The Ups (and Downs) of Contract-to-Hire Work

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Given the struggle many employers face in their search for full-time tech talent, it seems counterintuitive that many companies would continue—if not increase—their emphasis on contract-to-hire positions, in which contractors are considered for full-time employment only after a particular length of time or if they meet certain conditions. But some recruiters and staffing companies suggest that’s exactly what’s happening today.

Recruiters attribute the strategy to a variety factors: a need to bring on tech pros with full-time potential despite trouble getting new headcount approved; a belief that contract-to-permanent jobs can effectively expand the candidate pool; and a lack of candidates interested in taking on entry-level or tech-support positions on the help desk or as field technicians.

Whatever the reason, many are leery of the practice, both for themselves and for candidates. “The reality is it doesn’t open up the candidate pool that much,” said Chris Mitchell, a principal in the technology contract staffing practice at Waltham, Mass.-based recruiter WinterWyman. While it’s true that the notion of landing a permanent job may make the approach attractive to some candidates seeking full-time employment, he added, others are leery for one obvious reason: they may still find themselves without a full-time position when a contract ends.

The Benefits of Flexibility

From the employer’s perspective, the contract-to-hire process can offer several options for getting work done under less-than-ideal circumstances, said Doug Paulo, vice president and IT product leader of staffing firm Kelly IT Resources in Detroit.

For example, in Denver, where some companies struggle to meet high salary offers, contract-to-hire provides a way to expose candidates to an organization’s technology and culture. Companies can then leverage that familiarity to convince the contractor to accept a full-timer’s often-lower salary, albeit with benefits such as health insurance. Such tactics have been known to work, Paulo suggested, often because of the perks.

Other managers may attempt a contract-to-hire approach if they face difficulty getting new positions approved. After a contracted project is completed successfully, they may have an easier time getting the okay to bring on the tech professionals who oversaw the work, Paulo explained. In addition, startups often hire contractors to keep their tech efforts going, even as they’re raising money and building revenue—all in the hope that they’ll be able to make full-time offers when the initial projects are done.

“It depends on what the company is trying to do,” Paulo said. “IT is always being asked to reduce budget while doing more work. Basically, contracting gives the employer a number of scenarios that can allow them to find solid talent and try before they buy.”

Some Pros, Some Cons

For candidates, though, the idea of navigating their way to a full-time position by accepting a contracting gig may not be all that attractive—especially in the current market. “There are two types of candidates,” noted Ben Hicks, a partner in WinterWyman’s software technology search practice. “People who’ve always been full-time, who this would be risky for and not attractive. The others are contractors who like contracting. They don’t want to go full-time.”

That said, Hicks thinks a contract-to-hire position could be a good solution in some cases, such as when a tech pro has departed one job before lining up another. Paulo also observes that contract-to-hire could lead to full-time employment for people who have skills that may not be in high demand in their particular region of the country, giving them fewer ideal options at a time when many companies are loathe to risk making a bad hire.

In the worst case, Mitchell said, a contract-to-hire position provides professionals with more options, and offers less-experienced candidates an opportunity to prove themselves.

For his part, Hicks would be cautious of companies that seem to rely on contract-to-hire as their recruiting model. “I’d ask questions,” he said. “I’d try to understand how often they’ve done it. What percentage of people have they converted? How long do they usually keep people on the hook?”

Paulo also has a word of warning. “The only time I see this backfire is when the candidate underperformed and feels like they’re owed the offer,” he said. “You still have to earn the offer. Usually if the company says ‘contract-to-hire,’ they mean it.”

Image Credit: Saklakova/Shutterstock.com

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One Response to “The Ups (and Downs) of Contract-to-Hire Work”

January 26, 2017 at 11:01 am, Anon in Denver said:

This article is crap, poorly if at all researched, and very blatantly narrow-minded in scope. To draw upon the “knowledge and advice” of people who have no concept of actually being in the workforce as a CTH worker, such as Hicks (who only thinks there are “two kinds of candidates”, or Paulo (who only thinks it backfires when candidates underperform), is tantamount to stabbing every CTH worker who has been turned down for a permanent position in the eye with a sharp stick.
I have followed your articles here at DIce off and on for the last decade, Mark, but I find your work to be deceitful, and apparently deliberately biased; completely against objectivity. You certainly do me a disservice with this article.

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