To Contract or Not To Contract?

It’s the classic good problem/bad problem scenario…

Good Problem: Business is growing so much that your team has more work than they can possibly handle.

Bad Problem: If you continue at this rate, you risk burning out your employees and disappointing your clients or customers.

Thankfully, there is a solution: expand your workforce. Note that I did not say there was a “simple” solution; that was on purpose. Choosing to add to your team is not a decision to take lightly, and there are many factors to consider when growing your team. One of the most important: Do you hire permanent full-time employees or do you use contractors?

Before we get into that, let’s clarify some terms:

  • Full-time Employees: They work for you on a full-time basis and receive benefits, paid time off (PTO) and holidays. When their current project is over, they still are gainfully employed by your company.
  • W2T Employees: Employees hired on a temporary basis for a specific project. They receive benefits, but not PTO or holiday pay.
  • Subcontractors: You may call these “1099s.” These are typically individuals working through a third party agency; occasionally, they may be just a single person who is self-incorporated. No benefits, PTO or holiday pay.

According to the law, W2Ts are temporary employees and not contractors, even though many people often call them the latter. In the eyes of the law, regular full-time employees and W2T employees must be treated the same. It’s a bit confusing! So to keep things simple for the sake of this article, I am just going to group “W2T Employees” and “Subcontractors” into the generic category of “Temporary Workers” since they are similar in that they are transitory members of your team.

Enough legalese! Ready to get on with expanding your workforce? But still not sure if the right path is hiring full-time employees or temporary workers? Consider the “Contract Six C’s:”

  • Capacity – How much additional bandwidth do you really need? And how quickly? Take a careful look at your recruiting team’s current workload and your typical time-to-fill metrics. If the timing does not line up, utilizing agency subcontractors may be your best option.
  • Continuity – How long is your project? If short term, likely a temporary worker is the way to go. However, if the project will extend for a longer period of time, hiring a full-time employee may be more favorable.
  • Cash – Typically, temporary workers will cost more on an hourly basis. What cost differential are you okay with? One way to figure out your cost comfort level is to calculate “Earn-Out,” or the time it takes for a new employee (or temporary worker) to earn back their recruiting costs in billable hours. I give the long explanation on Earn-Out in this LinkedIn post.
  • Culture – Adding temporary workers can change the dynamic of your team. Full-time employees may feel uncertain, or even threatened, by these “outsiders.” Do you have a plan in place to assuage employee concerns while simultaneously making your temporary workers feel welcome?
  • Caution – There is always a risk when using temporary workers. If the person is someone with whom you have worked in the past, comes from a trusted source or was well vetted, your risk is much lower. However, in rushed hiring situations rigorous interviewing processes can become lax. Make sure you are fully comfortable with the temporary workers you are bringing in.
  • Creativity – Temporary workers are not the only source of short-term staffing help; College interns and co-ops can provide a great deal of value. Bonus: it’s a great way to identify future full-time team members. Another great source of help is part-time employees. Often parents with small children or people approaching retirement age are interested in flexible, atypical work arrangements. These talent pools can also help diversify your workforce.

I have found that both full-time employees and temporary workers can be valuable assets to project teams. By incorporating the “Contract Six C’s” in your staffing process, you can create a blended team of full-time employees and temporary workers to meet your growing business needs.

This article originally was published on

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