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Contract-to-Hire Pros and Cons You Need to Know

Over the next ten years, predictions show that freelance and contract hire will make up half of the US workforce. One in five Americans is currently in a contract role.

Employers that hire contract-to-hire employees want to see if they are a right fit for the position and company. It is pretty much a trial period that lets the employer know if they want to continue working with you. Working with contracts to hire employees is a fantastic way for a business to meet its capacity at any given time.

So, let’s take a look at the Contract-to-Hire Pros and Cons You Need to Know and why they provide excellent flexibility and can help improve and grow a business.

contract to hire pros and cons you need to know

The Contract-To-Hire Definition

Contract-to-hire means hiring an employee or multiple employees for a job for a set period, written on a contract. Once their short-term period of employment is over, gaining a position as a full-time employee is a possibility.

These short-contractual roles allow the employer and employee to have what you might call ‘a trial period. It should be noted that contract-to-hire employees still work for the company. This should not be confused with self-employed independent contractors. Some companies choose to hire independent contractors as they are not liable to offer any benefits and save money in the long run.

the contract to hire pros and cons you need to know

How Contract-to-Hire Works?

A staffing agency is usually responsible for sourcing employees and handling most front-end tasks. These include; finding employees, reviewing resumes, and shortlisting candidates for the role. Once the staffing agency has found potential candidates, they pass them along to the company to deal with the formalities like interviews and training.

The hiring manager will make the final decision but can contact the staffing agency for any advice or extra information on the candidate. The selected candidate will then be added to the staffing agency’s payroll, not the companies.

The length of your contract can vary…

The length of the contract can vary from only a month to indefinite. However, it’s most common to see a contract run from three to twelve months. As the contract comes to an end, in most situations, the company will have the option to employ the worker full-time or terminate the contract.

If the employer hires the candidate, they will transfer onto the company payroll. Think of it as a ‘try before you buy’ kind of arrangement. The employer can work with someone and decide at the end whether they want to keep them on or give them up.

Roles for Contract-to-Hire Work

  • Marketing and Communications
  • Administration
  • Sales
  • Graphic Design
  • Project Management
  • Retail

Contract-to-Hire Pros and Cons You Need To Know

The Pros

Experience

If you have been on the job hunt for some time with no success because you are looking for permanent positions, why not apply for some contract-to-hire roles.

It may not be the complete job stability you are looking for as there is always a possibility you’ll be out of work when the contract ends. However, it is an excellent opportunity to expand your knowledge in a field and gain more experience to add to your resume. It also allows you to dip your toes into some new experiences if you are trialing new career options.

Networking

Another great part of these roles is you can meet new people in the field you work in. Working for a new company under these circumstances will lead you to meet other members of staff who may be able to guide you in the right direction to another company if they decide to let you go at the end of your contract. It also gets a foot in the door for any future job listings that are permanent.

Contract Time

Often we look from the employer’s point of view and the benefits of having a contract with an end limit. However, this may also benefit you. Perhaps you only want to work for the said contract time and have plans after the role ends.

This is great as it works in your favor whether you have ideas to travel, move country or be with your family. Contract-to-hire will allow you to work in your field of expertise with an end date!

the contract to hire pro and cons you need to know

Earn More Money

Often because you don’t have company benefits, your salary may be higher. This means that as long as you don’t need to use any benefits during your contracting period, you’ll have been able to earn more money.

Try Something New

Perhaps you are looking to switch careers and fancy trying out something new. If you are qualified for the role and take a chance, you can find out if it is a possible career path for you. Knowing you will likely be employed at the end is a great feeling if you enjoy it.

Demonstrate your value and skills

Taking on a contract-to-hire role allows you to demonstrate your skills and value to a company. If you do an excellent job and work well with your colleagues, it will enable the employer to see you as a good fit for a permanent role. The employer uses this as a type of working interview where they watch you and observe if you have a positive impact on the team and the business outcomes.

If you do receive a formal offer, you can use your successes to negotiate a higher salary. Showcasing you are a valuable asset to the business will allow you to have higher expectations from your employer, and they will most likely oblige.

Increase your Knowledge and Qualifications

Working in a contract-to-hire role may help you find your specialty and focus on your strong skills. Gaining more experience in your field will lead you to better opportunities.

Whether you stick with the company if they make you a formal job offer or decide to venture elsewhere. This experience can help you refine your skills, acquire new ones or excel in your current profession. If a few contract-to-hire roles employ you, you can continue to learn and build yourself a reputation as a fast learner and over-achiever!

