Strategic Guide to Leveraging Contract and Permanent Talent

​A company’s workforce is its most valuable asset in navigating short-term disruption and achieving long-term growth. However, the impact ...

​A company’s workforce is its most valuable asset in navigating short-term disruption and achieving long-term growth. However, the impact of COVID-19 on business demand, operations, and bottom-line results has many companies reconsidering their staffing solutions to better manage the realities of this evolving landscape.

In fact, recent survey findings from KPMG illustrate the growing importance of securing talent. In January, CEOs ranked “talent risk” behind 11 other risks to growth. However, since the start of the pandemic, talent risk has risen to be named as the most significant threat to their businesses ahead of supply chain risk and environmental risk. The bottom line is that any company with plans to protect and grow its share of the market must have essential talent in place at critical turning points.

Whether securing contract workers to rapidly implement critical initiatives or strengthening internal excellence through full-time employees, there’s no one size fits all staffing approach. In today’s environment, every company will need to adapt its workforce structure to better meet current needs and propel future growth—likely with reduced overhead.

There are advantages to every workforce model, whether it be the use of contract workers to augment in-house capabilities or securing permanent employees to fill voids. As hiring leaders begin to assess what the best staffing solution is for each new role or vacancy, here are several key factors to consider.

Contract Workers

A recent jobs report from the Department of Labor shared some positive signs that the worst of the pandemic is behind us. However, it was also confirmed that February 2020 was the official start of a recession. As the U.S. begins to recover from the pandemic, employers are beginning to retool their staffs. This challenge can be complex for hiring leaders, as many require employees now but are fearful of what the future holds. This is where contract staffing can play a vital role. Using contractors may be the safest and most cost-effective solution in the post-pandemic environment. Here are some considerations and advantages to using contract workers in certain roles:

Reduces Fixed Costs.

Hiring contract workers can reduce fixed costs, allowing the company to only pay for the hours each contractor works and helping improve the bottom line during economic difficulties. This cost-effective approach helps to ensure that there are no additional expenses once the critical business need is met.

Access to Specialized Skills.

If the company needs assistance with business-critical projects, such as implementing cloud-computing services, contractors can provide the specialized technical skills that are of value to the project. Contractors learn about and work in various companies and industries, giving them a broad base of knowledge. They also are likely to have used different technologies, platforms, and processes so they can offer an informed, yet objective, perspective on considerations such as risk and compliance, change management, and/or financial viability.

Contract Length Flexibility.

Hiring leaders can choose the terms of contract assignments, which can be as short as a few months or long-term contracts of up to years. In addition, if business disruption requires it, contracts can be terminated much easier than laying off a full-time employee (FTE).

Streamline the Hiring Process.

Under normal economic and social conditions, it takes roughly 42 days to fill a permanent position. If the company needs workers immediately to maintain productivity levels, the turnaround time for hiring contractors can be much faster and more efficient.

Speed to Productivity.

Contractors are familiar with adapting to new environments quickly. They typically immerse themselves in short order and begin delivering value and outcomes with minimal lead or orientation time.

Loss of In-House Knowledge.

When contractors complete their projects, they often take the legacy knowledge with them. To combat this, companies can ensure that contractors dedicate sufficient time on knowledge transfer to relevant permanent staff.


A recent poll conducted by National Public Radio and Marist found that 1 in 5 American jobs are held by a worker under contract. Within a decade, contract hires, and freelance positions are predicted to make up half the workforce. Contract-to-hire staffing has grown in popularity in recent years giving businesses the ability to hire on-demand and on their terms.

In addition, with economic disruption comes the pressing need for many companies to remain nimble and scalable as they look to drive business growth. Many of the same benefits of using contract workers for assignments apply to contract-to-hire arrangements, including a quicker hiring process, budget variability, speed to productivity, and fixed cost flexibility. Here are four unique considerations when it comes to evaluating whether contract-to-hire is right for your business:

Try before you buy.

Given the high cost of poor hires, many companies prefer to ensure the person is a good fit for the job and the culture long-term before hiring. The contract-to-hire arrangement is essentially a trial run, allowing you to minimize risk and maximize retention. This benefit also extends to the candidate, giving them the ability part ways if the fit isn’t right without any lasting negative impact on either party.

Accommodate growth.

If there is one lesson to be learned from the COVID-19 pandemic it is that we never know what the future will hold – particularly in business. Contract-to-hire allows companies to scale up or down in order to meet changing needs. One of the fundamental benefits to using contract-to-hire is that it gives companies the flexibility they need to work a new full-time hire into the budget while still gaining the value of the contractor’s work.

Risk of starting over.

While one of the biggest benefits of contract-to-hire is the ability for both candidate and the company to “try each other out,” the chance that it doesn’t work out does exist. In cases where a permanent offer is not extended at contract end, a new search must begin.

Job security perceptions.

Some candidates may hesitate to accept a contract-to-hire position for worry they will lose their position after the contract ends and have to job hunt all over again, leaving many job seekers to look for a direct hire position instead. However, many staffing firms have a candidate base made up of workers who prefer contract-to-hire assignments.

Permanent Staff

Companies will always endeavor to retain their top talent, which means that the best candidates for your vacant roles are often those who are currently employed elsewhere. In addition, the current economic landscape may see employees putting more value on job security and they may be less likely to change roles for a contract offer. This makes hiring FTEs an effective way to gain access to a wider talent pool. Here are some advantages and considerations for using FTEs to fill open positions:

Retaining Wisdom.

Permanent roles are particularly vital for those in strategic positions requiring industry expertise and knowledge, keeping invaluable skills, relationships, or wisdom within the business.

Ongoing Business Need.

If the position is aligned with or supports a core competency of the organization, it may be best suited for an FTE. This is particularly important for people in management positions, as turnover in manager-and-above levels can negatively affect business continuity and stability.

Lower Salary Costs.

Often, the hourly or flat-fee rate that you pay for a contractor may be higher than you would pay an employee to perform the same services. However, that’s mostly due to the additional costs you’d normally incur with an employee that aren’t required when you hire a contractor.

Commitment to the Company.

With permanent employees, companies are more likely to secure higher levels of commitment, dedication, and loyalty to the organization as compared to contract workers.

High Investment Level.

While a top-performing permanent employee is an invaluable asset to any company, it’s worth considering that FTEs often require more resources and training and are a fixed cost to the company.

Potential of Bad Fit.

Especially during times of disruption and crisis such as the COVID-19 pandemic, it can be tempting to base hiring decisions on short-term priorities. However, putting an emphasis on a candidate’s technical skill set or short-term value without evaluating for cultural fit can result in turnover and a drain on productivity in the long term.

Building a Mixed Staffing Solution.

Every staffing solution has pros and cons, but having a flexible approach allows companies to build an agile team that’s responsive to changing conditions without compromising on the required institutional knowledge and business-critical skills that will support the company through the pandemic and beyond.

As a trusted staffing partner, Dexian is ready to help you build the right team to ensure continued business success.