Contractors. Freelancers. Temps. Permanent hires. There’s no shortage of methods to staff up your business. But what’s the best method for you? And how do you identify which type of employment is best suited to an opening? Here are some general points to consider when matching a new hire with a type of employment.
Contractors and freelancers
Specialized skills required for a one-off project are often best supplied by contractors. Great examples of where this is beneficial can be found in web design agencies; often, they’ll win contracts to build websites that require specialist coding knowledge. Rather than hire a new employee, it makes more sense to bring in a contractor or freelancer (essentially two words for the same thing) with specialist knowledge only for the time required.
In these cases, it makes sense to negotiate a contractor pay package for the specialist to complete the project rather than paying based on the number of hours the contractor works. This has two major benefits: first, it ensures that there are no extra labor costs involved should the contract run longer than expected; second, it ensures that the person remains a contractor and not an employee. This second point is important as, legally, many contractors who are paid for an amount of time that they spend working for a single employer may actually count as employees. This means that they may be entitled to benefits such as overtime pay, annual leave, and pension payments, increasing your hiring costs.
In order to be absolutely sure whether somebody counts as a contractor or employee, it’s advisable to speak to contractor pay experts. They’ll be able to advise on the best way to handle freelance contracts and contractor pay.
Temps (short for temporary workers) differ from contractors and freelancers in that they are usually paid based on the time worked at a business, not on a per-project basis. Temps have many of the same rights and entitlements as employees, and they usually (though, not always) have a more general skill set, rather than specialized knowledge. For this reason, it is common to see temps employed for admin-based work such as answering phones or entering data into databases.
Many temp agencies will already have candidates on hand with the basic skills required for a job – whether it’s filing in an office or washing plates in a commercial kitchen. Engaging a temp agency is a great way to fill gaps in unspecialized work. They’ll handle recruitment, employment contracts, and payment to the temp workers.
Hiring an employee on a permanent basis makes most sense when your business has an ongoing need for somebody who can fill a particular role. Whether it requires specialized or unspecialized skills, it’s a great way to permanently fill a hole in your business.
The hiring process is where many businesses trip up, however. In fact, many business commentators cite ineffective recruiting as the reason for a myth of skills shortages. It’s important to get the hiring process right from the beginning. You’ll need to determine:
- Whether this job really is permanent. Would this role be better suited to a temp or contractor?
- Whether an existing employee can fill the role. Is there somebody you’re overlooking? You may not need to recruit at all.
- Where to advertise so that the best candidates see your available role. Using an employment agency is lazy and ineffective – most will simply post a job ad somewhere that you could have posted yourself and then send the candidate straight to you. Consider job boards, Facebook, Twitter, and LinkedIn as thought-starters.
- Whether a current employee can recommend somebody for the role. They’ll be well placed to determine whether there’s a good cultural fit.
- How shareable is your job advert? Make it easy for employees to share job opportunities on social media by ensuring that it’s in a universal format.
- How easy do you want the process to be? A complicated application process can drive even the most determined candidates away if it’s the seventh or eighth one that they’ve had to complete that same day.
Increasingly, employers are opting to fill roles with initial contracts that offer an option to become permanent. For example, instead of putting a six-month probation period in place for a permanent hire, many businesses now hire employees on a six-month contract. If they prove that they can do the job well, the business can then opt to offer the contractor a permanent position with no probation period. This can be a great option to reduce the risk on both parts.