Visualizing the Impact of Contractors

Most companies of size today balance a workforce of employees and contractors. A recent NPR/Marist poll showed 1 in 5 jobs is held under a contract. Loosely defined, an employee will just be working for your organization, generally works at your place of business, is entitled to benefits and has defined working hours. A contractor has the flexibility to work for numerous employers, can work their own schedule, has specific experience and qualifications in a field but is not covered by many aspects of employment law.

In practical terms, contractors can be very helpful particularly where there’s a need for a specialized skill set and little/no time to grow it in house. While the standard of work is often excellent, “a contractor’s allegiance is typically to themselves rather than the company,” explains Joe Kolinger, a strategic leadership consultant and co-founder of OfficeWorks, “So as a company works to build a culture of quality, customer care, and alignment with company values, there will be differences between employees and contractors. One has a long term view, the other has a short term view. There are exceptions, but in general an organization overloaded with contractors experiences low allegiance.”

The definition of contractor itself has come under scrutiny recently with the emergence of companies such as Uber and Lyft and the “gig economy”. California legislators in 2019 approved a bill which will force these app-based companies to treat their contract workers as employees. The argument is that these companies exert control over how contractors perform their tasks and that the work is part of their regular business.

It might surprise you that in a company like Google, that touts its company culture and generous and innovative employee benefits, contract workers now outnumber employees. The advantages for hiring contractors in certain roles might be lower costs to the employer associated with providing benefits and supplies. Disadvantages may include a more transient workforce, with contractors tending to have a shorter tenure than employees who are engaged full-time.

Given the distinct differences by which employees and contractors must be handled from both legal and strategic perspectives, being able to visualize how they fit into your organization is useful. OrgChart lets you highlight contractors and the positions they hold, from key managers to individual contributors, allowing you to see their impact across your organization.

Schedule a free demo and we can show you how to model “what-if” scenarios to experiment with key metrics such as benefit costs, salary and tenure to measure the financial impacts of freelance workers. With flexible positions a continually changing variable of today’s HR landscape, keeping a handle on the distribution of these workers is a vital component of organizational management.

References

Google Follows A Growing Workplace Trend: Hiring More Contractors Than Employees, Forbes Magazine, 2019.

Silicon Valley’s dirty secret: Using a shadow workforce of contract employees to drive profits, CNBC, 2018.

Employee or Contractor? Health Care Law Raises Stakes, The New York Times, 2015.