The economy is still under the pressure of issues stemming from the COVID-19 pandemic and the war in Ukraine. While there are signs the worst may be over, at least as far as the pandemic goes, it is still a challenging environment for businesses to navigate. Workers are redefining what they want from their careers, and many of them are seeking flexible work arrangements. With so much uncertainty, many businesses are filling their vacant positions with contract-to-hire employees.
It’s not a surprise that contract-to-hire employment arrangement is rising in popularity since it saves time and money, increases profitability, and allows companies to access a wider talent pool and find the best candidate for their organization. In fact, it is estimated that in the next ten years, contract-to-hire and freelance employees will comprise nearly half the workforce, according to a poll conducted by Marist and the National Public Radio.
What Is A Contract-To-Hire Employment Arrangement?
A contract-to-hire arrangement is a system that allows companies to bring contract hires on board to work at their organizations for a set period of time. In some instances, companies may hire contract employees for a couple of months, and in others, they may employ them for a few years. Whatever the case, these contract workers will work for a company until their contract expires. Once the time is up, a company will have the option to either offer a permanent, full-time position or part ways.
Companies typically utilize recruiting agencies to acquire candidates for contract-to-hire positions. These agencies will:
- Find top candidates for the temporary positions companies are looking to fill
- Check out the resumes of the candidates who are applying for the positions
- Interview candidates who are interested in working with a certain company, even temporary; and
- Recommend the best candidates.
In most cases, the recruitment agency will handle paying the employees hired on a contract-to-hire basis. For many companies, finding the right candidate via a recruitment agency is the best option as it saves both time and money, allowing them them to focus on their work.
So, what are the pros and cons of a contract-to-hire employment agreement? Let’s find out.
What Are The Pros of Contract-To-Hire?
Actually, there are plenty of advantages to the contract-to-hire arrangement, both for the employer and the candidate. Here are a couple of benefits in utilizing contract-to-hire for an employer:
1. Less Commitment On The Company’s Part
When a company hires someone full-time, they are making a big commitment. A company is devoting a lot of time and resources to a single permanent employee, hoping things will work out for the best. However, if the direct employee turns out to be a bad fit, a company might end up firing them and going through an expensive and tiring recruitment process again. This isn’t a concern with a contract-to-hire option.
If an employer brings a temporary worker on board and they don’t work out, an employer will not have to fire them in most cases. An employer will just have to wait until their contracts run out and then replace them. This is a much simpler way of doing things, especially for small IT or start-up companies.
2. Better Results
When an employee is working in a temporary position that can potentially turn into a permanent one, if they put their best foot forward. A great benefit of utilizing the contract-to-hire option is companies usually get better overall results from employees in short-term positions. Such workers will do all it takes to make a mark and increase their chances of getting a permanent role in the company.
3. Flexibility For Both The Staff And The Budget
As companies are fighting to stay profitable amid the pandemic, they need to be as flexible as they can be with regard to both their staff and the budget. They may have to either increase and decrease the size of both at various times based on how their organization is doing.
Naturally, this can sometimes be difficult with direct employees locked into full-time positions. Contrary to this, when there are contract workers on their payroll, it could be much easier to manage.
What Are The Cons Of Contract-To-Hire?
Even though the benefits of the contract-to-hire employment option are quite appealing, there are some cons to this arrangement. Here are some of them:
1. Less Security For Employees
If a company hires too many contract employees, workers might not have the kind of security they desire. Working under the contract might make them feel on edge, which can impact performance. Unfortunately, there isn’t a way to give too much security to someone working in a short-term position. They will wonder if they’re making the right impression and how much longer they will stay at the company. However, this can change once you switch them to a permanent position, alleviating the stress and anxiety sometimes associated with the temporary contract.
2. Fewer Qualified Candidates Applying For The Temporary Position
Contract-to-hire employees usually don’t get any benefits while working in short-term positions. They will get paid for their work, but they won’t get health insurance, sick days, vacations, etc.
Because of this, companies may discover their candidate pool is smaller than if they were offering employee benefits to candidates. There could only be a small number of qualified people willing to take on the short-term position. Because of this, a recruiting agency will have to work hard to generate interest in vacancies at the company. Recruiters will have to go above and beyond to convince top IT talent that a specific company has great opportunities for them.
3. Seemingly Endless Staff Turnover
When companies opt for the contract-to-hire arrangement, especially for multiple positions and for extended periods of time, it may seem like they can’t retain workers. Although it may add to the dynamic, this arrangement may also affect the flow of work and delay some of the company’s success. Additionally, a lot of time might be spent teaching new employees how to work in the company.
It’s good to note that some IT professionals may prefer the contract-to-hire option, mainly because they can get their foot into the specific company’s door and test the waters. As contract hires, they can leave after the contract is over if the job is not challenging or fulfilling enough.
For companies, hiring IT professionals on a contract-to-hire basis may seem like the best option to meet their business needs and offload some work to someone flexible enough to work on a contract basis. Many IT companies have shifted their hiring practices by hiring for contract-to-hire roles in various tech fields. It is a hiring trend that will undoubtedly continue to dominate the industry for years to come.
The pandemic and the current state of work have inspired many companies to be more creative and rethink the definition of a contract-to-hire role. If you’ve considered the pros and cons of this employment option and want to test it out yourself, make sure to contact a professional IT recruitment agency to provide you with the best talent for your company.
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.