Short-term contracts can help to create long-term benefits, says Tony Wai, managing director for contracting solutions specialists Crackerjacks.
For small businesses, the idea of taking on new permanent staff this year may be too big a leap, but hiring some key contractors can be a good short-term solution.
We are thinking of taking on a contractor or two to our business in the New Year. How do we go about finding the right people?
The first step is to be very clear on the type of person you want as a contractor in your business. Key requirements to identify involve the type and level of skill needed, with specific experience and performance that was essential for prior roles that are similar to the one you have on offer. The next point to establish is how much you want to spend. Generally contractors command an hourly rate which is 137 per cent higher than it would be if you employed them permanently.
You can find them through a full service contracting agency - this tends to be quite expensive, typically 15 to 20 per cent increase in rates over and above what a contractor receives, but can be effective and quick. Second, using a job board; cheaper but can be hit and miss depending on who's looking for a role at the time. Lastly, you can work through a service such as ours at Crackerjacks which has an active database of contractors and a range of services covering a DIY approach to a full service recruitment offer at a reduced rate.
What are the main advantages to using contractors versus taking on full-time employees?
Historically contractors have been used in short-term assignments for, first, role coverage such as maternity leave, hand-over coverage and so on, and secondly for projects. A good contractor should have successfully achieved in similar role assignments in their career. They should also be slightly more senior than the role would justify for a permanent employee.
Given the short-term nature of role assignments, a successful contract is one where the job is done with little down time.
Ideally the contractor should get up to speed quickly while having no dramas during the assignment while following the brief.
More recently contractors have been used to structurally enhance clients' businesses by getting involved in change-strategy. In many instances this has enabled a fulltime employee at a different level to come into the business thereafter.
The economic cost of using a contractor can therefore often be cheaper than a fulltime employee for the assignment when you look at the output delivered over a wider timeframe.
We are nervous that when you take on a contractor, we don't want to give them our most important company information. How do we protect ourselves?
We stress the importance of having a contractual relationship with a contractor that directly covers the legal conditions that you want an independent contractor to work under. It is no different to what you would expect with a permanent agreement where confidentiality and protection over internally generated intellectual property is outlined. Including a confidentiality or non-competitive clause in the contract could be a way to ensure your business is protected.
How long do companies tend to keep contractors for on average? Can it be more expensive than hiring an employee?
It is difficult to be classed as a truly independent contractor where the assignment spans beyond nine months (full time).
Beyond this tenure the client is at risk of having to treat the contractor as an employee of the company. I would say most contracts will last for approximately six months, but it does depend on the type of assignment.
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