Employees or Contractors - The Dilemma of Hiring Talent

When you need a resource in your business, how do you tackle it?

Is your default response always to hire employees, only to regret it later when it doesn’t work out?

Or are you innovative and look at your resourcing need holistically, considering engaging contractors as a potential solution?

Business owners struggle with this dilemma.

So here’s some tips to consider.

I preface this blog article in saying that you should understand the definition of an ‘employee’ under the applicable legislation. So please check that ‘contractors’ are in fact contractors and not ‘deemed employees’ under law. 

Reasons to hire Employees

There is a permanent or ongoing need, full-time or part-time, for the resource. 

Hiring an employee fixes operational costs through fixed salaries.

Hiring talented employees with operational skills may reduce business risk in the ability to deliver your service offering. Business continuity is important.

Employees can reduce the burden on owners in running the business.

Attracting and retaining talent through employment can be a competitive advantage and create barriers to entry for other competitors.

Reasons you may prefer not to hire Employees

Getting stuck with a resource you may not need in the business on an ongoing basis.

Getting stuck with a particular individual you may not wish to retain in employment.

The annual cost of a full-time resource may be prohibitive for cash flow reasons.

Employment on-costs such as superannuation and insurances.

Administration increases for payroll processing, employment records, taxation and other record keeping.

Employees are paid when they are sick and on holidays.

Fear of unfair dismissal claims or industrial relation disputes if you wish to terminate employees.

Fear of personal conflict if in dispute with an incumbent employee

So what are some of the benefits to engaging Contractors?

Contractor costs for a resource can often be reduced through tendering and negotiation between several parties seeking engagement.

Engaging a resource on a ’success only’ basis can result in you only paying if they meet the deliverable.

Contractors can be terminated when the business doesn’t need the resource. There is less personal conflict and no fear of an employment law dispute.

Engaging a more experienced resource through appointing a contractor for less hours at a higher rate. In this scenario, the annualized cost for the resource is generally still cheaper than paying a full-time employee over a year.

Contractors often work off-site and reduce operational expenses in not impacting administration expenses or rent. Contractors are not normally subject to employment on-costs.

You do not pay contractors when they are sick or on holidays.

Cash flow may be smoother through negotiating payment terms with as contractor.

What types of roles suit Contractors?

In the global village of the internet, there are endless ways to engage contractors to meet a resource need.

Business owners are getting savvier about resourcing.

And don’t just think that all contractors engaged are sourced off-shore via the internet. There are many local domestic contractors providing resourcing solutions to business owners, eliminating the need for them to hire employees.  

With so many exciting, innovative and cost-effective resources available, it is worth observing which ones are working best for business owners?

The areas that I am seeing more contractors being appointed by small and medium businesses include:

•    Bookkeeper
•    Finance Manager/Virtual CFO
•    Personal Assistant/Virtual assistant
•    Graphic Design
•    Accounting/Legal
•    Website Support
•    IT Support
•    Administration
•    Data Processing
•    Online Sales
•    Sales & Marketing
•    Social Media & Communications

Finding the right balance

There is a happy medium in complementing your employee team with contractors.
Getting this right is part art and part science.

I encourage you to be curious and innovative in finding solutions to your resourcing needs.

There is no one way

Play with this and make it work for you.

Creating synergies in resourcing through both employees and contractors is the future.
If you want to learn about how I can help your business with resourcing or other business challenges you’re facing, please email me.

You might like to also come to our Roadshow on Thursday this week, as it will give you some further insight on the article above. If you would like to come along please find further details here.

Darren Bourke

I really want you to start creating sustainable success in your business and life. Simply check out my FAQs videos HERE on what business owners most commonly ask about sustainable business success. If they help you, simply sign up and get the other 20x videos free.

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Cheers, Darren K Bourke