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The rise of the contractor

​Recent market volatility

During the COVID period, leaders and boards were forced to think on their feet, and most were plunged into a desperate situation. There were very few past examples of how to handle this phenomenon from both a personal and business perspective. One of the obvious and most common tactics to offset the loss of demand and revenue was to lay off employees within the business. This happened across the board as over 2.7 million people in Australia or 1 in 5 workers lost their job or had paid hours fall during the peak of COVID in 2020.

Last year, restrictions were lifted, and the market picked back up with an abundance of activity. Suddenly the pre-COVID employee numbers were needed again, to keep up with business demand. But has rehiring those previously permanent positions been the best approach?

Growth in contract hires

With the heavy layoffs throughout COVID, managers were needing to grow their team headcount to keep up with business picking back up again.

An effective way to support a spike in business activity was and is to hire contractors. Many employers opted to replicate their previous teams, rehiring permanent workers as a snap reaction to the increased business. It worked before, so why not now? However, those who were needing a faster hire, or on the contrary, had time to stop and develop a recruitment strategy, opted for contractors. Some haven’t looked back since.

Not all positions require a permanent employee, and this was realised by many employers in the process of searching for a more versatile and adaptable hiring strategy. Contractors bring multiple benefits, whilst allowing companies to maintain their foundational team of permanent employees:

  • Flexibility: Contractors provide businesses with the ability to scale their workforce up or down as needed. This can be particularly useful for companies that experience fluctuations in demand or have seasonal spikes in workload.

  • Cost-effectiveness: Hiring contractors can be more cost-effective than hiring full-time employees. Contractors typically do not receive benefits such as health insurance or paid time off, and they only need to be paid for the work they perform.

  • Access to specialised skills: Contractors often bring unique skills and expertise to the table, which can help businesses to complete projects more efficiently and effectively. By hiring contractors, businesses can access the skills they need when they need them, without having to invest in in-house training or development.

  • Improved productivity: Contractors are typically highly motivated to complete their work quickly and efficiently. This can help businesses to get more done in less time and to meet their deadlines more effectively.

Candidates are also turning to contracting

We recently looked into quiet quitting and the situations that are leading to it. One of the main consequences of COVID for employees was burnout. A preventative measure taken for this is contracting. It offers shorter-term goals, quicker turnover of workload and new and different experiences, without the need to commit in the long term. The level of redundancies and layoffs would have changed the perception of job security, which was a key deterrent to contracting in the past. Now with either witnessing or experiencing the feeling of dispensability, even when permanent, more people are keen to consider the benefits of contracting.

A balanced mix of permanent and contract

To arm themselves for future market volatility, companies need a flexible recruitment strategy. We know enough about the candidate shortage by now to understand that candidates are not to be taken for granted and that a proper strategy needs to be implemented to adapt to the ebbs and flows of business demand.

Importance of permanent employees

There are of course positions that are much more suited to be permanent. These positions are crucial in establishing a foundation for the team within the business. Those that require a deeper knowledge of the business and skills that can only really come from experience on the job. Not only this, but permanent employees also play an important role in establishing the culture of the team. There is a heightened sense of loyalty and there is the space to invest in training and progression for those employees.

Mixing in contractors

Companies should be considering the previously discussed benefits of using contractors within their employment strategies. The short-term nature of contracting allows companies to onboard support for their team during times of need. It also allows them to operate with a reduced headcount during off-peak periods, without removing loyal employees and threatening the strength of the culture.

If you would like further advice on building a strong recruitment strategy, you can reach out to our Client Engagement Director Chris Crolla, or any of the team here.

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