Learn about the Company Culture

Once you have your foot in the door, it’s time to evaluate the company culture and its ethics. If you have a short-term contract, this is a great way to see if the company suits you. So actually, in a sense, this benefits you. It allows you to see how people work in a team and if you’re going to achieve an excellent work-life balance and a good mental health state.

It also allows you to test out different career roles in your field without committing to a full-time permanent position. Choosing a new company to do this will allow you to see if you fit in there and if there are other roles available to you.

The Cons

After listing all the pros of contract-to-hire work, you may be thinking great! However, there are some other things to think about, And like most things, contract-to-hire comes with some cons that may put you off applying or accepting a role like this.

Low Job Security

There will always be a thought hanging over your head about the outcome of contract-to-hire. Employers often hire staff for short-term roles to cover busy periods or replace an employee on leave. This means you never have 100% job security. And, if this is important to you, it may cause you more stress and worry than it’s worth.

However, it should be noted that if you do an excellent job and the employer can’t employ you at that time. They may keep your name for any future job openings and get in touch.

Starting Over

Another con is the thought of starting the job search all over again. If your contract is short-term, for example, three months, and the employer decides not to keep you on or employ you as full-time, the job hunt starts all over again. This can feel a bit deflating and may put you off a contract-to-hire role.

Employee Benefits

Unfortunately, most contract-to-hire roles come without employee benefits. Once the hiring process begins, it’s up to the staffing agency to let you know if they provide any valuable benefits. Still, you will not often receive benefits such as health insurance, pension options, or paid leave. However, if the candidate were then employed full-time, they would be entitled to the company benefits.

FAQs

Suppose you have received an interview for a contract-to-hire role. It is important to come armed with some questions. Like any interview, this makes you look interested in the job position.

However, with a role like this, there are some other questions you want to be asking. Why? You want to get a rough idea of how the company feels about employing these hires full-time. If this doesn’t interest you and you are content with short-term work, that’s fine. But, always ask the question anyway, so you know your options.

As a temporary employee, how will I be evaluated?

This allows you to find out how the company will evaluate your work. You may find yourself working in a fast-paced or relaxed environment. You want to know if there is task-tracking software or whether your supervisor checks in on you from time to time. It also gives you an idea of the company culture and whether you’d be happy being a full-time employee.

When will you be hiring a permanent employee for this role?

You can ask the interviewer if they have a rough time scale on when they believe they will hire for this role. They might have a set date when the contract ends to employ a full-time employee; that’s great. It gives you a rough idea.

You can discuss your timeline before or once you have started working in the role about when you think you’d be a suitable candidate to become employed permanently. You also only want to do this if you are actually enjoying the role.

What is expected of a permanent employee in this role?

Find out what the company value in their employees and link this to your skillset. It also allows you to step into the role prepared to know what they value as important from their employees and play that up. You must demonstrate why you are an excellent value and an excellent fit for the team.

Land That Contract With An Amazing CV!

No matter what kind of position or duration you’re applying for, a great resume is essential! So, why not try reading up on Your Guide To A Stand Out Modern Resume: Make Your Resume The One That Stops the 6-Second Scroll, the Resume: Writing 2022 The Ultimate Guide to Writing a Resume that Lands YOU the Job! and how to Modernize Your Resume: Get Noticed…Get Hired.

Furthermore, we also recommend using How to Write the Perfect Resume: Stand Out, Land Interviews, and Get the Job You Want, as well as The Resume Handbook: How to Write Outstanding Resumes and Cover Letters for Every Situation, and Resume 101: How to Write an Effective Resume, LinkedIn Profile, and Cover Letter, to help you stand out from the crowd.

Finally, we have The Resume Writing Guide: A Step-by-Step Workbook for Writing a Winning Resume, and Resumes For Dummies or my top choice, The Damn Good Resume Guide, along with the Knock ’em Dead Resumes: A Killer Resume Gets MORE Job Interviews!, all available online in 2022.

Final Thoughts

Contract-to-hire has many pros and cons for both a potential employee and an employer.

However, if you are looking to dip your toes into something new, find the perfect role with the possibility of a permanent position at the end, or are even happy to work short-term with the option of not accepting a permanent role, contract-to-hire could be the right fit for you.

Remember, make sure you are aware of the job security and little to no benefits when you accept the role. Contract-to-hire could ultimately be your dream job. Make sure to show your skillset and value to a team to increase the chance of the company offering you a permanent role at the end.

All the very best with your next Contract-To-Hire role!

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About Calvin Miller

Calvin has over 20 years of experience in a leading employment agency in Tucson, Arizona, and is passionate about finding the perfect position for everyone who uses the company’s services.

He lives with his wife, Annette, and their two sons Jake and Joseph.

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