How to tell if you need a contractor
As an employer you will always have resource requirements, but what type of worker is right for you? You will likely view full time employees as those that can provide stability. They are also usually both mentally and emotionally engaged, and this will drive them to help your business to succeed. Full time employees are often perceived as a cheaper than professional contractors who often demand a high day rate.
However, it is predicted that in the coming years the number of temporary workers and contractors employed will increase significantly. It is likely that in the future this type of worker will play an increasing part in you overall resourcing strategy.
Where do contractors fit in?
Contractors can appeal to businesses for various reasons, the real driver for this depends on the business motivations at the time.
If you have project
If a project is a one-off then often contractors would be suitable as you only need resource for a fixed amount of time. The alternative is to have full time employees that move around different projects. In this scenario you may also have skill gaps that need filling for specific projects, and contractors can help here too. Projects have the best chance of quick success if team members work solely on a project. Context switching can slow things down and this another reason to hire contractors for specific projects.
You need to bridge a gap
No matter how hard a business tries it is inevitable that employees will leave. Some of those individuals could be in leadership positions or have specialist knowledge. It is likely that you will want to replace the leaver with a new full time employee. However, highly specialised individuals often have long notice periods there, so there is usually a gap. A contractor can join on an interim basis to provide continuity while you are trying to hire a replacement.
During periods of investment or you have a rapidly changing environment
If your business is inwardly investing then contractors offer a great opportunity to bring in up capacity quickly. Usually these types of workers are available straight away and they can bring high levels of experience and skills to your team.
Contracts also end when the investment period and/or project is finished. There is also no obligation at this stage that leads to additional spend, such as redundancy costs.
In rapidly changing environments contractors provide a solution which delivers results.
What are the Financial implications?
When comparing salaries to daily rates it can seem cheaper to hire full-time employees than it is contractors. However it is important to factor in employer taxes, pension contributions, sick pay, holiday pay and other costs, as this is not always the case. That said if there is a requirement for ongoing work without an end date it is unlikely that contractor would be suitable. There are also legal consideration if you are hiring contractors in this way. Before making a purely financial decision is important to seek advice.
Your financial goals can also provide some rationale around your decisions. Contractor costs are not viewed as fixed cost in same way that salaries are. This provides some flexibility when cost savings need to be made. Where the contractor costs appears within your financial reporting will be controlled by your accountant, but you should ask what the options are to see which one can help you achieve your financial reporting goals.
An easy way to decide what you need?
It can be easy to decide what you need. If you have ongoing tasks that do not have a defined end date then it is a full time employee that you need. You may also want to consider full time project team members if you are continuously starting new projects, but try an keep them focused on one project at a time.
Contractors and temporary workers are the way to go if you have short or fixed term project needs, you have skill gaps, you need rapid change, or you need supplement your current teams with additional skills and capacity.
If you feel you may have requirements for contracting staff then please free to get in touch.