait you may find yourself in a tricky situation. 

learning curve.

Your new contractor may be an expert in a certain field, but there is always a level of knowledge about your business systems they he/she will simply have to pick up on the job. Learning how to navigate your internal systems, processes and communication with other staff can waste those precious contract hours and every time you employ a new contractor you will have to start the process all over again. Conversely, you only have to teach permanent employees once. 

less task flexibility.

A permanent employee comes with the benefit of performing the task they were hired to do as well as the flexibility to dive into other tasks that need doing – whereas a contractor will likely only be there to do one thing. While this might not be a problem for larger companies with more specialized roles, smaller businesses might have a hard time adjusting to this rigidity of responsibilities. 

less control over messages and brand awareness.

Contractors will have their own working methods and ideas that may have come from other companies and projects they have recently worked on, whereas permanent employees will have been immersed in your brand and work culture for enough time to be trusted with delivering on-brand messages not just internally but also externally.


Employing a contractor allows for more specialization, may end up being easier on the budget and could provide less risk for your business. A permanent hire, however, could shine in the areas where contractors fall short: they are always at your direct disposal, their learning curve serves as an investment, they understand your brand and culture and they offer more role flexibility within the role.

Remember contractors are still people, if they are working for you on a long-term basis you should consider how they will rate their experience with you as an employer. Including long-term contractors in office events, onboarding and treating them as one of the team can really enhance their performance and how they are perceived by the rest of the team.


This article first appeared on www.randstad.com.nz
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