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Pros and Cons of Contract and How to Hire

Most startup companies are going to fail at some point in time. In fact, some reports have suggested that upwards of 70% of them are going to fail within the first decade.

Pros and Cons of Contract and How to Hire

They fail for all kinds of different reasons. But in many cases, startups fail simply because they don’t have enough good employees working at them.

If you’re the owner of a startup company, you should try to steer clear of running into this problem. You can do it by taking advantage of contract-to-hire. It’s a great approach to take when you’re trying to turn a startup into a success.

So, what is contract-to-hire, and what are the pros and cons of it? That’s what we’re going to discuss today so that you’re able to decide if contract-to-hire is something that you want to use when hiring people to work for your company.

Learn all about contract-to-hire below.

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What Is Contract-to-Hire?

If you’ve been running a startup company for several years now, you might be familiar with contract-to-hire. But if you’re just getting your company off the ground, you might not know the first thing about it. So let’s begin by answering the question, “What is contract-to-hire?”

Contract-to-hire is a system that allows you to bring contract hires on board to work at your company for a set period of time. In some instances, you might hire them for a few months, and in others, you might hire them for a few years.

Whatever the case, these freelance workers will work for your company for a specific amount of time. And once that time is up, you’ll then have the option to either give them a full-time position or part ways with them.

A contract-to-hire employee with a short-term position is obviously going to be much different than a direct employee. They might do a lot of the same work, but they’re not going to have the same close connection to your company in the end.

How Exactly Does Contract-to-Hire Work?

If your startup company decides that you want to start using contract hires, you’re typically going to find candidates for contract-to-hire positions through a staffing agency like the one that you’ll see when you look here. This agency is going to take care of almost everything for you, including:

  • Finding candidates for the short-term positions you’re looking to fill
  • Checking out the resumes of the people who apply for the positions
  • Interviewing those who are interested in working for your company
  • Recommending the strongest candidates for your company to you

Most times, an agency is also going to take care of paying the people that you hire through the contract-to-hire setup. You’ll appreciate them for doing most of the dirty work when it comes to helping you find employees for your startup.

What Are the Pros of Contract-to-Hire?

Now that you know a little bit more about contract-to-hire, you’re probably wondering what the benefits of it are. As it turns out, there are lots of advantages that you’re going to get to enjoy when you utilize contract-to-hire. Here are a few of the biggest pros of contract-to-hire.

1. Less Commitment on Your Part

When you’re hiring someone to work for your startup company full-time, you’re making a big commitment to them. You’re devoting a lot of money and resources to a single direct employee and hoping that things work out for the best.

If this employee doesn’t pan out, you might have to end up firing them and going through the hiring process for a position again. This isn’t something that you’ll have to be too concerned about when you use contract-to-hire.

If you bring contract hires on board and they don’t work out, you won’t have to fire them in most cases. You’ll just have to wait for their contracts to run out and then replace them. It’s a much simpler way of doing things for startup companies.

2. Better Results From Your Employees

When someone is working in a short-term position that could potentially turn into a long-term one if they play their cards right, they’re going to put their best foot forward every single time they show up for work. They’re not going to get complacent at any point.

You’re going to notice that you’ll typically get better overall results from those with a short-term position. These people aren’t going to be able to take their foot off the gas pedal at all if they want to make a mark and increase their chances of working for your startup company for the long haul.

3. Flexibility for Both Your Staff and Your Budget

As your startup company begins to grow, you’re going to need to be as flexible as you can be with regard to both your staff and your budget. You’re going to have to increase and decrease the size of both at different times based on how your company is doing.

It’s going to be challenging to do this when you have direct employees that are locked into full-time positions. But when you have a bunch of contract hires on your payroll, it’ll be so much easier to manage them.

What Are the Cons of Contract-to-Hire?

After reading about all the benefits of contract-to-hire, you might be convinced that using contract hires is the way to go. But you should know that it’s not going to be all sunshine and rainbows when you go with contract-to-hire. Here are some of the contract-to-hire cons.

1. Less Security for Your Employees

If you welcome in many of your employees through the contract-to-hire system, they’re not going to have the kind of security that they want. This might make them feel on edge most of the time, which could impact their performance at work.

And unfortunately, there isn’t any surefire way to give security to someone who holds a short-term position. They’re always going to be looking over their shoulder and wondering how much longer they’re going to be with your company.

By going with full-time direct employees, you can alleviate a lot of the stress and anxiety that people will feel while working for your company.

2. Fewer Qualified Candidates Applying for Your Positions

Contract hires usually won’t get much in terms of benefits while working in short-term positions. They will, of course, get paid for their time and effort, but they won’t get health insurance, vacation and sick days, etc.

Because of this, you’re going to quickly discover that your pool of candidates will be much smaller than it would be otherwise if you were offering benefits to them. There is only going to be a small handful of qualified people who are willing to roll the dice and take a short-term position.

This is going to make it extra important for a staffing agency to stir up interest in job openings at your company. They’re really going to have to go above and beyond to convince people that you have great opportunities for people looking for jobs.

3. Seemingly Endless Staff Turnover Within Your Company

When you go with the contract-to-hire approach, your company’s front door is going to turn into a revolving door before long. You’re going to have new people working for your business pretty much all the time.

This will keep things interesting for you. But it’ll also affect the flow of your startup and delay some of your success. You’re going to have to spend a ton of time teaching new people how to work for your company.

No one enjoys experiencing this kind of staff turnover. It’s going to be one of the worst parts of contract-to-hire for you.

How to Hire Employees With Contract-to-Hire

Do you think that contract-to-hire might be a good option for you? Then you should give it a try today and see how it works out.

To do it, you should find a staffing agency that you trust to help you put contract-to-hire to good use. As long as you have some basic descriptions of the positions that you’re interested in filling, they should be able to get to work right away.

You can also attempt to utilize contract-to-hire on your own. But it could turn into a huge headache if you’re not careful. It’s why you should leave it up to an agency to handle everything for you.

Decide If You Want to Utilize Contract-to-Hire Today

Many companies, including both startups and well-established businesses, have started to put contract-to-hire to the test. They love the flexibility that it provides and appreciate that it can help them fill a short-term position in no time at all.

You should weigh the pros and cons of contract-to-hire to figure out if it’s something that you should use. With a little luck, you might be able to utilize contract hires to take your startup to the next level.

Do you want to get your hands on more tips that will help you build up your startup company? Find them by browsing through the other articles that are posted on our blog.

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