Contract-to-Hire: Is it Right for you?

Companies and professionals have three routes available when hiring: contract, contract-to-hire and permanent. Contract is when an individual is engaged to work for an agreed amount of time with no intent for permanent employment. When the contract ends, the individual moves on to other jobs. Contract-to-hire is when a person begins work as a contractor with the intention that after a set amount of time, the role will become permanent. And lastly, permanent is when an employee is brought on immediately without any contract period.

There are benefits and drawbacks to each type of work engagement; however, we've seen an increase in popularity for contract-to-hire positions. We thought we'd examine some of the reasons companies (and professionals) find this arrangement so attractive.

Fast hires. Many companies must fill vacancies so fast that they simply do not have time to wait for their ideal permanent hire candidate. In a contract-to-hire scenario, they request contractors who are already prescreened and qualified, conduct a phone interview, make a decision. The contractor can often start the next day. Given that a typical permanent hiring process takes two to four weeks, with an average of four to six weeks before the start date, contract to hire allows companies to hire with minimal interruption to productivity.

Ease of hiring. We have seen hiring managers run into situations where they don't have a job officially approved, but they need the head count. It can be easier to get a contract-to-hire approach approved up front, fill the job, and have the contractor already working while you're waiting for job approval. If it is approved, you transition the role to permanent. If it is not, the contract ends without hassle.

Cost efficient. Companies pay a staffing firm an agreed-upon rate for a contractor's hours, this amount can be more cost efficient than immediately going with a permanent hire. (Particularly, in those rare instances when the hire does not work out.)

Immediate impact. Because contractors can typically start immediately, they get up to speed and productive much faster than the average permanent employee onboarding process.

Flexibility. Even with the most promising hires, companies and professionals both need time to figure out if an individual and the culture is right for them. While every job arrangement has a probation period during which a professional can be let go, contract-to-hire makes the whole situation far more comfortable for all involved. The contract period gives the company and the professional an opportunity to "see how it goes" and determine if it's the right fit. While permanent employment is the goal, when the contract period is up, both the company and the professional have the opportunity to evaluate the situation and decide if permanent placement is indeed the best decision going forward.

Broader talent pool. Some companies express concern that if they go contract-to-hire they may miss out on the best permanent hires. What we typically point out is that some of the best professionals prefer contract-to-hire because of the ability to evaluate over a period of time if the company is a good fit. By going contract-to-hire, you open up your position to a much broader talent pool. Many professionals who typically only apply for permanent hires are willing to consider contract-to-hire. So, you do not lose anything by opening a role to this arrangement.

Contract-to-hire isn't for everyone. But companies who prefer to lower hiring risk, appreciate a "trial" period to ensure cultural fit, and want to expand the talent pool they draw from, often find that it can be a great way to find the right people for their roles.

James Vallone is the Director of Business Development at Jobspring Partners and Workbridge Associates. During his 12-year career, James has built and managed highly successful recruitment teams in four major cities: Chicago, New York, Philadelphia and Los Angeles, and he has also trained and developed current and future company leaders. James graduated from Michigan State University in 2002, with a BS in Industrial Engineering.