The largest and most successful companies in the world use contract staffing as a staple in their hiring. Last year at Google, for example, for the first time in the company’s 20-year history, contract workers outnumbered direct employees.
Right here in our hometown of Portland, we’ve seen companies like Nike, Cambia, and Intel utilize contract employees to great success. Now smaller and mid-sized organizations have joined the ranks of larger companies by successfully utilizing contract and contract-to-hire to more effectively build out their teams — whether they need them only for the contract period, or they’d like to hire them permanently at the end of that period.
We’ve found that hiring IT contractors on a “temporary-to-permanent” or “contract-to-hire” basis really does work well for several reasons, which may not be as obvious as you think! Let’s take a look at those reasons why you may want to consider a contract-to-hire strategy at your business:
The contract-to-hire practice enables your business to evaluate a potential new employee on the job. It allows you to observe them first hand during this trial period to see if they truly have skills needed for the position. More importantly, you can see if they’re also a good fit for your company culture and whether their work style and values match up. This allows you to more realistically determine if they’re a good fit for permanent hire.
According to the American Staffing Association, two-thirds, or 66% of those who are offered a permanent job after temp assignment accept the offers of permanent employment – and here at ProFocus, we find that more than 90% of our contract to hire placements end up converting to permanent employees with our clients.
Hiring is an expensive endeavor for any business, in both money and time. It usually requires investment in advertising, time reviewing applications and resumes, interviewing, and training. In the Randstad 2016 Workplace Trends survey, IT hiring managers say that it takes an average of 90 days for them to fill non-executive positions on their own.
Utilizing a staffing company like ProFocus can help your HR department fill IT roles much faster, saving you costs on lost production. The staffing industry average for filling a contract role is 45 days, and ProFocus’ average is just 32 days. Contract-to-hire also allows your company to save on the costs of providing employee benefits during the trial period, such as time off or health care coverage.
Reduces legal risk.
Not only do you reduce risks of wasting typical hiring costs, but you also don’t run the risk of termination costs either. With contract-to-hire, you avoid wrongful termination or unemployment costs that you could get from a permanent hire that turns out to be a bad fit. Research by Martindale-Nolo says average litigation costs for wrongful termination can range anywhere from $5,000 up to over $80,000 – averaging at about $37,200.
Increases employee satisfaction.
A temporary placement also allows your IT consultants to make sure your organization is a good fit for them too! It gives them a chance to see if they’ll truly enjoy the job and feel comfortable with their new colleagues and day-to-day environment. This again reduces turnover, along with the associated costs. This is why it’s crucial that you’re as open as possible about the possibility of being hired permanently.
For example, does permanent placement depend upon a client’s contract extending, or sales of a new product? Or if it’s dependent upon their performance, then it’s important to let them know how they’re doing on a regular basis. See our tips on how to help a contract employee contribute more and feel rewarded for it.
Makes onboarding easier.
When an employee has been on staff temporarily, they’re already familiar with your company’s policies and philosophies. They understand the general way you operate and go about doing business, all of which will ease their transition time if and when they’re hired permanently.
The contract-to-hire strategy saves time, money and helps avoid hassles that can result from a hire that isn’t the right match. If you have questions about hiring technology professionals on a contract-to-hire basis or want to implement this practice, give us a call at ProFocus today. We understand your challenges and can help you get the right team in place.