To Contract, or Not to Contract-- That is the Question...
Brad
Spring is here and that typically means change is in the air. Of course, a very welcome change when it comes to weather, but perhaps a change in your career as well. Since 2020, the job market has been as hot as I can recall in my professional career. There was absolutely no fear in taking a new position…even if it was one you weren’t entirely sure about. Let’s face it, it seemed as if everyone was hiring - so getting another job, if needed, didn’t seem like a daunting task.
Despite rising inflation and news of large-scale layoffs in some sectors, the job market is still very hot. That said, it seems people are approaching it with slightly more caution in recent months. In my opinion, that’s a great thing. A job or workplace is likely where you’ll spend the majority of your waking hours M-F so it should be something you enjoy…or at a minimum, get paid a decent wage to tolerate. When thinking about a career move there is plenty to consider:
Remote, hybrid or onsite?
Staying in the same industry or changing careers all together?
And, the reason for today’s post –
Contract, contract to hire or direct hire?
Below is a brief, incomplete, look into some pros and cons of each job type – contract, contract to hire and direct hire.
Direct Hire
I have been in the Staffing business for nearly 16 years. If I had a penny for every time someone told me “a direct hire opportunity is a safer job option”, I’m confident I could spend a lot more time on the golf course! Realistically, I just don’t believe this to be true... especially in Michigan, an “at-will” employment state. If you are not doing a good job for the company, FTE or contract, it is likely your stay with that organization will be short-lived. I have placed people on contract that have stayed with the same organization for over 14 years. In the meantime, at the same company, hundreds of FTE workers have been let go.
The primary reason? Our contract resources’ skill sets were of more value and they made themselves indispensable.
All that said, there are still pros and cons and I will break some of those down below. At the end of the day, if it makes you feel better personally to go the direct hire route, it’s hard to argue with that. You’re the one who has to be comfortable with this decision.
Pros:
· Treated as an FTE and included in all employee events – perhaps stronger culture
· Holiday schedule of the employing company
· Benefit packages – PTO, health insurance, fringe benefits, etc.
· Structured career progression
· Potentially paid training opportunities
Cons:
· Pay scale is typically less for FTE vs contract
· Higher chance of getting “pigeon-holed” into same role, duty, or technology
· Potentially less flexible work schedule
Contract to Hire
This tends to be a middle ground for a lot of companies. The “try before you buy” method. This is also a great model for candidates too as they get to see the culture and workplace in action before making a long term commitment.
Pros:
· Short term commitment to see if you like the tech stack, project, and team
· Often higher pay in the contract portion before hiring in
· Typically, faster interview and decision process
Cons:
· Perceived lower job security – but as I mentioned, I don’t believe this to be true.
· If you don’t like the company, you’re starting the job search again in 3-6 months. Is this really a con? If this was FTE or contract and you didn’t think it was going to work long term…you would likely be in the same boat.
Contract
The most important part of working contract or contract to hire is carefully selecting which staffing firm you are trusting with your career search. As an industry professional, I assure you we are not all built the same. There are many companies that will treat you as a number and move on as soon as they realize there is no money to be made. That said, there are several out there, Custom included, that are built on values and have a genuine interest in helping candidates. Of course, we get compensated financially; however, it’s in our best interest you have the best experience possible. We want to work with you again and again, should the need to explore new opportunities arise.
Pros:
· Higher hourly wages
· Get paid for every hour you work
· Growing your tech stack and learning new technologies
· Exploring multiple industries
· Flexibility in working hours
· If working with a reputable staffing firm, often times benefits are offered
o Benefit packages – PTO, health insurance, fringe benefits, etc.
· If working with a reputable staffing firm, you’re also likely to receive:
o Support while navigating increased responsibilities and pay increases
o Assistance coordinating 401k and benefit offerings, etc.
o Built-in advocacy for any potential transition to FTE
· Increased accessibility and visibility to hiring managers that may not be available when applying through company portals
Cons:
I’d love for this to be a true “mic drop” situation and say there are no cons. However, that would not be fair and, ultimately, extremely biased. There are definitely some perceived and potential real cons.
· Potentially working with a staffing firm that doesn’t have your best interest in mind
· Perceived lower job security
· Potentially logging hours in 2 places (1 for the client and 1 for the staffing firm)
· Potentially feeling like a “contractor” vs. an FTE employee – not participating in all company functions
· Possibly few options for advancement – however, I say this only as a possibility. We have placed many people on contract that we have then been able to help move forward within the same organization and into new companies for solid career growth.
Bottom line: there are benefits to all three types of employment. As mentioned, you need to ultimately do what makes you the most comfortable. My goal is to hopefully shed some light on the opportunities from a contract staffing point of view and help people realize there are good organizations out there to help maximize your experience. Hopefully the next time a Recruiter gives you a call about a contract to hire or contract staffing opportunity you will hear them out. These roles can not only be financially rewarding but propel your career in a positive direction!
—Brad Burton, President- Custom Business Solutions, Inc.