Contract to Hire: Definition, Pros and Cons

As an owner of Company, you have a perilous task on hand. You have to hire a senior business analyst to help forecast the needs of your company and ensure that all the items are in stock when they need to be throughout the year, and especially meet the demand surges during festivals. Not an easy task. You are confused when someone tells you that a contract to hire is a great option.

Being a close friend, whose suggestions you are open to consider, you pay heed to what he just said and are now exploring what contract to hire really is and how it works!

What Is a Contract to Hire?

When you bring on a candidate in a company, on a contract of a few months, which could be extended to a full-time opportunity, it is called contract to hire. A contract to hire is used by companies to fill a full-time role but they lack clarity on whether the candidate they are hiring would be a good fit.

How Contract-to-Hire Works?

Here the important thing to note is that in a contract to hire there is an intent from both parties to move to a full-time role and that both parties, employer and the employed accept the terms and conditions of a full-time role in the company as well. However, both the employer as well as the employed can terminate the contract on the completion of the contract period.

With advancements in AI and the need to hire candidates with advanced skills becoming a priority and there being a skill gap in the current job market, contract staffing and contract to hire are slowly becoming very popular options.

Contract to Hire Pros

For employers

1. Flexibility

C2H can help you explore different candidates with varying skill levels and consider the work intent and flexibility offered by each.

2. Trial Run

Allows companies to save a lot of time and money by doing a trial run with the employee if he/she is a good fit for the company.

3. Savings in money

At least for the trial run, you are not providing any benefits that you normally give to your full-time employees, which saves you a lot of money.

4. Savings in Time

You can get an expert in very little time, and you have the course of a few months to decide whether they will make the cut.

5. Can seek the help of a staffing partner

A staffing partner can help you negotiate terms with the candidate so that you get the best value from the contract.

For contractors

1. Flexibility

C2H can help you explore different opportunities and employers while keeping the security of a job in the short term.

2. Trial run

C2H allows an employee to do a trial run with a company to see if the employee and company are a good fit for each other.

3. Assess the company’s culture

C2H allows you to assess a company’s culture and make sure it suits your work style and life.

4. Showcase the value your work brings to a company

Contract to hire work allows you showcase how you add value to the company, for instance by doing business analysis or managing the marketing leads.

5. Build your professional network

You can build a professional network very quickly, especially if you are hired by a big company.

Contract to Hire Cons

For Employers

1. Need to find a trusted staffing partner

There are several staffing partners in every geography. Finding a reliable one can be a challenge.

2. Change in priorities

It is often when the contract period is on that probably the requirement is no longer there, at which point terminating the contract becomes difficult.

3. Lack of dedication from the contractor

If the new hire does not show the necessary commitment to the role, then it could lead to a lot of problems, leading from laziness and carelessness in your workplace, which might prove to be a costly mistake.

4. Legal problems

If either party breaks the contract, there could be legal problems. This, however, rarely happens for a contract to hire agreement.

For Contractors

1. Company culture could be a problem

If the company culture is not a right fit, then problems could exist, which may not be easily resolved.

2. Lower job security

Job is safe and secure for the contract period but not beyond that. What if you are not confirmed as a full-time employee?

3. Change in priorities

If you find a better role, you will still need to excuse yourself and continue with the contract to hire role, which will waste that opportunity and a lot of time.

4. Legal problems

If either party breaks the contract, there could be legal problems. This rarely happens in a contract to hire agreement.

Tips for a Successful Contract-to-Hire

When you are looking to fill a contract-to-hire role, there are some considerations that you must make. These considerations will help you pick the right candidates, remove any ambiguity or doubts in the mind of the candidate and consequently boost the business’ bottom line. Some of these considerations are:

1. Contract Value

The financial worth of the contract, and how it will affect the business. A detailed financial analysis must be done.

2. Evaluation for the Role

How to evaluate the candidate for the role and who will be involved in the evaluation?

3. Needs Assessment

Will the job need change in the future, and will the hire need assistance with upskilling in the short period itself?

4. Working Hours

How will the contractor’s work hours be organized, and will they remain the same in the future also?

5. Duration of Employment

How long do you plan to work with the hire as a full-time employee, if they qualify for full-time employment?

6. Duration of Contract

How long do you plan on engaging the hire and what methods will you use to assess if the candidate is suitable for full-time employment?

7. Labor rights

What salaries and benefits are you offering contractual hires? Can you offer additional benefits if the candidate asks for it?

What is the Difference Between Contract and Contract to Hire?

A contractual hire is temporary staff hired with the intent of service only for a specific period. There is no intent of converting the staff to full-time or offering them the benefits and rewards that a regular employee has. A contract to hire role, on the other hand, is made with the intention of hiring a contract worker as a regular employee after a period of a few months.

How to Hire a Contractor?

You can hire a contractor by yourself or with the assistance of a staffing agency. Opting for a staffing agency would be the best way to do it, if you do not have any prior experience in contract to hire. A staffing agency would be aware of how to frame the contract, what channels to use to source candidates, and even have an idea of how long it would take to find a suitable hire.

Alp Should Be the Staffing Partner of Your Choice

With over two decades of experience in recruitment and staffing, Alp Consulting can help find the right contractor(s) for your needs, no matter the size of your company. We will also do it in the least time possible and with the guarantee we will find the right person for the jo. So, when are you talking to us?

Frequently Asked Questions

1. What is a contract to hire position?

A contract to hire a role is to be filled permanently after a specific period. During this time, the candidate who is chosen for the position would be evaluated and a decision would be made at the end of the contract period.

2. What does contract to hire mean?

Contract to hire means hiring a candidate on a temporary basis, with a commitment to go onboard as a regular employee after a specific period, as mentioned in the contract. A contractor is to abide by the rules mentioned in the contract, failing which there would be legal ramifications. The same goes for the employer and if there is a staffing agency, then they do as well.

3. How does contract to hire work?

In a contract to hire, either the employer directly contracts the hire for a specific period with the promise of full-time employment or a staffing agency takes over, acting as a mediator, and the hire is on the payroll of the staffing agency but works for the employer.

4. Are contract to hire jobs safe?

Contract to hire jobs are safe, at least for the duration of the contract. There is no job guarantee beyond that. The transfer of the candidate to a full-time role depends entirely on how capable the hire has been in the role.

5. Is contract to hire a good idea?

Yes, contract to hire is a great idea, especially if you have a good staffing agency working for you and you are pressed for time and need to hire a good candidate soon. You can also always change your mind later if the candidate is not a good fit.