We are delighted to once again have Robby Slaughter of Slaughter Development, a business process improvement consulting firm, as our guest blogger. Robby, the floor is yours!
The conventional wisdom is that contract employees are like mercenaries: they are there for the money, not the cause. But a column published last year in ABC News offers an alternate perspective:
In the decade-plus I’ve worked as a contract employee and freelancer, I’ve encountered many temps who agree that contract work has its undeniable perks. Between the autonomy, flexibility and variety, many of the nation’s 10.3 million independent contractors have no intention of returning to staff work any time soon…
Why on earth would millions of people who have limited job security want to keep it that way? Author Michelle Goodman explains:
Ask a contract worker what they like most about their lack of employee status and among their top reasons you’ll likely hear include “It gives me more control over my schedule,” “I have more time to travel/raise my kids/work on launching my own business” or “My work/life balance is through the roof.”
It’s easy to get distracted in this discussion. On the one hand, contractors and employees couldn’t be more different. They are classified differently under tax laws. Contractors are typically exempt from benefits, and employees typically have a higher status in the organization. Contractors tend to get called in to work on a particular project until it’s done, but employees are hired on a permanent basis.
On the other hand, every job is a contract job. When you’re a full time employee, you work under an employment contract. This might be an implied contract or a written job description. It might be a verbal understanding that gets reiterated in periodic reviews. In the case of a sales role, your work contract might be your commission structure. In essence, the contract is: work and you get paid, don’t work and you need to get out.
This brings me to the ultimate question for small business owners. Who is more productive: salaried employees or contract workers? The answer is not quite as simple as the question. It’s not the classification that forecasts individual productivity, but rather the clarity with which work is defined.
In this regard, contractors may have a slight edge. Usually a contractor is hired to complete specific tasks. The act of writing down those expectiations offers a tremendous advantage over someone who is just bringing on “extra help.” On the contrary, it’s the “other duties as assigned” category which drives employees nuts. You might have joined the firm as a copywriter, a production manager or a bookkeeper, but when you’re getting coffee and dropping off dry cleaning you no longer feel like you are part of the team.
In any organization, productivity and satisfaction are inextricably linked. People who work hard and achieve their goals feel good about their accomplishments. But if you have not precisely defined those goals, every day is a little mushy. There’s no sense of forward progress and no sense of personal achievement.
In summary, we can’t say conclusively that contractors are more productive than salaried employees. But we can say that contracts themselves—written descriptions of work, expectations and compensations—are the foundation of productivity. Your accountant may be the best person to decide how to classify people who work for you. But no matter what the tax code says, clarity is key to a happy, effective team.