Contract to hire…
If you’ve been in the job market lately or have had a recruiter reach out to you, it’s likely that you’ve heard the term contract to hire recently. What is a contract to hire position? What does it mean for you as a job candidate and how should you approach a scenario that involves contract to hire roles.
We get to it all below.
But first, who am I and why should I even be discussing contract to hire positions with you. Well, my name is Rob Paone and I’m a former technical recruiter. I’ve placed countless professionals in contract to hire scenarios in my past career, before moving into the software sales world.
The fantastic thing about being a former recruiter is that I’m not here to feed your BS about “how great contract to hire positions are!” or how they give job candidates all the flexibility in the world.
I’m here to shoot you straight with the facts, so if that’s what you’re interested in, let’s get started.
In today’s current economic environment, the utilization of 3rd party staffing agencies is increasing at a significant rate. Many companies either prefer to use staffing agencies instead paying for large, in-house recruiting teams, or their internal recruiting teams can’t get the job done so they hire outside help.
When you’re in the process of evaluating jobs through a 3rd party staffing or recruiting agency, a term that might be spoken about quite often is the “contract to hire” or “contract to permanent” placement scenario. It’s something that you might not be familiar with now, but trust me, it’s time to get familiar because it’s not going away.
Using my past experiences, let’s look into exactly what a contract-to-hire (or contract to permanent) position is and the potential outcomes that can result for them. Definitely read through this before you ever sign on the dotted line of a contract to hire contract.
What is a contract to hire position?
A contract to hire position is a term used in the staffing world to describe a position where you are placed at a company, initially as a contractor making an hourly rate. Following a specified time period, typically three, six or twelve months, your employment is evaluated and you are then made a permanent full-time employee. Once a full-time employee, you no longer have any ties or connections to the recruiter company that placed you.
With a contract-to-hire position, you are placed with the INTENTION of going from a contract employee to a permanent employee, although neither the recruiting agency, potential full-time employer or yourself are under any contractual obligation to make sure you convert to permanent employee status.
Contract to hire can be a great thing for an employee and an employer, or it can really hurt an employee. Let’s be clear here. The employee is the one taking the risk in a contract to hire, not the employer. That’s why the employer is finding this employee as a contract to hire, to “try before you buy” and find out if you are as great as you say you are, before paying you a nice salary.
The employee also gets the benefit of “trying before buying”, however, he/she is taking on a much greater risk in the process than the future employer.
Doesn’t sound all that great for a potential employee, does it? Well, it depends on the outcome of your situation. And in the case of a contract to hire position, there are really only 3 distinct possibilities that can eventually occur. Let’s break them down.
1. You convert permanent:
This outcome is obviously the one that occurs in the ideal world. In this scenario, you’ll go in and do a great job at your position and the employer will be pumped to bring you aboard as a permanent employee.
I’ve placed contract-to-hire workers, absolutely KILL IT at their jobs, and get brought aboard permanently before their original conversion date.
In this scenario, you’ll go from making an hourly rate on contract and then seamlessly get switched over to a salaried, full-time employee on a Monday, typically after working your last day as a contractor on Friday.
2. You stay on an extended contract:
Let’s say you signed on for a 6 month contract-to-hire and the 6th month comes around. You’ve been expecting to convert to a permanent employee, but your boss let’s you know that’s not going to happen.
It’s usually because you’re either very average at your position and your employer doesn’t need you in a full-time role, or because the company is going through internal changes and doesn’t have the money to allocate to another salary.
This isn’t the ideal situation because you don’t receive the benefits of a permanent salary position, but if you’re still working as a contractor, you’re still making money and there’s always a chance you’ll still go full-time.
This isn’t necessarily a positive outcome, but it could be worse as we’ll find out below.
3. The contract is not extended or you’re fired:
Worst case scenario, duh…
Typically this happens for two reasons, you’re really bad at your job or the company is going through some type of internal change and you unfortunately have the least amount of baggage for the employer to let go.
When it comes to firing a contractor, it’s a pretty easy thing for both the end-employer and staffing agency to do, so you have to make sure that you try your best to make a great impression.
Judging from my own experiences though, the people that get fired in a contract-to-hire position are the same people that would have been fired if they were permanent employees. These are the useless employees; the ones that literally sleep on the job, show up 2 hours late day after day, lied about their resume, etc. Getting fired in this scenario is something that’s your fault, not the fault of the employer or staffing agency.
For even more details on what the heck contract to hire is and how it relates to you as a potential source of employment, I’ve created this video below to walk you through the subject at a high level.
Why do companies use contract to hire
After going through the potential outcomes of a contract to hire job, you might be wondering why it is that a companies use this method? There are a few main reasons. Often times, contract to hire is pushed by the recruiting agency that a company is working with because it can be more profitable than simply placing someone directly with the company and charging a percentage of their salary.
Additionally, some companies like the flexibility of contract to hire because the burden of paperwork, benefits, and firing an employee all lie on the recruiting firm, not the employer.
This makes their lives a bit easier, especially if they’re looking to bring someone into the building quickly, or kick them out of the building equally as fast.
In today’s working environment, contract to hire is a pretty common thing. The idea of “try before you buy” for employers isn’t going anywhere in the near future and it will likely increase in prominence in the coming years.
My best piece of advice for anyone thinking about a contract-to-hire position or currently working in one is to bust your ass every single day of employment as a contractor. You can’t give your future full-time employer a reason to not bring you on permanently, you have to show them every day why you’d be an awesome asset to their team. If you’re not willing to do that, I would advise against taking a contract-to-hire position.
Don’t take anything for granted, don’t slack off. If you go in every single day with a bad ass attitude and kill your job during the contract period, you will get brought on as a permanent employee 90% of the time. I’ve seen this and I know this to be true.
Do you have any questions about your own scenario? Drop it below or shoot me an email at [email protected] If you’re in this position now, it also might be good to see how you can negotiate with recruiters in a contract-to-hire position!