Over the last couple of weeks as we begin to navigate the changing business norms resulting from the pandemic, we have put together a couple of contract-to-hire engagements with our clients matching them with highly qualified candidates who start on my company’s payroll as consultants with the plan of converting to the client’s payroll in the future. Contract-to-hire (CTH) engagements are projects where a client has a need for a permanent resource, but is unable to add headcount to their payroll immediately. Obviously, many companies find themselves in this predicament at this time. We have found there are definite advantages in CTH engagements both for companies with critical resource needs (but limited ability to hire people currently) and for candidates anxious to get back to work.
A workaround that “works” - Many companies are working under hiring freeze restrictions at this time, but are short of specifically skilled people. Contract-to-hire gives clients immediate coverage of these needs without officially taking on additional headcount.
Faster turnaround - Clients appreciate that CTH allows them to get a highly qualified person in the chair working as soon as the their background check is cleared without the usual HR on-boarding process. Candidates see this approach as the quickest way for them to get to work and their next paycheck.
Quality people/quality employers - There are some exceptionally talented people who are available right now directly as a result of the pandemic. Companies that engage candidates this way have access to some of the best and brightest people on the market. Some highly experienced consultants who typically don’t work in perm roles are interested in such programs and can dramatically improve the talent level on your team.
CTH saves you money - In most CTH engagements, we are able to build into the margin the placement fees which typically occur when companies hire through an agency. Rather than paying the fee upfront, clients pay in “installments” on every hour billed. Because we are able to create a win-win scenario for the candidate and the client, rates under CTH usually are less than the average bill rate paid in pure contract engagements.
Try/Buy - Often, the contract period under contract-to-hire engagements is seen as an evaluation period - both for the client and the candidate. While this generally is the case, we encourage both clients and candidates to not enter into these kinds of engagements unless they both are in alignment in moving forward with a perm offer at a future date. Our agreements allow the client and candidate/consultant to negotiate and move into a direct hire situation as soon as both parties are ready and able.
I would encourage companies to consider contract-to-hire engagements as an effective way to fill critical requirements, save money on recruiting fees, and improve the overall quality of people in your organization. We’ve been effective at negotiating these kinds of engagements recently and can provide both the structure and the candidates to make it work for you.
