Friday, November 30, 2012

Contract Employment - Pros and Cons?

Contract Employees have traditionally been used as a way for companies to fill needs during peak production periods or special projects. During an economic downturn companies have also used Contract Employees as an option to help them in the transition period from recession to recovery. We've seen this to be true the last few years and as we look at the economic outlook going into 2013 it would appear that Contract Employees will continue to be a solution for hiring managers. Because in these economic times companies don’t quite have the confidence to hire permanent employees. Contract workers allow a company to address their current needs without making long-term personnel decisions.

An interesting change has taken place of recent as well. A transition that seems to have changed the overall composition of the employee make-up. And appears to be a change that is here to stay. Companies are integrating their traditional employee talent with contract workers. They are using contract workers for positions that were traditionally viewed as permanent employee roles previously.

Technology and changing demographics both play a part in this change in the make-up of the workforce at companies. In addition, many insurance professionals are by choice changing their status from permanent employee to free agent. Some Contract workers feel contract work provides them with a better work/life balance; others want to create or design their own careers by choosing the kind of work or projects that create a unique set of skills, making them more desirable prospective employees. Contract work assignments can provide individuals a broad variety of challenges, demanding constant learning and new skills, which can make work more interesting.

Some reasons why companies use 
Contract Employees:

  • Outsource recruiting efforts
  • Benefits administration is reduced
  • Contract employees are a variable cost
  • Employee payroll tax issues are outsourced
  • Labor accounting is reduced
  • Permanent hiring process is too long 
  • Overall cost of hiring is reduced
  • Bring back a retiree

While the Contract Employee may choose Contract work as a permanent alternative to the traditional employment status because of the flexibility and work life balance it can provide. And an opportunity to gain valuable and interesting experiences not always available in a traditional employment arrangement. Naturally the downside of Contract Employment for a long term career is the lack of any benefits and the instability of not knowing when you next assignment will come along as you end the current assignment you may be on.

From a worker standpoint there are definitely pros and cons. From an employer standpoint it appears to be a pros and largely no drawbacks arrangement. In the current economy for some workers contract employment provides that badly needed bridge between permanent positions.

This discussion is well suited for participation from both the employer and the contract employee. I’d be interested in your input on your experiences on this subject. 

Scot Dickerson, CPC | President
Capstone Search Group