July 8, 2024

The Definitive Guide to Contract Recruitment 

Wilson Cole

You know how difficult and time-consuming it can be if you're involved in recruiting and hiring employees for your business. This is particularly the case for companies in the technology sector, where talented employees are in historically short supply and high demand. 

You may have considered whether contract recruitment is right for your company, to complement your other staff recruiting approaches. If you're wondering whether this might be the right decision to make, you're in the right place. Below, you'll find a comprehensive rundown: what contract recruiting is and how it works, the pros and cons, and some additional factors to take into consideration when looking at contract recruiting for your business. 

 

What is Contract Recruiting? 

At the most simplistic level, contract recruiting means hiring an employee with specific skills to complete specific tasks for a fixed period. This can be done by the employer directly; in which case the contract is between the company and the employee they hire. It can also be accomplished by working with a contract recruiting service. More on that in a moment. 

A contract employee is similar to your regular employees in some respects and different in some others. In terms of the work the employee does for your company, or the way they interact with their colleagues and supervisors, there should be very little difference between them and your other employees. The differences between the two are primarily on the 'back end' -- the obligations you have as an employer. When an employee is working on a contract basis, there is considerably less complexity in terminating employment as compared with a regular employee, and there are typically fewer administrative obligations related to payroll deductions and benefits. In fact, when working with a firm acting as Employer of Record, there may be none, as you'll see below. 

 

How Does Contract Recruitment Work? 

When you incorporate contract recruitment into your staffing strategy, you typically contract with a partner company. This company should work to gain a comprehensive understanding of your business and the people you need -- the skills, experience, and attributes that will make them successful employees, and the time that you'll need them. Also, the company then works to source candidates who align with your requirements and would be available to commit to your company for the duration of the contract. 

There are various ways in which a contract recruiting firm is paid. Some operate on a fixed-rate basis; others charge a percentage of the employee's salary for the time they are working with you. If the firm is also acting as Employer of Record for the contract employee (in which case they assume responsibility for payroll compliance obligations), there is typically an additional fee for that service. 

 

Pros and Cons of Contract Recruiting 

As with any business decision, there are pros and cons when incorporating contract recruitment into your talent strategy. However, in most cases, this move has fewer downsides than upsides, and the downsides can be managed. 

 

First, the pros:  

Flexibility 

Contract recruiting gives you the ability to scale up and scale down as required with equivalent ease. You can better manage the ebbs and flows of demand as projects ramp up and down, with less logistical and compliance difficulties of hiring and downsizing. 

 

Access to Talent 

At any given time, there is a rotating roster of talented individuals beginning and wrapping up contracts. This continuous cycle of prospective candidates expands your talent pool well beyond the range of regular employees looking for a full-time permanent position. Additionally, working with a partner company gives you immediate access to that firm's pool of pre-vetted candidates. All of this adds up to faster access to a wider range of talent for your company. 

 

Speed  

Contract recruiting typically gives you access to employees in days, rather than weeks or months. There's a steady supply of contractors available on the market at any given time, and -- unlike their employed counterparts -- they don't need to provide notice to their previous employer. Onboarding a new contract employee tends to be seamless as well, since experienced contractors are accustomed to ramping up quickly in new companies and projects. 

 

Less Risk 

Two kinds of risks are mitigated with contract recruiting. The first is the risk of a bad hire. When hiring a permanent employee, it can be complex and cumbersome to terminate that person's employment, not to mention the impact on the employee's team and their projects.  

 

A contract employee, by definition, is with the team and company for a fixed and defined period. If it isn't working out, cutting ties is easier and less disruptive. This isn't to say that a good contract employee doesn't integrate with the team; they do. But the relationship is more transactional. They're there to perform a specific function, and then they likely will move on. 

The second risk that is lessened with contract recruiting involves the financial and regulatory compliance involved in hiring people in a new, unfamiliar market. Working with a contract recruiter -- particularly one equipped to act as Employer of Record -- minimizes and even eliminates this risk. 

