Contract-To-Hire Method of Hiring Explained
When you need to augment your team, your first instinct might be to bring a new employee on board directly. While that is certainly an option, going the direct hire route isn’t always ideal. If the employee you hire turns out to be not the fit you’d hoped for, the business would have to suffer the costs of onboarding, training, unemployment and lowering team morale with a termination.
There is an alternative that can help you avoid most of the risks associated with direct full time employee hiring. This is called the contract-to-hire method. With the contract-to-hire method, you are using an approach that can guarantee a great fit all while keeping costs and risk low. If you are wondering what the contract-to-hire process is exactly and how it can benefit your company, here’s what you need to know.
What Is the Contract-to-Hire Method?
The contract-to-hire method is a hiring approach designed to help companies find right-fit candidates efficiently. The employee is first brought on board and into a position through a staffing firm as a consultant. During the initial period, the employee remains on the recruitment agency’s payroll, similar to a temp. The recruitment agency covers payroll costs, taxes and unemployment insurance, workers compensation, performance reviews/feedback, regular communication with the employee, and more.
How long the trial period lasts can vary, though it typically is six months. As the chosen initial contracting time period comes to a close, your company has the option of bringing the employee on board full-time as a member of your permanent team. Essentially, the worker transitions from being part of the recruitment agency’s payroll to yours.
However, if you’re still wanting to work with the employee as a consultant, you are not required to bring them on permanently. Instead, you can either extend the contract or release that worker from the assignment. You don’t have to make a permanent hire until you’re sure the employee would make an exceptional long-term addition to your team.
The Benefits of the Contract-to-Hire Method
As mentioned above, one of the biggest benefits of the contract-to-hire method is that you can try a candidate in the position before making a formal hiring decision. In many ways, the initial assignment through the staffing firm serves as a working interview. You can experience the candidate’s capabilities firsthand, as well as assess culture fit.
But the benefits don’t stop there. The contract-to-hire method is also incredibly cost-effective. Since it involves partnering with a staffing firm, you’re eliminating much of the financial burden associated with recruitment. The recruiters will handle the candidate search process and initial screenings, streamlining your process and giving you more time to focus on your other responsibilities.
While the contract employee is part of the staffing firm’s payroll, you don’t have to worry about some of the costs that come with a permanent hire. You won’t be responsible for benefits, for instance, and that can result in a significant cost savings.
Plus, the contract-to-hire method is a time-efficient hiring approach. It creates opportunities to secure a great candidate faster, allowing you to reach full productivity in less time.
Additionally, with contract-to-hire hiring, you reduce risk to your business. For example, since the employee doesn’t initially start on your payroll, you aren’t responsible for unemployment if it isn’t a great fit or workers’ compensation costs. You also won’t have to struggle with the ramifications of a bad or an ill-timed hire, as you can release the employee from their assignment at any time should the need arise.
Finally, when the trial period ends, you aren’t the only one who will be confident about the fit; the candidate will be, too. They’ve also had a chance to try the job on for size. So, when it comes time to accept a permanent offer, they’ll know it’s the best choice for them, as well.
Ultimately, by using the contract-to-hire method, you can guarantee that you have the right candidate for the job, all while reducing the costs of hiring and lowering risk. If you are ready to experience the benefits of contract-to-hire hiring, contact On Cue Hire today.
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