Hiring independent contractors instead of full-time employees offers many benefits. Independent contractors are paid on a per-day basis through a limited company, rather than through PAYE. They can provide you with flexibility, expertise, and a wider range of people and skills to choose from.
Contractors, also known as "contingent staff" are particularly useful when you need expert assistance quickly. You can hire someone with highly specific expertise who excels in their field.
Many professionals, such as software engineers, project managers, and demand managers, choose to work as contractors because it offers them flexibility, creativity, and the potential for higher earnings.
They receive a daily rate and can reduce taxes by offsetting legitimate expenses through their company. While their services may come at a premium, you often get what you pay for in life.
Well, a rule of thumb is to calculate the cost of a permanent employee package in your company, including salary, bonus, pension, health plan, Employers PRSI, options (if applicable), and any other benefits associated with a permanent hire. Divide this total by 232 to get the equivalent daily rate for comparison with a contractor and their offerings.
Many companies, especially larger multinationals, focus on building a blended workforce that includes permanent employees and non-employees, commonly referred to as contractors.
These contractors can take various forms, such as daily rate contractors, temporary workers, or freelancers/gig economy workers paid by the hour.
So companies hire part-time contractors because it gives them a competitive advantage.
1. Increased Flexibility: When you don't need someone full-time and want to avoid the hassle of finding more work for a permanent hire after a project finishes, contingent workers can provide the solution.
They can be found quickly, onboarded efficiently, and start working immediately with fewer employment law issues to worry about.
Once their work is complete, you have the option to keep them in mind for future needs. Contractors who have already worked with your company are familiar with its operations and have gone through the onboarding process, making re-engagement faster and smoother.
By reducing costs and gaining faster access to talent, companies can increase their agility, improve supply chain control, and enhance overall efficiency. Additionally, terminating employment and disengaging becomes easier, which is appealing for many businesses.
2. Overheads: Overall, independent contractors are often cost-effective resources. They can be engaged for a specific period of time and bring specialized expertise that may be challenging to find or recruit among your current employees.
Once you establish a system for hiring, engaging, and managing contractors, there are minimal overhead expenses associated with expanding your pool of contingent workers.
Engaging independent contractors offers several financial benefits, such as not having to provide traditional benefits like health insurance, stock options, or retirement plans.
3. Increased Productivity: Instead of a generic job description, Independent contractors are given specific project goals when they are hired. Because their job is to focus solely on solving problems, identifying, and implementing solutions, they often achieve these goals faster than traditional workers.
Hiring an independent contractor for a project instead of investing time in hiring an employee with the same skills makes more sense for many companies. Independents operate as their own business, completing the work outlined in their contract for a client.
Once the project is complete, the independent contractor moves on to their next gig. There's no need to deal with discussions of continued employment or termination.
While they report to a manager, they require less oversight than a traditional employee.
One downside of hiring a new employee is the time it takes for them to learn their role. Independent talent, on the other hand, should already be an expert, requiring less training.
This reduces onboarding time, which is helpful for managers and allows projects to start faster.
Managing a contractor isn't quite like managing an employee, but it's not altogether different either. There's a delicate balance you'll need to achieve to reap all the best benefits of hiring an independent contractor.
Good work is hard to come by. Hiring a contractor is beneficial for your business because it allows you access to people with specialized skills.
So, when you find a good one, you'll want to make sure they're motivated to stick around and get the most return from your investment.
Contractors are people, and motivated people work better. Being organized and efficient will help you get more value for your money. Here are some ways to manage your contractor more effectively.
Before making important decisions on how to manage your new hire, it is crucial to clearly define their responsibilities. Without this information, both you and the new hire may experience confusion and frustration, and it will be difficult to measure success.
Provide a detailed timeline with a final completion date, clearly define the expected output, specify their role and responsibilities within the team, and establish a plan for managing any changes to the existing plan that may arise.
Utilize a comprehensive job specification with outlined deliverables and refer to it during the appraisal process. Once everyone is clear on the requirements, it is important to set expectations for the partnership.
This can be achieved by creating a formal document that outlines the project's scope, including a schedule, milestones, key dates, tasks, project goals, privacy requirements, and payment terms.
When onboarding a contractor, it is common to involve a recruitment agency that can provide a detailed legal contract and terms, as well as manage billing and payments on your behalf.
This may seem counter-intuitive since they are not regular employees, but bear with me. Good contractors provide the expertise you need. However, if it is their first engagement with you, they are new to your business and will need to understand how work is conducted in your environment (processes, stakeholders, systems).
Take the time to explain the goal of their work and how it aligns with the bigger picture for your company. This will enable them to make informed decisions that support strategic business goals.
Ensure they have a point of contact for fast access to information. When they feel welcomed, treated with dignity and respect, they will be more invested.
Just like employees, contractors prefer to work for companies that make them feel valued. Although they may prefer not to get involved in office politics or form deep relationships, if you include them and treat them as integral team members, it will be beneficial.
Be aware that this may not necessarily make your permanent team more appreciative.
If possible, invite them to attend important meetings, add them to the company email list, include them in team lunches, and show interest in their family and interests outside of work.
Sometimes people feel like they can't (or shouldn't) offer feedback to contractors, but this is a mistake. Don't be intimidated by their expertise or experience.
While it may not be a formal performance review, remember that you have contracted them to work for your business, so you are ultimately responsible for the job they complete.
"Inspect what you expect" is an old saying.
Start by discussing deliverables and have an open conversation about what is and isn't working, so that they feel more engaged in their work with you. It's helpful to provide specific examples of both positive and negative work and behavior rather than generalizations. Schedule a few one-on-one meetings to maintain open lines of communication.
If you are working with a reputable recruitment agency, they can often assist with the appraisal process, facilitating feedback sessions and loops to ensure you are receiving the value you paid for.
Recruiters.ie is a well-known Irish recruitment agency that specializes in providing contracting and contingent workers for various companies, including iconic multinationals in Ireland and the UK.
For more information, visit our contract hiring solutions for employers.
