Everything Employers Need To Know About Contracts To Hire

When working with a recruiting agency, employers should know there are several different types of employment arrangements available. While most employers are familiar with full-time and temporary employment, other employment options are rising in popularity. One such option is contract-to-hire, which can provide the employer, and the employee, with valuable exposure and experience.

In recent years, the number of companies wanting to hire contract and temporary employees has increased drastically. In fact, according to a poll conducted by Marist and National Public Radio (NPR), one in five American jobs are held by contract workers. According to the study, it is expected that the number of contract hires and freelance positions will make up half the workforce in the United States within the next decade.

So, what is contract-to-hire recruiting, and why is it becoming so popular? Essentially, contract-to-hire allows businesses to hire ‘on-demand,’ enabling them to operate at desired capacity at any given time with contract hires. This employment option provides a limitless workforce for businesses, no matter if it’s short or long-term. 

To help employers make the most informed decision, we will discuss the contract-to-hire employment option, how it works, and the benefits for employers if they choose to opt for this arrangement.

What Is Contract-To-Hire?

Contract-to-hire is a type of employment where the employee (or contract hire) is put in a short-term position for a specific period of time, with the possibility of being hired as a permanent employee at the end of the contract. However, contract-to-hire positions shouldn’t be confused with self-employed independent contractors. Although contract-to-hire employees are under contract to work for a company, they are technically employed by the recruiting agency.

How Does Contract-To-Hire Work?

When an employee is hired for a contract position, it usually lasts longer than most temporary assignments, typically between three to six months. At the end of the contract period, there is a possibility that the employer will choose to extend their role or permanently hire a temporary employee. The contract-to-hire employment agreement is similar to a probationary period for the new hire after accepting the job position. However, unlike the probationary period, the contract-to-hire worker is under contract with the recruiting agency throughout their temporary employment and is not eligible for the benefits (such as health insurance or paid time off) typically offered to full-time employees of the company where they are working.

However, after the temporary employment period ends, the contract-to-hire worker is eligible for permanent employment by the company. Companies typically transition the employee’s current role from temporary to permanent, which requires the necessary paperwork and onboarding process associated with bringing on a full-time employee. If and when a contract employee is hired full-time after their temporary period, their contract with the recruiting agency ends. On the other hand, if the role remains temporary without an offer for full-time employment, an employee will be able to continue to work with the recruiting agency and accept temporary employment assignments.

When working through a recruiting agency, wages and hourly rates are usually a little lower in order to satisfy the costs and administrative fees incurred by the recruiting agency. Contract-to-hire employees can occasionally experience a pay increase when they transition from a temporary to a permanent position because the agency’s fees then become irrelevant. However, these funds can also be relocated to cover the employee benefits now available to the full-time employee.

What Are The Benefits Of Contract-To-Hire For The Employers And Employees?

Contract-to-hire job positions can offer many benefits to both employees and employers. Such benefits are:

Flexibility and Risk Reduction

Contract-to-hire job positions allow employers the much-needed flexibility to experiment with new roles and hires to determine whether it is a good long-term fit with the company. This trial run is particularly beneficial when a company is trying to decide whether hiring a new, full-time employee is necessary to meet its needs. Additionally, it provides valuable insight into the capabilities and competency of the new hire. Based on all of this, the employer is able to make an informed decision that will ultimately benefit the company.

Gained Experience

Even if the contract-to-hire role ends without an offer for permanent employment, there is still so much to be gained from the experience. The contract employee will have the opportunity to gain valuable skills and knowledge that could be a remarkable asset on their resume. Such experience will, in turn, provide a competitive edge during their search for permanent employment.

A Chance for Assessing Performance and Skills

By using a contract-to-hire employment arrangement, employers can get a clearer picture of the candidate’s employability before bringing them on permanently. Aside from the benefits for the employer, this arrangement also benefits the employee by giving them more time to impress their employers through exemplary work performance.

Effective Use of Time and Money

Rather than spending valuable time and resources recruiting candidates that can be ineffective, employers can use a recruiting agency to put them in contact with contract-to-hire top candidates that will be a perfect fit for the company and position. Additionally, the temporary period can reduce the likelihood of turnover.

What Are The Best Contract-To-Hire Practices For Employers?

In order to ensure that the experience is beneficial for both the employer and employee, an employer should keep these things in mind when considering filling a vacancy with a contract-to-hire position:

1. Evaluate their needs and the candidate’s performance: The employer should take advantage of this temporary period to evaluate their needs for the position and whether the responsibilities of the position require a full-time employee. They should also spend this time assessing the new hire.

2. Hire with the intent to make the role permanent: Instead of searching for an employee who can fill a temporary position, employers should focus on finding a candidate with the skills and characteristics ideal for a permanent employee. This can increase the likelihood of an employee being effective in their role and on their team.

3. Find a reputable recruiting agency: Before opting for a specific recruiting agency, employers should spend time conducting thorough research, looking into reviews, and asking for recommendations. The goal is to find an agency with a highly-qualified candidate pool relevant to their needs and industry. A good recruiting agency with a proper screening process will supply the company with the best possible candidates.

Conclusion

The world of work is rapidly changing. With the advancements in technology and the rise of the gig economy, companies are increasingly looking to hire contract workers. Contract-to-hire is a very attractive employment option as it saves the company’s time and resources, allowing them to access a wider pool of talent. Working as a contract-to-hire employee enables a candidate to gain valuable experience, skills, and an opportunity to be hired permanently after the contract is over.

Hundreds of new candidates are looking for job openings every day, and CIBR Warriors are here to help you find the right one for you. For more help in advancing your career or finding a qualified candidate in IT and Cybersecurity, contact us. We’d be happy to answer your questions and provide you with the best advice for getting started.

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