Hiring Temps and Contractors to Fill Staffing Needs | Thursday January 29th, 2004 | |
Summary: Many businesses are turning to temporary employees and contractors to meet business needs. Depending on your company's priorities there are advantages and disadvantages to hiring each one.
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There are a number of factors to consider when comparing costs for temporary employees or independent contractors versus permanent employees, such as company size, industry, demographics, project scope, position, etc. If the needs of the business are recurrent or if the project is expected to last over an extended period of time, it may prove to be more economical to hire permanent employees who will presumably become an even greater resource the longer they are with the company.
Generally the cost of temporary employees, or temps, is higher, however it is spread out over the duration of a project because hiring fees and benefits have been factored into the monthly charge. Using a temp allows your company to evaluate the worker's performance on a non-committed basis, while also providing the temp with an opportunity to see if they like your office environment and the job responsibilities before they sign on full-time. Based on the outcome you may determine you don't need someone to fill the vacant position after all, you decide to reassign some of the responsibilities, or make a different hire in another department.
Let the temp know what your expectations or plans are, as most temps will have an incentive to work harder for you if they know their work could lead to a full time-position. Check to see how much the temporary employment agency will charge if you do hire one of their temps full-time. Calculate the monthly cost for permanent employees factoring in salary and benefits to determine whether the cost would be lower for hiring a permanent employee versus a temp.
Some firms turn to independent contractors to help fill staffing needs during periods of hypergrowth or to meet specialized project needs. An independent contractor is a person who contracts to perform services for others without having the legal status of an employee. Most people who qualify as independent contractors follow their own trade, business or profession--that is, they are in business for themselves. Independent contracting is not limited to highly specialized or technical fields such as computer programming, engineering or accounting. There is hardly any job that independent contractors don't perform--from construction to marketing to nursing. The general rule to remember is that an individual is an independent contractor if you, the payer, have the right to control or direct the results of the work, and not how those results are accomplished.
By using contractors, you get a worker in right away and have time to determine whether they are delivering what your company needs. There are many distinct financial advantages to contracting out work to independent contractors, for example, no employer contribution to workers' compensation insurance or unemployment, no employer liability for Social Security or Medicare taxes, and no need to provide job benefits, including health insurance or retirement plans. Proper management of contractors is an important issue for businesses, as there are potentially serious financial consequences if independent contractors are later found to be employees. Make sure that you don't misclassify workers that you hire as independent contractors.
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