 

Although the upsides are numerous, there are a few potential cons to consider.  

Loyalty and Commitment 

Contract employees aren't generally expected to have the same loyalty to the company as a full-time, permanent employee. It's not that they don't have commitment; it's just a different set of expectations. It's transactional in the way one has a commitment to providing excellent service to a client. However, this dynamic can be addressed by putting effort into creating a solid employee/employer relationship -- by showing that you value contract employees no less than their colleagues and that while the relationship is different, it's still important. 

 

Culture 

Creating a cohesive culture is challenging enough when a company's employees are on the same playing field. When there are two kinds of employees -- full-time and contract -- there can be a tendency for two separate cultures to form: One created by the regular employees, the other with everyone else. However, this doesn't necessarily have to happen. If contract recruiting is in your company's future, managers should be coached on ways to bring teams together, regardless of their status with the company. 

 

Is Contract Recruiting Right for Your Company? 

If you're considering whether contract recruiting is the right move for your company, there are some questions that can be helpful to ask. 

 

What's our intention? 

Is your need for contract recruitment short-term, to solve an immediate problem, or is it part of your overall growth strategy? Where do you need the most flexibility to scale up and down in your organization? What kinds of skills and experience have been difficult to find in regular employees, and might provide the best target for contract recruitment? The answers to these questions will help ensure that your approach to contract recruiting is strategic and aligns with your company's priorities. 

 

How will we balance contract recruiting with recruiting regular employees? 

In many cases, contract employees are recruited to supplement teams of permanent employees to balance capacity and demand. Sometimes, companies recruit contract employees for very specific skill sets that aren't required on an ongoing basis. Understanding where contract recruiting fits into your overall recruiting mix will help prioritize the right areas. 

 

What's our vision? 

Some companies want to build a large team of dedicated, long-term employees. This doesn't rule out contract recruiting altogether, but your decisions should align with the company's long-term vision. 

 

How sensitive and confidential is our environment? 

Contract employees certainly can be trusted to work with confidential and proprietary information, but the level of security involved may influence your decision as to whether contract recruiting is the right decision for certain projects. 

 

What kind of contract recruiting partner would be the best fit for us? 

Some contract recruiters work entirely on their own, offering services to a very small number of clients. While the relationship can be very high-touch, in some cases, the firm's reach and access to candidates can be limited. Working with a larger organization can result in a different kind of business relationship, but this kind of organization can bring resources to the table that a small firm sometimes can't. 

 

What information will a contract recruitment firm need to do the best job for us? 

A contract recruiter can only provide results as good as the information they're given. Consider factors such as job specifications and expectations, skills and experience needed, culture and environment, management and working style, and others. The more comprehensive a picture your chosen recruiting firm has, the better able they'll be to act as your partner in the market for contract talent. 

 

Final Thoughts 

The decision to incorporate contract recruiting into your staffing strategy shouldn't be taken lightly. Weighing the pros and cons and being intentional about your plans will help to ensure that the move is the right one, when and if you decide to take it. 

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Wilson Cole

Adams,Evens, & Ross-NC,LLC

Founder and CEO of Adams, Evens & Ross NC, LLC, the nations largest credit and collection agency design exclusively for the staffing and recruiting industry. In 2008 he was inducted into INC. Magazines, "INC. 500" for being the CEO of Adams, Evens & Ross NC, LLC, the 307th fastest growing privately held company in America. This exclusive group of other INC. 500 CEOs includes Bill Gates of Microsoft and Larry Ellison of Oracle.In 2007 Recruiting & Staffing Solutions Magazine's Editorial Staff named him " The Billion Dollar Man" due to the fact that he had collected or helped his clients collect more than 1 Billion dollars in past due debt over his career of 30 years as CEO of Adams, Evens & Ross NC, LLC.