The Pros and Cons of Hiring Independent Contractors

Your company is expanding. You have new projects in the works, and you can’t complete them without expanding your workforce. It’s time to place job listings in all the usual places and put feelers out wherever you can to attract new talent. But first, there’s an important issue you need to consider: instead of hiring new permanent employees, would it be more practical to use independent contractors? Let’s look at some of the pros and cons of doing this.

Pros of Hiring Independent Contractors

The biggest benefit to hiring independent contractors is that it’s cheaper than taking on more permanent employees. Even though freelancers often charge a higher hourly rate, you don’t have to pay benefits, or match any social security or Medicare contributions for them. They also usually use their own equipment, and sometimes their own separate facilities, which also saves you money.

Independent contractors also provide you with more workforce flexibility. Since you hire them on a per-project basis, you can bring in more when there’s more work to be done, but scale back when money gets tighter, without actually having to do layoffs. Over time, you can build up a pool of freelance workers whom you know and can trust, and hire them as needed.

Finally, independent contractors can often provide you with a better quality of work and higher rate of efficiency than in-house employees. Your permanent employees will likely have a variety of duties in multiple areas. Putting them on one project means less time for them to work on a different project, or perform a host of other regular tasks.

An independent contractor, on the other hand, is hired for one specific project. It’s in a field they specialize in and likely something they do all the time. This means you don’t need to provide training above just a cursory overview of the project details. They can give their full attention to it, doing what they do best and freeing up the rest of your organization to concentrate more fully on what you do best. The result is higher productivity and a better overall quality of work for everyone.

Cons of Hiring Independent Contractors

Working with freelancers is not without its problems. For one thing, it’s more difficult to create a stable working environment. While it is possible, as stated above, to build up a pool of contractors whom you work with on a regular basis, it takes more time than it does to assemble a team of permanent employees. You’re likely to have a higher turnover rate with independent contractors, and while they’re easier to replace, it makes it more difficult to develop a rapport.

There’s also a double-edged sword with regards to how you manage them. On the one hand, since they know what they’re doing, you can basically just wind them up and let them go, with little need for oversight. However, it can also be difficult when you do need to give them direction. Many contractors resist micromanagement and don’t work as well in connection with a team other than their own. Plus, the more closely you work with a freelancer, the more likely they are to ask to be treated like a regular employee, complete with benefits, payroll taxes, etc.

A lot of the pitfalls of hiring independent contractors can be avoided by paying very careful attention to the agreement you draw up. For instance, who owns the copyright to any work they create for your business? What kind of liability do you have if they become injured on the job? Under what circumstances can either you or they terminate the contract?

The answers to these questions are usually a lot clearer with permanent employees. With a freelancer, they must be spelled out explicitly, or you run the risk of a prolonged legal battle, if it turns out the answers they assumed differ from your own.

In the end, the question of whether or not to hire freelancers comes down to what your company needs and how you want to work. If there are aspects of your company that you’d rather not have to worry as much about, while still guaranteeing a quality finished product, then you’d do well to farm out those aspects to independent contractors.

On the other hand, if you prefer to work more closely with a project’s team, create a close-knit group that works well together over time, and have more control over both the process and the finished product, then permanent employees would probably be better suited to your company.

Both have their advantages and disadvantages. By taking a careful look at the positions you need to fill and how, exactly, you want the work done, you’ll be able to create a workforce that meets your company’s needs and improves your overall productivity.

Technology can be a valuable tool in onboarding strategies and achieving your goals with respect to new employees. Paypro offers a comprehensive suite of workforce management solutions that give you the accurate, real-time information you need to make informed decisions. Please contact us with questions – we are here to help simplify your workforce management!