In a world with increasing uncertainties, the contract-to-hire model is fast gaining currency with leading employers.
But first, what is the contract-to-hire model?
It is a staff augmentation model which could result in the consultant/ contractor being hired by the employer, after a defined period of time working as a consultant. It is usually predicated on certain conditions being achieved during the period served as a consultant and not based on the client’s whims, as is sometimes misunderstood.
It is a form of an arrangement known as staffing. The individual is on the rolls of a staffing partner of the company, who manages all the administrative aspects related to hiring, such as payment of salary, statutory deductions, medical benefits, etc. while functionally he/ she works directly under the guidance of the company. The agency also handles all pre-hire activities such as identifying and shortlisting candidates. Only the final decision needs the concurrence of the company.
In layperson terms, it could be viewed as a pre-marriage live-in relationship.
The duration and terms could vary from contract to contract. Subject to the agreed terms being fulfilled, or to the willingness of both parties, the contract could even be terminated before it has reached its completion date.
Benefits for an employer
A wrong hire can sometimes set the company further back as compared to not having hired at all, say HR consultants. Employment strategies and tools have been constantly evolving. Their objective is simple – to identify suitable candidates who will be an asset for the company. However, despite tests and tools and techniques that have kept evolving, no certain method has been found.
Contract-to-hire comes closest to getting to witness the individual working, from close quarters. This enables the most objective evaluation of the candidate’s technical competence, social skills as well as the fit with the company’s culture.
As the company is not tying itself in for a long-term employment commitment to the individual, the hiring process also sometime works out better as the employer and employee do not need to jump through hoops for a perfect slam-dunk. They will have time over the contract staffing period to evaluate their long-term interest and fit. Hence, an unintended benefit is that the company is able to fill its open positions faster.
Does it suit consultants?
While similar benefits have been available to consultants taking up the contract-to-hire positions, with the balance of power traditionally having been in favour of the recruiting companies, it has been a somewhat theoretical benefit for consultants/ contractors. However, with work from home now commonplace, and contractors beginning to exercise their choices, it seems to have become a reasonably level playing field for both parties.
For contractors who are experts in their filed, the proof of the pudding may be in the eating. By operating initially on a staffing arrangement, they can display their skills and competence to the employer and negotiate more favourable terms when the time to convert the contract-to-hire finally arrives.
Contractors will be well advised to research the history of the company regarding the fate of earlier contract-to-hire engagements. Staffing partners like Ushankk can play a crucial role in the eventual success of the contract as they represent the interest of both parties.