Category : CAREER


Temporary/Contract Hires vs. Permanent

When there is a positive change to your business, often you look at the option of hiring additional staff. If you are like most business owners, you would rather contribute to furthering your business. Spending time placing ads on the Internet or in newspapers, screening 50 plus resumes and applications, interviewing five (plus or minus) candidates, having to make the hiring decision (which sometimes doesn’t work out), and then going through the new hire “negotiations” may not be how you want to spend your time. Some small business owners aren’t comfortable doing these tasks because they question their “human resource” expertise.

One alternative to adding permanent staff is to hire someone on a temporary or contingent basis. To help you make the basic temporary vs. permanent decision, please review the reasons it may make sense to hire a temp, below.

Why Hire A Temp?

  • Do you need someone full-time or part-time?
  • Is the job seasonal?
  • Do you know when you will no longer need this extra help?
  • Is this need caused by a special project that has an end date?
  • Do you need someone with specialized skills that you won’t need or can’t afford once the project is completed?
  • Is this an emergency caused by someone who is absent unexpectedly and is planning to return? Is the return date certain or uncertain?

Sometimes the answers to these questions would suggest that a temp hire is not the best alternative but you’d still rather start out that way. There is another scenario under which a temp hire may make sense and it is called a temp to perm’ placement.

Temp to Perm Option

  • Temp agencies will use either their applicant data base or recruiting skills to find a number of qualified applicants almost immediately — that’s their business.
  • Temp agencies are skilled at screening and selecting people.
  • There is no recruiting expense to the hiring company.
  • Most temp agencies will have a process in place that allows the hiring company to “convert” the temp to a “perm” (permanent) hire for an up-front negotiated fee or by keeping the temp for a specified period of time through the agency after which the hiring company may convert them to a regular or permanent hire.
  • If the person selected isn’t working out, he/she can be replaced quickly by the temp agency and there are almost never any negative legal implications for making a change (e.g., wrongful termination, unemployment compensation, etc.).

Temp vs. Permanent Cost
(Note: this may differ greatly depending on your business’ employee-cost structure, especially for benefits.)

% Added to Cost included in

“Permanent” Cost Salary/Wages Temp Rates
Weekly Salary             500.00
Payroll Taxes*               50.00 10% Yes
Paid Benefits
(health, life)
              75.00 15% Yes
Paid Time off
              50.00 10% Yes
Recruiting/hiring cost               25.00 5% Yes
TOTAL             700.00 40%

(*FICA, Medicare, Unemployment {Federal & State}, Workers’ Compensation)

If you want to make sure someone will work out longer term without the uncertainty of the outcome, the best way to make that “permanent” decision is to “try before you buy.” The advantage of this approach is that you can observe the person doing the job for a period of time before you have to make the final hiring decision. That’s the most reliable selection process going.



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