Dec 1, 2010

On CIO, an article was recently run called The Semiotic Diet: The future of work in the U.S. In this article, author Bob Lewis discusses the differences in hiring contractors vs. employees as the U.S. pulls itself out of the recession, and bluntly provides his thoughts on how companies view employees:

Most U.S. companies consider employees to be a colossal pain in the tush, and the bigger the company, the more that’s likely to be the case.

Employees, after all, require places to sit, equipment, training, performance feedback, policy management, and oversight. If they think you’ve treated them poorly they can be the source of aggravating lawsuits or complaints to the EEOC or OSHA. They’re the reason executives have to spend excessive time communicating, paying attention to the company culture, and otherwise taking their eyes off the ball of doing business and making money….

…Unless the government institutes some sort of strong industrial policy that creates strong incentives for creating stable, well-compensated jobs … unlikely in today’s political climate … the future of work, both inside and outside IT, is going to be a steady shift from employment to contract staffing.

This is a common belief, and Fordyce has provided several articles recently discussing the rising trend in contract staffing and employers’ interest in hiring contractors as opposed to bringing on employees. It is always a good consideration to diversify your recruitment service offerings, and there’s never a better time to investigate adding contract placement to your business. In fact, the January print issue of The Fordyce Letter will feature an article by Debbie Fledderjohann discussing contract staffing.

However, the CIO article takes a slightly different viewpoint and outlines several ways in which hiring employees is better for a company than hiring contractors. The following are some very valid points made in the article as to why companies should continue to hire employees instead of contractors:

  • Incentive: Employees do better when their work gets done faster. Contractors do better when their work takes longer.
  • Innovation: When employees spot ways your business can operate more effectively, they want to let you know about their ideas. When contractors spot ways your business can operate more effectively, they’ll expect you to pay them for their insights.
  • Trust: The single biggest determinant of process efficiency is trust among the participants. Without it, processes break down into unnecessary re-work, arguments over quality, and recriminations. Employees have the time, opportunity and reason to build relationships with each other. Contractors will be gone soon, replaced by other contractors, so employees have less reason to make the time or take the opportunity.
  • Institutional knowledge: Real organizations (as opposed to textbook ones) are complex networks of interpersonal relationships. When you need to get something done, understanding these networks is the difference between success and frustration. Over time, employees learn them and become adept at navigating them. For contractors, there is no “over time.”
  • Culture: Good employees fit into and reinforce the company culture. The rest generally don’t survive. It’s one reason among many that the ability to hire and retain strong employees is the most important skill business leaders must develop. Contractors rotate in and out of the organization more quickly, so at any given time more of them will be poor cultural fits than an equivalent group of employees.

Since many of you are in the business of placing employees rather than contractors, these are excellent pieces of information to share with your current and future clients to encourage them to continue partnering with you to assist them in finding and hiring the best talent. Perhaps you can even get them to pay you a 60% fee

What do you think? Do you feel that companies will be more likely to hire contractors coming out of this recession? Do you think they will be gun-shy about once again building up a workforce they may have recently had to down-size? Or do you think that companies will invest in their infrastructure and continue hiring employees? And, more importantly, how will these considerations affect your own business? Share your thoughts in the comments below.

Get articles like this
in your inbox
Subscribe to our mailing list and get interesting articles about talent acquisition emailed weekly!