This year has been challenging for hiring. Around 75% of employers worldwide, especially in technology, healthcare, and communication services, report difficulty finding people with the right skills.¹ One key reason for this gap is the rapid pace of technological change. Many roles now require specialized skills, like coding or data management, that not everyone has had the chance to learn.
Another challenge is that older workers are retiring faster than younger workers can replace them. And although many people are actively seeking jobs, their skills don’t always align with what employers need. On top of that, many companies are now hiring from a global talent pool, creating even more competition for top positions.
Employers are experimenting with new ways to attract ideal candidates to address these challenges. Many offer remote work options, flexible hours, improved pay, and increasingly use contract-to-hire jobs to fill skill gaps.
What is Contract-to-Hire?
Contract-to-hire is a straightforward way to test out a new hire before committing to a full-time role. You bring someone on for a few months with the understanding that, if everything goes well, they could transition into permanent employment. During this time, you get to see how well they perform, handle the job, and fit in with your team and company culture.
What makes this different from typical contract positions is the intention behind it. From the start, there’s a possibility of turning the role into something permanent. But if it doesn’t work out—for you or the employee—you’re not locked into anything. You can part ways at the end of the contract without the challenge of a full-time commitment that didn’t work out.
The Pros of the Contract-to-Hire Model
The contract-to-hire model can be an innovative, flexible, and cost-effective way to hire. Here’s why:
1. It Reduces Risk
Hiring someone permanently is always a gamble. Resumes and interview processes can only tell you so much. With contract-to-hire, you see the person in action—how they handle their responsibilities, work with your team, and fit into your workplace culture. If it’s not the right fit, you can part ways at the end of the contract without the stress and cost of undoing a permanent hire.
2. You Can Fill Roles Quickly
Sometimes, you don’t have the luxury of waiting. Maybe you have a critical project that needs immediate attention or a sudden gap in your team. The contract-to-hire model lets you bring someone on board quickly while deciding if they’re the right long-term fit. They can hit the ground running and help you keep things on track.
3. It Saves Money in the Long Run
A bad hire can be expensive—not just in salary but also in lost productivity, training time, and the cost of starting the recruitment process all over again. Contract-to-hire minimizes this risk. You only commit to a permanent position once you’re confident they’re the right person. While there might be upfront costs if you work with staffing agencies, it’s a small price to pay to avoid costly mistakes.
4. It’s Flexible
The business world is unpredictable. Workloads fluctuate, budgets change, and sometimes, the need for a role disappears altogether. With contract-to-hire, you have the flexibility to adjust. If things change, you’re not tied to a permanent hire. You can end the contract and pivot as needed without any strings attached.
5. It Attracts a Broader Range of Candidates
Some professionals, especially those with niche skills, are open to contract-to-hire positions because they like testing a job before fully committing. This can help you access a wider talent pool, including people who might not have considered a permanent position right away. It’s a win-win for both sides.
6. It Motivates Employees to Perform
When someone knows they’re being evaluated for a permanent position, they’re more likely to give it their all. Contract-to-permanent employees are often eager to prove their value and secure a full-time role. This can result in higher productivity and a strong work ethic during the contract period.
The Cons of the Contract-to-Hire Model
While contract-to-hire has its perks, it’s not perfect. There are a few challenges you’ll want to keep in mind before diving in:
1. There’s No Guarantee They’ll Stay
Even if the person excels during the contract, there’s always a chance they won’t accept a full-time offer. Maybe they will get a better offer elsewhere or decide your company isn’t the right fit for them. This can be disappointing, especially if you were banking on them becoming a permanent part of your team.
2. Temporary Employees May Not Fully Integrate
Contract hires sometimes hesitate to dive in fully, especially if unsure about their long-term future with your company. They might hold back from forming solid relationships with colleagues or committing to more significant projects. This can create a sense of separation between them and your team, which could impact overall morale.
3. Uncertainty Can Impact Employee Engagement
Contract-to-hire positions come with an inherent level of uncertainty, which can make employees feel uneasy. If they feel like they’re constantly being judged, it might create stress or reduce their engagement. This insecurity can affect how they interact with their team and how much effort they put into their work.
4. It Can Prolong the Hiring Process
While the trial period gives you time to evaluate a candidate, it can delay your final decision. If the contract ends and they’re not the right fit, you’ll need to start the recruitment process again. This can be frustrating if you’re trying to fill a role quickly.
5. You Might Miss Out on Top Talent
Some job seekers, especially highly skilled ones, prefer the stability of a permanent position. If your offer is contract-to-hire, you might lose out on great talent to competitors offering full-time positions immediately. Additionally, if the contract period is too long, you run the risk of the candidate leaving for a more secure opportunity before you can decide.
Overcoming the Cons to Maximize the Benefits
Overcoming the challenges of the contract-to-hire model isn’t as complicated as it might seem—it just takes a little thought and preparation. If you’re considering this approach, here’s how to make the process work for your company and the candidates.
Be Upfront About Expectations
One of the biggest frustrations for contract-to-hire workers is not knowing where they stand. You can avoid this by being clear from the start. Let candidates know the role is temporary and has the potential to go full-time. Explain what you’ll be looking for during the contract period. When people know what’s expected of them, they feel more confident and motivated to perform.
Pay Competitively
Since most contract-to-hire employees don’t receive benefits during the contract, offering competitive pay is a great way to attract strong candidates. It shows you value their skills and effort, even during the trial phase. If you can, strengthen the deal with small perks—like professional development opportunities or flexible work hours—to make the position even more appealing.
Make Them Feel Like Part of the Team
Temporary workers often feel like outsiders, but you can change that. Include them in team meetings, invite them to company events, and give them meaningful work that shows their contributions matter. When contract employees feel like they belong, they’re more likely to invest in the job and your company.
Give Regular Feedback
Don’t keep flexible workers in the dark about how they’re doing. Schedule regular check-ins to share feedback on their performance and let them know where they stand. At the same time, ask for their thoughts about the role and address any concerns they might have. Clear communication helps build trust and keeps everyone on the same page.
Don’t Drag Out the Decision
A long contract period can leave employees feeling stuck, and you risk losing great talent to other opportunities. Set a clear timeline for deciding whether to offer a permanent role and stick to it. If the employee is doing well and you know they’re a good fit, don’t wait too long—make the offer before someone else does.
Work With a Good Staffing Agency
If you’re using a staffing agency to handle contract-to-hire roles, ensure they’re reliable and experienced. A good agency will manage payroll, paperwork, and other administrative tasks efficiently, freeing you to focus on evaluating the candidate. They can also help you find top-notch talent that meets your needs.
Find your perfect contract-to-hire staffing partner with C4 Technical Services.
Hiring doesn’t have to be complicated. At C4 Technical Services, we make it easy to connect you with contract-to-hire candidates who are the perfect fit for your team. Whether you’re looking for top talent to jump into a project immediately or want the flexibility to evaluate someone before committing to a permanent hire, we’re here to help.
With a deep network of skilled professionals and a focus on understanding your unique needs, we take the guesswork out of hiring. Contact us today, and let’s find your next great hire together!
References
- “2024 Global Talent Shortage” ManpowerGroup, 2024, go.manpowergroup.com/talent-shortage.
