By Robert Gallagher

bgallagher@thedenzelgroup.com

Most managers have three options when hiring: contract, contract-to-hire(a.k.a temp-to-perm), or permanent. There are significant benefits and drawbacks that come with each method and every situation is unique. While contracting has dominated the headlines lately (Uber, healthcare laws, Amazon etc.) there has also been a significant increase in employers going the contract-to-hire route. Here are the factors every employer must consider before using this option:   

 Low risk 

Even an All-Star candidate might not be a perfect fit. When a hiring manager makes a poor decision and hires the wrong candidate the results can be embarrassing. The replacement cost in firing the employee, resuming the search, and making a second hire can cripple a budget. Contract-to-hire eliminates this risk. By hiring the candidate on a temporary basis, all risk is shifted from the employer to the employee. The employer also saves on the substantial cost of providing healthcare, retirement, and other benefits that permanent employees enjoy. If the candidate is a winner, they can be brought on as full-time employees at the end of the contract. Low risk, high reward; this is why most hiring managers decide to go the contract-to-hire route.

Fast hires

The time-to-hire in the U.S. is at an all-time slow. A low unemployment rate is doing nothing to speed the process. While some companies can afford to wait for the perfect candidate to apply, others are using contract-to-hire to make immediate hires. Bringing on a permanent employee requires multiple phone interviews, on-site interviews, offer approval, offer negotiation, and barrages of background/drug screens. Bringing on a contractor requires emailing a contracting vendor and phone screening the candidate who is provided within days or maybe hours. Forget two-week notice; most contractors can start the next day. Permanent positions can take weeks or months to be approved; contractors can usually be brought on at the discretion of the manager.

Less talent

According to some theories, contract-to-hire grants access to a wider range of candidates since it possesses attributes of both contract and permanent hiring methods. This is not even remotely true. Most contractors are so by choice; they enjoy the freedom and the big paychecks. Permanent employees enjoy the extensive benefits and security that their employment provides. These are generalizations, but the fact remains that few permanently employed employees will quit their job, lose their benefits, and take a short term contract on the chance that it will lead to a permanent role. Generally speaking, the only candidates who would be interested in a contract-to-hire scenario are those who are currently unemployed. Contract-to-hire draws from the shallow end of the talent pool.

Two kinds of people…

There are no “contract-to-hire” candidates. There are contractors and permanent employees. The problem with contract-to-hire is that it caters to neither. For a former permanent employee who chooses to quit and go contract-to-hire for 6 months, those months represent a difficult transition capped off with the fear of being jobless at the end of it all. For a contractor, those six months can be spent looking for the next contract. The current market has developed sharp divisions between those who identify as contractors and those who prefer permanent employment. The contract-to-hire method ignores these important distinctions.

Contract-to-hire can’t be ignored for its potential to bring on qualified candidates on short notice with minimal risk. However, it should never be mistaken as a substitute for contract or permanent hiring methods. It is a distinct hybrid fitted for unique situations. After weighing employee concerns and hiring requirements a hiring manager should be able to clearly articulate why (or why not) contract-to-hire is the right choice for the company. If you are still undecided, feel free to contact a recruiter at The Denzel Group to try our free consultation services or visit www.thedenzelgroup.com.

ABOUT THE AUTHOR:

Robert Gallagher (email: bgallagher@thedenzelgroup.com) is an Executive Recruiter and Career Coach at The Denzel Group. He received his Bachelors in Corporate Communications from Penn State University and has published works in Lehigh Valley Business, Fordyce Letter, Tradition Magazine, InQ, and The Pottstown-Mercury. Follow him on The Denzel Group’s LinkedIn site:www.goo.gl/IWRpqh

THE DENZEL GROUP:

The Denzel Group conducts Contingent, Retained and Staff Augmentation Information Technology searches for a wide variety of clients. Using our tried and proven 17-step search process, we are able to provide our clients with critically talented Information Technology professionals in a timely and cost efficient manner. Visit us at http://www.thedenzelgroup.com