Hiring is one of the most important decisions you make as an executive. The hiring of a new employee, whether it’s temporary or permanent can have a significant impact on your company’s culture and productivity.
A common dilemma leaders face is whether to hire a permanent employee for a vacant position or an interim. Do you want to commit for the long term or do you prefer a short-term, specialized contract?
No one solution fits all, so let’s look at some of the factors that will help you to make the right decision for your business.
What are the two contracts?
Interim leadership staffing is a project-based approach to hiring employees who are brought in for a limited time period, usually to meet a particular need within an organization. These hires can provide you with immediate and focused solutions to a specific challenge, such as leading your organization through a transition or crisis, or overseeing a project for a short time that requires specialized expertise. A McKinsey report found that 87% companies in the world have or expect a skills shortage to occur within the next few years. This can be resolved by hiring interim specialists.
The duration of these contracts can vary between 3 and 12 months depending on the urgency and scope of the job. Their compensation can also be structured differently. For example, they may receive fixed fees over the duration of a project, consulting agreements or day rates calculated according to their expertise, experience and involvement.
Companies hire permanent staff with a longer-term perspective in mind. They are the ones you want to grow with and in your company, and they will contribute to your daily operations and your future plans.
Permanent hires are typically given contracts that last more than one year. They receive a steady salary, benefits at work like health insurance and other incentives to encourage their professional growth and engagement.
Permanent Employees vs. Interim Employees Permanent Employees
Each type of job has advantages and disadvantages. You should compare them to decide which is the best for your team and company.
Why hire Interim Employees
Why many executives choose this option:
They Hire Quickly
If your company is faced with an urgent need, such as an unexpected project or a sudden turnover, it may not have the time to conduct a thorough search. Interim positions tend to attract candidates that are used to working in fast-paced environments, and who can deliver results quickly. The rapid turnaround of interim leadership staffing reduces disruptions that could be caused by vacancies, and keeps projects moving without costly delays.
A more flexible arrangement
Interim professionals are more flexible than permanent employees. They can be hired quickly and then removed as soon as their job is complete. They are ideal in situations where capacity changes need to be made quickly, such as when there is a seasonal spike in work or you require someone to fill in a temporary gap.
Upwork’s study found that 59% U.S. hiring manager plan to rely on more interim workers. This is due to the COVID-19 pandemic, which has created a need for flexible workforce.
They Offer Specialized Skill
Interim hires can bring with them a wealth expertise, especially in situations when specific skills are required. If your company is going through a digital transformation you may need to conduct an interim executive search in order to find someone who has a deep understanding of the latest technology, but only during the project. A temporary employee with expertise and experience can be brought in to help get things up and running.
It’s cost-effective in the short run
The upfront costs of hiring an interim employee may seem higher than the cost of hiring a permanent worker, but they are more cost-effective for short-term jobs. You only pay for their time on the job, which can be as little as a few days or as much as several months.
The Disadvantages Of Interim Hiring
Higher short-term costs
The salary of an employee can be much higher for interim professionals. If you don’t keep the engagement brief, these costs can quickly add up.
Because of their expertise and temporary nature, interim professionals charge a premium rate. Many companies pay a lot for their services when extending the project or expanding the scope.
Instability
The lack of stability of interim employees is one of the greatest challenges. The interim hires may leave when the project or contract is over, no matter how far they have progressed.
Interim hires also aren’t invested as much in the long-term goals or vision of your company as permanent employees. They may have delivered exceptional results while on contract, but their departure could create a void that requires you to start the hiring process again.
Limited Training and Development
Since their tenure is so short, there’s no incentive to invest in the long-term development of these employees or fully immerse them in company processes and systems. It limits their ability to contribute outside of a specific project, and makes it difficult for them collaborate with others or align themselves with the goals of your team.
Why choose permanent employees?
Consider the following trade-offs when deciding whether to sign a long-term contract, depending on your business’s goals and capabilities.
Commitment
Employees who are permanent tend to be loyal and stable, as they want a long-term relationship with their employer. Because they’re in it for the long run, they’re more likely to embrace their roles and responsibilities as well as immerse themselves into your company’s vision and goals.
Full integration into the company’s culture
These employees are more likely to build strong relationships with their colleagues and become part of the team’s fabric over time. Permanent hires are more likely to form strong bonds with their co-workers and become a part of the fabric of the team, leading to greater collaboration, trust and camaraderie.
Consistency
You don’t need to worry about replacing employees constantly or dealing with the disruptions caused by high turnover. A stable and permanent workforce will ensure better continuity of daily operations as well as project execution.
It is important to maintain consistency, especially in roles where employees are required to have a thorough understanding of the company’s processes and products.
Long Term Development
When you hire someone to fill a long-term position, you have a strong incentive to invest in the professional development of that person, through mentorship or training opportunities. The employee benefits as well as your company from this long-term growth focus, since employees are able to expand their skill set and take on more complex challenges.
The Downsides of Permanent Hiring
Permanent employees have another side:
Complacency and the Risk of Complacency
Permanent employees can be a stable source of long-term employment, but they could also lose their motivation over time. Some employees become complacent or lose their motivation. Even the highest-performing employees can fall into a rut of low-value work that slows down their growth as well as the team’s momentum.
Hired for a longer period of time
The search for the ideal permanent hire may take a long time because the stakes are high and you want to find someone who is compatible with the culture of the company and also the role. It can be difficult to meet this extended timeline, especially if you are in a rush to fill a position or if there is a gap during times of high demand.
Cost Increases Over Time
Salary is just the beginning. Benefits like paid time off, health insurance, retirement contributions and bonuses are included in most permanent employment contracts.
Takeaway: Find Balance
How do you decide what to prioritize after reading all of the pros and con? These four questions summarize it:
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Is this position or skill-set a permanent, essential requirement for your business, or a temporary one?
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Are you looking for a solution to a short-term problem or can you afford an employee who will stay with you?
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You need to quickly fill the position or thoroughly vet candidates?
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Is the position a critical one for meeting your goals, or does it require temporary, specialized expertise?
You will gain a better understanding of the needs of your business by comparing these two scenarios. Each situation is different, and therefore requires a customized solution.
