Contract a path to security

More companies are bringing in talent via contracting jobs. Photo / NZ Herald

What would you do if your pay packet dried up tomorrow?

It's a question many workers face on a monthly, sometimes daily, basis as they contract their way from pay packet to pay packet.

Many job seekers shake their heads and say, "No, the contracting life is not for me. I need more security." Yet career planning experts say their preference for a permanent position is limiting their employment opportunities.

As the economy rebounds, unemployment is easing slowly. Projects that have been put on hold are being revived and organisations need to engage additional talent. However, many companies are still reluctant to commit to hiring employees in permanent jobs and are bringing in the talent they need via contract jobs.

Companies offering staff augmentation services, such as Robert Walters, confirm this trend. They say that contract positions have been the first to open up as the job market rebounds.

However, despite a thawing job market, recruiters say employers are struggling to identify talented candidates. In part they blame a preference by job seekers for permanent, more "secure" positions. Yet the reality is that employment security as we know it is a thing of the past.

"The only job security employees have is the knowledge that they have a saleable skill," says Dr James Waaldroop, former co-director of MBA Career Development Programmes at the Harvard Business School.

The future of work, he says, is in the hands of skilled, just-in-time workers.

It can be a frightening world for those for whom job security means receiving paid holidays and a guaranteed income at the end of every week. But is a permanent role really more secure?

"By nature contracting is less secure than having a permanent job but most contractors are aware of this," says Anna Brookes, senior consultant at Robert Walters' Finance Contract division.

"Contracts are generally set for a specific period of time and in most instances they run the full term and in many instances extend longer," she says. "Currently being in a contract provides a secure position but it is the downtime between contracts that creates the insecurity."

Most contractors are masters at budgeting for downtimes and scan the horizon for their next contract. Many juggle a portfolio of contracts, thriving on the variety and gaining peace of mind from diverse income streams.

"If one goes quiet, it's not the end of the world," says Bronwyn Sell, who made the call to become a freelance writer in 2006, after 13 years of employment in the media and PR industries. "Compare that to being in a full-time job in this environment, and not knowing if the next wave of redundancies is going to wash your job away."

Sell says it's far better to have a "mixed portfolio" of work. Although she doesn't get paid holidays or sick leave, she gets a far higher hourly rate than she would working full time.

Being in control of her work also gives her more freedom and greater worklife balance.

"My prime motivation was that my husband and I were talking about having kids, and I wanted to set myself up with a work-from-home business. I also wanted more control over the work I did: as a freelancer you can say 'no'; as an employee you usually can't. And I wanted variety - I tend to get bored easily."

These added benefits attract many people to contracting - something those cautious of changing their status from employee to contractor may pay to consider.

Katie Baar, a single parent with a mortgage, left the "security" of employment for the freedom of contracted self-employment.

"I did the math. As an employee I earned $20 an hour. Sure my salary was regular but so was the expectation I'd work 48 weeks of the year. I calculated I could work a third of the hours and still increase my earnings. It was a no-brainer."

"Contracting often represents a truly flexible lifestyle," says Tom Derbyshire, manager of Robert Walters' IT division. "Some of our contractors elect to work only 9 months of the year and travel or pursue other opportunities for the rest of the year."

Contracting also exposes talented individuals to cutting-edge projects, allowing them to familiarise themselves with new technologies and up-skill, he says.

A major upside for people still hanging out for a permanent position is that a contract role can often become permanent once employers have seen your skill set in action.

Plus, once you are in "their system" you can also see vacancies posted on their intranet - opportunities that you may not have been able to access as an outsider.

Freelancing can be the first step to starting your own business, which in turn could be the ultimate solution to long-term unemployment.

Also, a survey sponsored by the American Staffing Association and CareerBuilder showed workers in contract employment positions had higher job satisfaction than those in regular, full-time permanent jobs.

Despite the allure of these benefits can anyone hack it as a contractor? Derbyshire says he appreciates that for candidates used to the perceived security of a "permanent" role, the psychological "shift" to contracting can be quite hard.

Experts say those holding out for permanent roles are suffering from "head-in-the-sand-syndrome" if they fail to adjust their mindset.

"The advice I would give is to actively seek out colleagues/networks of practitioners who are long-term contractors and pick their brains as to the pros and cons."

He recommends tapping into the expertise and market knowledge of recruitment professionals: "A good recruitment consultant should be able to give an unbiased opinion as to the validity of contracting for an individual, based on their specific experience and how much their skill sets are likely to be in demand."

There are other ways to contract your way to employment security:

Upskill, keep abreast of new technologies. The key skill involved in contracting is being able to hit the ground running and be up to speed as soon as possible;

Proactively maintain a good network to "tap" into if you are seeking new work. This includes building and maintaining a personal brand online - whether via LinkedIn, Twitter, Facebook or your own blog;

Look for companies that are stable and have a good employment brand and retention strategies;

Get professional advice. Refer to the IRD website and an independent accountant to find the best structure. Many people find there is a significant tax advantage in not being employed, especially if you have a home-based office. Be sure you set aside money from each pay to put towards your tax payments;

Build a bridge to contracting by exploring opportunities with your current employer. They may be delighted to contract your services. If you can do the job more efficiently you could use the extra time to contract your skill set to others;

Do a great job - not only may your contract be extended but once you have contracted successfully for an agency, they will actively try to find you another role.

"As the market improves, this will mean that you can often find yourself moving straight from one contract to another," says Brookes.

Widening job-search criteria to include contract roles is a smart move. Job seekers can try out a variety of companies, gain experience in sought-after projects and enjoy a lifestyle many employees dream of.

Being a contractor may well be the answer for those who wish to future proof their careers.