28 Jul Pros and Cons of Contract-To-Hire
Insight by: Daniel Jue
Hiring is a tough job, especially in the Life Sciences IT industry. As biotech and digital health is growing, the need for a technologist and a technology team is critical. But most techies do not have a life science background, so we must hire outside of the industry. Through just a 45-minute interview, it is difficult to assess a person’s skills, let alone the candidates team fit and work ethics.
Therefore, I have found a try before you buy is a good policy. That is, contract the person before bringing them on as a fulltime hire. Contract to hire is a short-term job that allows both parties to try out a role before committing to full-time employment.
Contract-to-hire is when the employee (or contract hire) is placed in a short-term position for a set period, with the possibility of being brought on as a full-time, direct employee at the end of the contract. Contract-to-hire positions should not be confused with independent contractors, who are self-employed. A contract-to-hire employee is still under contract to work for a company but is technically employed by the staffing agency that recruited them.
Contract-to-hire pro #1: Expedited interview process
The hiring process can be incredibly time-consuming and tedious — and HR departments are often so busy with other tasks that dedicating ample resources to making strategic hires can be difficult. Therefore, more employers are turning to staffing agencies to help them place contract-to-hire employees, as it eliminates many stages of the hiring process. The staffing agency will handle all the time-consuming legwork of finding and vetting a contract-to-hire candidate.
Making a contract-to-hire vs full-time offer is perceived as less risky because the employer is not committing to paying a salary and lofty onboarding expenses off the bat. This often reduces the length of the interview cycle, meaning contract-to-hire candidates can start working and producing value for your company sooner.
Contract-to-hire pro #2: The ability to experience a trial run
Hiring a new full-time team member is a big commitment for your organization and it is also a drastic life change for the employee. It has happened to every employer: you go through a lengthy hiring process, use valuable time and resources training a promising new employee, only to realize they are not going to be a fit long-term.
A major benefit of contract-to-hire is the ability to minimize this risk by “trying before you buy.” The contract-to-hire process is essentially a trial run to ensure that a candidate lives up to their resume and interview, meaning fewer poor hires that lead to further costs when their replacement must be hired and onboarded.
The benefit of contract-to-hire also extends to the candidate. The modern employee wants flexibility in their work-life — and no one wants to be stuck in a job where they are not a good fit. The short-term nature of a contract-to-hire position gives the employee a trial run of both their position and the company. If they are not enjoying the role or simply are not a culture fit, they can move on to something else after their contract has ended — without any lasting negative impact on either party.
Contract-to-hire pro #3: Budget flexibility
When working with a restrained budget, contract-to-hire positions can offer a monetary advantage. A major benefit of contract-to-hire positions is that they can give companies the time they need to work a new full-time employee into the budget while still getting the work done. Employees in a contract-to-hire position typically do not receive benefits and will not be eligible for a healthcare plan or retirement savings contributions until they become a full-time employee at the end of the contract. Additionally, contract hires are typically only paid for the specific hours they work rather than receiving a fixed salary.
Contract-to-hire con #1: The possibility of starting over
While one of the greatest contract-to-hire benefits is the ability for both the employer and employee to experience a trial run, there is always the chance that it may not go so smoothly. If the employer decides the contractor was not a successful fit and does not extend a permanent employment offer at the end of the contract period, a new search must begin. However, if the employer is not happy with a contract hire, there is a good chance the employee was not happy with them either. In this case, it is best for both parties to find a better fit for the future than sticking with someone who is not the exact right fit.
Contract-to-hire con #2: Perceived lower job security
Some job seekers may be hesitant about accepting a contract-to-hire position simply based off expectations or assumptions. For example, if a candidate is too worried that they will lose their position after the contract ends and must start the job hunt all over again, they may prefer to look for a direct-hire position.
This will depend on the preferences and mindset of each individual candidate, so it is not something to stress about — but is something to keep in mind when considering leveraging contract-to-hire positions. The key is to ensure that your staffing agency partner is clearly relaying timeframes and expectations to the candidates they are interviewing for your contract-to-hire positions.