When making staffing decisions, it’s important to consider all the variables. You may be hiring support growth, or bring in new clients. Other times, the role in a cost center, and you’ll need to evaluate if existing revenues can support added costs.
In some businesses, such as restaurants, the managers have to make staffing decisions on a daily basis. If it’s slow, should they cut a waiter and send them home? Or will they regret that decision if it picks up later? But many small business owners face they choices infrequently, and struggle choosing the right path to take.
The solution in that case could be to hire a contractor or temp. You may find them on a job board or work through a temp agency that screens candidates, but you have no long-term obligation to the employee. A temporary employee is just that - temporary - but they could be the answer to your needs.
When hiring a contractor is the best choice
There are some situations which naturally lead to hiring a contractor rather than a full-time employee.
Filling a temporary need
Your office manger is going on maternity leave. An employee is taking a sabbatical. While their absence will be temporary, you still need someone to do their work in the meantime.
One of the most common reasons to hire a contractor is for temporary staffing needs like these. Even if you’re not entirely sure that the employee will return from maternity leave, you must comply with legal requirements to keep their position vacant. Hiring a contractor ensures that their work gets done and that you’re following the law.
Uncertainty about Long-Term Needs
If you’re in a growth pattern, it could be hard to predict your long-term needs. If sales growth continues, you might need another support person in the back office. But if it tapers off, you could regret that hire.
Using a contractor when there’s uncertainty about the future is often the best choice. You may end up bringing them on full-time eventually, but if you realize that they’re redundant long-term you can let them go with no hard feelings.
Project Work
If a corporation is migrating to a new software platform, they may need extra help in validating data or testing the new software. But once the software has been implemented, the need will go away. Not all business needs are ongoing, and one of the best times to use contractors is when you have special projects.
Using contractors for special projects also allows you to bring in expertise that you might not have in-house. It could be expensive and unnecessary to hire a developer who’s an expert in the new software, or a data analyst to validate accuracy, full time. If they’re not already on staff, it could also take a lot of time to find the right candidate.
Contractors can be the best fit for a short-term project that demands a specific expertise.
When you Could Regret Hiring Contractors
Before picking up the phone and calling the temp agency it’s a good idea to consider some of the drawbacks to hiring contractors.
Contractors Might Charge More Hourly
Temporary employees or contractors know that their job could end at any moment. To compensate for this risk, their agency often charges a premium for their services. In short, their hourly rate could be much higher than a full time hire for that same job.
However, most businesses save money in the long run because they don’t have to provide them with benefits. If you weigh the total cost of an employee against the total cost of a contractor, taking into account why you need them and the flexibility of the hire, it still may make more sense to hire a contractor.
Contractors Don’t Have a Sense of Ownership
Full time employees have a vested interest in your business’ success. They’re a part of your company culture, and will often go above and beyond for your customers. While contractors will have their own integrity in their work, they’re not part of the permanent team.
A contractor takes ownership of their work and the role they’re temporarily filling, but simply will not have the buy-in and sense of ownership for the company as a whole. You may not need this buy-in, particularly for project work or an extremely short-term need, but think about how this could impact your business if they’re going to be around longer term.
Customers May Complain
Customer-focused businesses, where the customer demands a certain level of service and continuity, might not find that contractors are their best choice. Lack of a sense of ownership could lead to lackluster service. A revolving door of representatives servicing their accounts could lead to customer complaints.
If the role the contractor would fill is customer facing, you might want to hire someone full time.
Reviewing the pros and cons of hiring a contractor will help you make the right choice, one that will support your business and its future.