15 Jun 2023
Ever wondered whether you need to bring in a new employee or a self-employed contractor to work on your exciting new project? It’s a big question for any business, and both have pros and cons, but the best solution depends on many factors.
To make things simpler, we’re going to break it all down here.
Speed of Hire
Hiring a contractor will likely bring a quicker start date than a long-term employee, meaning work could start sooner. Many contractors have gaps in their schedules as they regularly focus on short-term project work with precise end dates and are more likely to be available to start quickly. Long-term employees, who are likely to be employed elsewhere, would generally need to give notice to their current employers, so expect to wait a good month before they can start with you, and possibly up to 3 months.
This flexibility is one of the most attractive reasons to hire a contractor. Doing things this way will give you a much quicker start to the project and you will begin to see tangible results much more quickly than having to go through a protracted employment process. There are also many freelance contractor marketplaces online such as freelancer.com or upwork.com which can make it easier to quickly find someone with the kind of skills that you are looking for.
Employment Costs
A contractor will undoubtedly cost more in real cash than an employee over the time period of the project, but essentially you’re paying for convenience. You will, of course, find that with contractors, the outlay for things such as sick pay and holidays is unnecessary, which can reduce costs and extend the length of the project.
Additionally, with contractors, if it doesn’t work out, you won’t have to go through the complex and possibly lengthy process of firing them - simply cancel their contract if the terms you have agreed allow for that. You should obviously carefully peruse the terms of the contract that you agree with them before starting but most have reasonable contracts that make provision for what happens if either or both parties agree that it isn’t working out.
As projects become more long-term, contracting becomes less and less efficient. Eventually, it becomes more efficient to have an employee who can also be asked to do other odd jobs in between or alongside other project work. For long-term roles, employees will develop a sense of loyalty and pride for where they work and feel like an essential part of the team.
Knowledge Retention
With any project work, employers should always make provision for the detailed project, technical and operational knowledge to be documented and retained within the business. There is a risk with hiring a contractor that some elements of these are lost with their departure, and then the additional risk of having to pay again to bring them back. Having said that, if they were contracted to document the process as they went along and turned this over when they left, this should allay much of the concern in this regard.
On the other hand, with a dedicated, long-term employee, the knowledge is retained within the business and with the broader project team.
Flexible working
With employees, it’s not uncommon to have incentivised premium working arrangements or fresh negotiations to get them to work at different locations. Contractors will generally work anywhere they are required with little fuss as long as this is something agreed upon in their contract. With the advent of remote working, it has become easier than ever to hire a contractor and have them start working from a remote location and quickly make progress on taking a project forward.
Training
Hiring a contractor generally means you are bringing in someone who can hit the ground running. There should therefore be minimal training costs; induction for a contractor (whilst still necessary) should not be as involved as that for an employee.
In addition, they should not need any technical training at all as they are being paid for their expertise in the area concerned. This can be a major benefit to your business as they can make a start without having to undergo extensive training to bring them up to the required level.
Experience
One major benefit of hiring contractors is the experience they bring with them. Not only should they have the relevant technical / job-specific skills and experience at a high level, but they should also have a broad background carrying out similar work across several organisations. Technical expertise aside, experienced contractors who have worked in other organisations can bring a whole new perspective to project management. They bring with them a whole range of different experiences and can help to anticipate any potential problems and head them off in advance of them occurring because they know how similar projects work.
Employee Relations
Finally, hiring a contractor can harm employee relations within the company. Many employees will feel overlooked if you bring in an expensive outsider to work on a project; there can be negative feelings about lost opportunity, missed promotion, and lack of development for existing staff.
While these are entirely understandable, there are often just no people within the company with the requisite level of skills. Explain that the person you have contracted with is someone with the skills and experience that you need for this particular project, and they are filling a skills gap that currently exists temporarily.
Explain to your employees that you are happy to support their development and their taking the chance to work with and learn from the contractor will stand them in good stead for the future and should help them to improve and build their own skill sets so there will be less need for outside contractors in the future.
If the contractor approach is the one you favour, then communicate with your existing staff to let them know and explain why. If you have union recognition agreements in place, ensure your local reps are also fully informed.
