As a Leader you are responsible for the delivery of your team’s objectives. When a new project lands on your desk or a key person is unavoidably absent, deadlines don’t change but resources get stretched, sometimes to breaking point. Such talent crises not only create gaps and threats to quality of work output, but can often generate hidden problems of stress and demotivation amongst team members. Trying to cope with reduced resources, reduces the ability of your resources to cope.
The rise of professional contractors across all functions (41% of professionals in Science want to work as contractors, a further 42% would be happy to do so between permanent roles)provides an immediate and valuable solution to many types of talent challenges. Firms generally fall in to one of two categories, those who consistently draw on the value that contractor relationships bring and organisations who never really consider the option. If your company falls into this latter group, there is a deep pool of instant talent solutions available to you, but it’s important to understand the impact and benefits of each.
1. Daily Rate Contractor (through a Recruitment Firm)
In this model, the contractor will have a limited company setup and a contract “for service” is issued. The contractor is engaged by the recruitment firm, who in turn is engaged by the company and so no direct contractual relationship exists between contractor and the company. The benefit of this includes your firm not having to pay expensive employment costs (PRSI, Holiday Pay etc), whilst the contractor typically has greater net pay through tax efficiencies. Experienced day-rate contractors bring additional skills and great focus. They create a larger talent pool for your firm to draw from for specialist skills.
When best to use: For mid-senior level skills gaps, niche skill needs, medium or long term projects, absentee executives.
Benefits: Bigger talent pool, more value for money, flexibility, no impact on headcount, no upfront agency fees.
Considerations: Cultural alignment.
2. Temporary PAYE Worker (through a Recruitment Firm)
This options works well for short-term cover for lower level positions. The candidate is leased to your company and sits on the recruitment firms’s payroll. A contract “of employment” is provided to the temporary worker by the recruitment firm. An essential aspect to this model is compliance with the Agency Worker Directive (Protection of Employees [Temporary Agency Work] Act 2012), the framework for equal pay and treatment of agency workers in line with your permanent workforce. Costs include the hourly pay rate, PRSI, holiday pay and the recruitment firm’s margin. The main benefits are speed, the ability to cover absence, support workload and increase or clear backlogs.
When Best to Use: For junior-mid level roles, for short term assignments. To manage headcount restrictions or to experience a potentially future permanent hire in action. .
Benefits: Quick turnaround, costed through duration of contract.
Considerations: Agency Workers Directives, shorter contract lengths, tenure management to avoid redundancy arising..
3. Fixed Term Contractor (on your businesses payroll)
While historically companies have often used fixed term employment contracts, the 2 options above are now surpassing this. With FTC hires, the company offers a contract of employment directly to the contractor, similar to permanent but with a defined period. The benefit is ownership of the employment relationship, but all employer costs (holiday pay, Employer PRSI, benefits) are borne by the company. On top of the employment costs, the business would typically pay an upfront fee (if sourced through a recruitment firm) rather than pay this out over the period of the contract. We notice in some areas, contract talent has moved away from such arrangements in favour of Option 1 above.
When Best to Use: If the talent is sourced direct and you do not wish to avail of an external payroll service.
Benefits: Control of employment contract.
Considerations: Large initial outlay, employment costs (PRSI, benefits), less flexibility. Candidates have reduced net pay so a smaller talent pool for niche skills.
Contracting provides agility for organisations and flexibility for talent. Making agile hiring part of your talent resourcing strategy, substantially increases the size of your talent pool. It puts expertise on site when you need it and takes away cost when you don’t.
Professional contractors, have typically worked in multiple environments and so bring a wide range off added value, as well as giving you and your team, a little room to breathe.