The need for employers to hire temporary employees has increased drastically over the years. The temporary hires make it possible for businesses to hire on-demand, thus meeting the needed capacity at that time. Businesses can meet a limitless workforce in the short term as needed.

A contract to hire is when an employee, also known as the contractor, is placed within a company for a given period, usually short-term. The contract to hire an employee works under the company contract but is technically still under the staffing agent who did the recruitment. There is always a possibility of becoming a full-time, direct employee when the contract ends. A contract to hire an employee is not the same as independent or freelancer contractors because they are generally self-employed.

How it works

In this employment option, the company interested in hiring approaches a staffing agency that handles the contract-to-hire positions by sourcing candidates, reviewing their resumes, recruiting, and even conducting the initial screening procedures. After meeting the expectations, the candidates are passed to the company hiring for any final interviews necessary. The final decision is then made with insights from the agency if necessary. When selected, the right candidate can start their employment contract under the staffing agency’s payroll, not the company’s.

The contract-to-hire position duration can be from a month to indefinite, but usually, it is short term running up to twelve months. The company can then decide to convert the temporary employee into a full-time one if the needs allow it at that time. The common positions that require contract-to-hire include sales, project management, seasonal retail, administration, graphic design, and marketing and communication. It will all depend on where the company needs the workforce enhanced.

The benefits to the hiring company

Expedited interview process

When a company is hiring, the HR department experiences a tough time because it has to handle all the interviews and still manage other tasks under it. This can be tedious and time-consuming. By turning to staffing agencies, the hiring company can find the right candidates without going through a lengthy interview cycle. The quick process also means that the contract-to-hire candidates can take the positions fast and start producing value for the company just as fast.

Chance for a trial run

Hiring new employees on a full-time contract is a huge step for every organization. There is always the possibility of realizing that the candidate was not suitable enough for the position, especially in the long run after all the time consuming hiring process and use of resources and time to train them. With a contract-to-hire arrangement, the company can minimize the risks of employees not being as valuable as expected. The contract gives the company the chance of trying out the potential candidate before employing them permanently. The same goes for employees who might realize they don’t enjoy their new position as much or can’t adapt to the company culture. The temporary nature of the hire allows them to easily move to other things after it has ended.

Savings on special skills

Sometimes a company is faced with a project which requires special skills not available in-house. In such a case, it does not make business sense to hire a qualified employee full-time; what will they be doing within the company after the special project is over? The contract to hire allows the company to complete the project in a cost-effective manner. The money you would have used to train the additional skills to existing employees or hire a qualified person for the same is saved. The company only pays for services rendered and continues with business as usual.

Budget flexibility

A company with a restrained budget will find a contract to hire advantageous on the finance side. The temporary employee buys the company time to get ready financially for a permanent hire. Remember, direct employees, are eligible for benefits such as healthcare insurance and retirement contributions. The contract offers a good way of getting the job done without stretching the company’s budget out of proportion.

Staffing flexibility

Besides enjoying budget flexibility, the hiring company also saves by keeping the staff flexible. There is no point of keeping employees who are not that necessary and still paying them salaries and benefits. The company can meet the exact capacity needed through these contracts, especially on short projects and seasonal fluctuations. Seasonal ramp-ups can be challenging for businesses in the retail and hospitality industries, but the contract-to-hire option makes all the difference; you will not be overstaffed or understaffed.

Growth accommodation

The other benefit of contract staffing is it helps in accommodating growth quickly. Business is always unpredictable, and when you expand contract scope or secure new clients meeting the capacity can be challenging. When you contract staff, the company is able to remain productive when unexpected growth is experienced. The quick hiring process enables the company to meet its needs.

Contract to hire is not only beneficial to the company hiring but also to the employee being hired. It might be temporary, but it helps you:

Increase your qualifications through experience
Expand professional network, thus increasing chances of being hired on full-time
Determine how compatible you are with the role in the company

When looking at a contract for hire as a company, you need to be clear about the role of the temporary employee and how long the contract will be. It is also important to prepare the other employees for the addition so together they can work as a team even though they are working under different terms. When you completely understand your company’s needs, it is easier to decide whether to go for short-term contracts or permanent employees. Whatever path you choose to take, it will be a win for both you and the contractor.

It is also important to choose a staffing agency you can fully trust with the recruitment and finding you the best-suited candidate. The reputation the staffing agency has in the recruitment area will help you decide whether to rely on it to find the person you want to add to the company.