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Why hire a contractor? Let’s summarize here and get into more detail below.
Contractors Bring Experience
- Deep knowledge and experience – no need to hire, onboard and train
- A simple contract with specific work products and/or services
Reduced Budget Impact and No Human Resources
- No worker’s compensation, insurance or benefits (vacation, sick, holiday, pension, etc.), no payroll processing (firm or additional staff) and no payroll taxes
- Little to no onboarding or training; no performance reviews or human resource intervention; no performance reviews or salary negotiations
- Contractors go to work immediately on key issues that address important needs right away
- No job boards, no resumes, no hiring/onboarding/training; you identify who you want to work with and interview several people; contract for a specified period of time and specific outcomes to achieve your key goals and objectives
- Contractors work on their own schedule, but with the promise to deliver final products/services on your timeline
- Hire a contractor for seasonal engagements such as year-end or special appeals, annual budget development or annual fundraising planning; annual Board training or strategic planning
- Hire an interim executive director while the Board takes valuable time to reassess how a new permanent executive director will lead the organization into an unusual 21st-century!
Here are more detailed thoughts and considerations for hiring contracted services that keep your organization humming along nicely.
COVID-19 and the resulting impact has been devastating to say the least. Many non-profit organizations are rethinking and retooling how they engage with Board, staff, donors and the communities they serve. In addition, numerous employees are choosing to retire, which leaves business managers with the opportunity to create a new way of raising revenue and delivering program services.
Do you need to build an individual or major donor base from scratch? Or create a foundation funding plan or implement a capital campaign? Do you need an interim-position to fill key functions until you can hire permanently? If yes to any of these situations (and others), then hire a contractor who has deep knowledge and experience – someone who can go to work right away using her own knowledge, skills, abilities, tools and resources from a remote well-established office. Be specific and detailed about your need, and then hire a contractor to fulfill that need right away on a short-term basis.
The IRS has a lot to say about how an employer hires, pays, manages and fires an employee, but very little to say about the function of a contract between a business and the person (or firm) it hires to deliver products or services.
There are federal guidelines that all employers must use when deciding whether the person they want to hire falls into an employee or contractor category. In addition, employment law requires employers to collect and pay wage-based taxes for both the employer and employee. The record-keeping alone requires you to hire either a firm such as ADP or another staff person who is skilled in the world of payroll. In addition, employers must know the law regarding paid vacation and sick time, meal and rest breaks, workplace retaliation, wrongful termination, unemployment benefits, and employment status of hourly vs. exempt, and more!
Hiring a contractor simply requires looking at the bios, resumes and websites of several people or firms that have the skills you need to fulfill a specific purpose. Schedule a meeting, ask relevant questions, decide who to hire, review a contract and detailed scope of work, sign and go to work. The steps above should take fewer than 10 hours. Get to work on the important tasks quickly and see results according to your scope of work.
Numerous tasks are done seasonally and can be done very inexpensively, and with great results by hiring a contractor who has years of knowledge, skills and experience. Don’t like the annual budgeting process? How about the special or year-end appeal and donor stewardship? Let a contractor take the burden of the tasks you don’t enjoy, which frees up your valuable time to do those things you enjoy the most! If you decide that contracted services are no longer feasible, you simply terminate the contract per the terms in the agreement. Document what you worked, and what didn’t work with that particular contractor so that you can decide in the future whether or not to hire that person or firm again.
The traditional hiring process includes a very long list of employer obligations and employee expectations. This table provides a simple overview of the major differences between contracting versus hiring an employee.
|Job posting, screening, interview, hiring & onboarding||Position development, post to multiple job boards, screening, interview (following federal and state guidelines), document interview details for employee file, hiring team decision, offer letter and salary/benefits negotiation, set-up in payroll system (complete W-4, I-9 and all insurance/pension forms for opt-in or opt-out declarations), purchase tools/resources (laptop? Cell service? Online memberships?)||Identify/contact potential experienced contractor(s), interview, review contract and scope of work review, two signatures needed to begin work.|
|Training||Full engagement with all staff; regular training to cultivate relationships to develop strong work force||Minimal needed to achieve scope of work product(s).|
|Human Resource Oversight||Required to address all internal operating policies including: diversity, equity and inclusion; sexual harassment; periodic performance reviews; salary negotiations at hire and throughout tenure; timesheet approval & documentation, vacation & sick time, meal & rest breaks, retaliation and termination, unemployment, etc.||None.|
|Performance Reviews||Evaluate work product(s) against job expectations regularly; measure success via qualitative and quantitative measures.||None – unless the scope of work product(s) are not delivered as described in the contract.|
|Costs||Staff hours to conduct all activities above. Direct costs vary depending on where job is posted. Indirect costs related to number of staff hours over the course of approximately six months to hire. Additional hours to train/onboard.||Minimal: identify potential contractor; interview with executive director; review contract/SOW, sign contract; establish communications protocol to review work product(s).|
And, finally – when deciding whether or not to hire a contractor, refer to the IRS guidelines as a very important part of your decision-making process.
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