Contract, contract-to-perm, permanent – which should you choose? It all depends on what’s right for your business.

Deciding to hire someone as a contractor, permanent employee – or somewhere in-between – is not a decision to take lightly. A variety of factors must be considered before making a choice. And you must ask yourself a few major questions to ensure you hire the correct type of worker. The questions are:

1. What is the scope of work?
2. What can we afford?

What is the scope of work?

This is probably the first and most important question for you to answer. As the hiring manager, you may be forced to truly evaluate the department’s needs. First, determine exactly what work is required and in what timeframe. Once you’ve figured that out, it becomes a little easier to know which type of employee is necessary.

If you have a large project or initiative that needs to be implemented within a certain timeframe, it will most likely make more sense to hire a contractor. Hiring a full-time employee wouldn’t necessarily be beneficial in this situation. Once the work is done, you might not need that employee and specific skillset.

Although a higher hourly rate will most likely be paid to the contractor, it will still save your company money in the long run. It can enable you to eliminate high-cost items such as health insurance or other benefits and perks that are paid to full-time employees (depending on the contractor’s classification).

If a thorough review of the department’s workload reveals an ongoing need, then it might make sense to hire a permanent employee. However, the cost of hiring a permanent employee is usually higher than people realize. So, it’s a good idea to make sure you vet the candidates properly and hire the best one for the job.

One way you can accomplish this is by utilizing a contract to permanent hiring model. Third-party staffing agencies usually offer this option, which can be a major benefit to employers.

Using a contract to permanent model essentially provides both parties an extended working interview. If you realize the individual is not the right fit for your organization – no harm, no foul. You didn’t invest the valuable resources and hiring costs associated with in-house permanent recruiting. If you do feel the employee is a good fit, you simply pay a small fee to the staffing agency and welcome the individual as a permanent employee.

What can we afford?

Budgets always play a huge part in hiring decisions. You may be looking to hire one or more full-time employees, but your limited budget won’t allow it. Contractors can be a justifiable alternative to permanent employees in this situation.

You would first have to help your leadership team understand that more manpower is required to successfully accomplish your project(s). Then, present the cost savings that can result from hiring contractors and avoiding paying for the benefits for permanent employees.

A major advantage is the ability to employ great talent to do the necessary work with the flexibility to wait until your company is in a place financially to hire them permanently. Because the contractor will already be familiar with your company and their job duties, the onboarding costs associated with hiring should be minimal compared to a brand-new hire.

Making the call

The decision to hire contract, contract-to-perm or permanent employees is one that involves much thought, consideration and scrutiny. There may not always be a clear-cut right or wrong answer. But doing your due diligence to make the best decision will result in tangible benefits for you and your company.

Want help figuring out what works best for you? Our team of experts would be happy to consult with you and walk you through the process!