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Full-Time vs. Contract Employees: Which One Should You Hire?

February 4, 2016

hiring-question.jpgThanks to both the increased globalization due to the interconnectivity provided by the internet, and the ever more frequent advances in technology automating jobs in select industries, there is a growing number of individuals joining the so called ‘non-traditional’ workforce. Including contract employees, freelancers, and individuals with a niche skill set, the non-traditional workforce is seen across a large variety of different sectors and organizational levels.

An increasing majority of these non-traditional employees have chosen to identify as such due to evolving beliefs and attitudes regarding the nature of the employer-employee relationship. In addition, higher value is being placed on intangibles such as flexibility and autonomy, which many organizations work to provide to attract full-time employees, but not always to the degree that is desired by these non-traditional workers. Because the number of individuals that count themselves among the non-traditional group is steadily increasing, it would behoove organizations to take a hard look at the pros and cons of hiring each type of employee.

Traditional vs. Non-Traditional Employees

Let’s take a look at some of the pros and cons between full-time and contracted employees. To start off, full-time employees can be a more cost-effective option when looking at the comparable financial burdens a contractor would incur for performing the same amount of work. From the perspective of hours spent on a project or task, a full-time employee is typically the cheaper option.

However, when outside of that perspective, considering benefits, trainings, and salary increases, things irrelevant to a contractor, a full-time worker can be more expensive in the long run. Full-time employees are able to be trained or fit to a specific role or project. If your organization is beginning to explore a new technology, or expand into a new market, investing the time and money up front to turn a full-time employee into a specialist or expert allows you to have a permanent staff member that knows every nuance and detail. A contractor coming into such a niche project or task might only have the skills applicable to a piece of it, or not get the job done as well overall. On the other hand, a contractor does not cost the organization time or money to be trained in a specific field, so if a third party with the specific skills needed for the transition to that new technology or market can be found, that option could be much more appealing.

A full-time employee is a much more permanent resource, more likely to build company loyalty and feel a personal connection to the goals of the organization, which can result in higher productivity. A contractor might not develop that level of investment into the organization or its goals, but if properly vetted, can provide the same level of productivity. An organization also has more control over a full-time employee, able to direct their efforts, whereas contractors may not be as receptive or may have other commitments that they are balancing. However, a contractor may still be a useful resource despite not being subject to the same level of control. Finally, the process of bringing a new full-time employee on board can be cumbersome. Interviewing, onboarding, and training a new employee can take anywhere from weeks to months, whereas a contractor can often be brought on more quickly.

These are just some of the differences that highlight the pros and cons of hiring a full-time or a contract employee. Regardless of which route an organization goes, however, there is still one recommendation that is crucial to both types of employees.

Assessing is a Must

Despite the differences in hiring a full-time versus a contract employee, one of the common aspects shared by both groups of workers is that they can, and should be assessed prior to hire. In order to discover whether an applicant for a full-time position is going to be able to perform the work and match up well with the mission and atmosphere of the organization, a pre-hire assessment must be used. Their level of skill, how they work with others, and what motivates them are all essential factors that will affect their performance, and must be determined before sinking time and money into them as a new hire.

Similarly, it would be foolish to bring a contractor into your organization to provide a service without knowing whether or not they can adequately perform the work. A short skills assessment, reference check, and conversation with them would give an organization plenty of useful information in regards to their track record, level of ability for the project or task they’re being hired for, and history of working with similar clients. This valuable information can be used to inform the decision to hire them or not, and guide the relationship for as long as they are contracted.

Whether an individual is applying for a full-time position at your organization or bidding for a contract, it is essential to assess their ability to do the job. Determining factors such as length of the work to be done, cost, and specialization needed can all help decide whether to go with a temporary or permanent employee, but either way, you need to know whether they’ll be more helpful or harmful after hire.

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Greg Kedenburg Greg Kedenburg is an I/O Psychologist who previously worked for PSI. He is living and working in Chicago, IL.