Finding and Managing Contract Staff

NecktieI remember looking up from my desk as the door to my office opened unexpectedly.  The consultant crucial to one of my anchor client projects entered – pale and slightly jaundiced – and announced as calmly as he could, “I’m going to the hospital.”  That evening he underwent emergency surgery.  Thankfully, he went on to fully recover and return to work… weeks later.

Refocusing on my business situation at that moment, my boat was a critical person down and sinking fast.  How would you handle it?  Paddle faster?  Abandon ship?  No, it’s not every day a key person self-admits to the hospital.  But what response options do you have available right now?  Contract staffing is one important tool for any SMB seeking higher profit, improved productivity, and managed risk.  This article examines benefits of contract staffing to you as a SMB manager and provides tips for success.

Risk management is one benefit and it cuts both ways.  In the example above risk comes from being understaffed through illness, but the list goes on. Vacations, terminations, sales departments exceeding their numbers and creating extra work, simply not having people with the required skills – these and more create risk of being shorthanded.  Going the other direction, loss of business creates risk of being over-staffed.

Next, when managers think “productivity” they tend to think “the right person in the job, getting things done.”  If that’s your only goal, then yes, an agency can help – but you don’t “get it.”  The real benefit comes when you win back time and energy by offloading the drudgery of posting jobs and screening candidates, freeing you to focus. Combined with their ready reserves of pre-screened candidates, this should speed your placement process.

Finally, higher profit.  Hiring people is costly and time consuming.  Giving them benefits is expensive.  It’s great if it works out, and if it doesn’t… ouch.  Contracting eases the burden by simplifying the administration, spreading out the costs, and creating a sort of assured performance period, helping ensure a mutual match.  If eventual permanent placement is the end goal, it can be an affordable way for both sides to “try before you buy.”  And for short term engagements, there are few cost effective solutions that are as easy to employ.

So how do you go about establishing the agency relationship that’s right for you?  The tips below provide practical guidance about what to look for.

Finding a Relationship

  • Shop around
    Staffing agencies vary by their area of specialty.  A good way to separate the stand-out firms from the rest is to ask your account executive about their own expertise – and then verify it.  Elton Crowder, a Seattle-area recruiter specializing in technology staffing notes, “It sounds basic, but if you’re a technology company, find out if your account executive actually knows technology.  If not, ask them how they tell a good programmer from a bad programmer.”  Also ask how the agency sources their staff – direct or through brokers – as it affects your cost.  Lastly, find out what screening all candidates receive, and what optional screening services are available.  Tip: Your goal should be to see no more than three resumes per hire when the contract staffing process is working smoothly.
  • Get Referrals
    Ask colleagues for referrals to an agency that would match your needs – and ask them why they’re willing to recommend the agency.  Be sure to ask about the agency’s placement performance – the speed with which they found qualified candidates. Tip: If you’re having trouble spotting an agency matched to your need, search the Internet job boards for jobs like your vacancies.  Many will be posted by agencies.  They’re your matches.
  • Get a written staffing agreement.
    A good agreement specifies that the staffing company will be responsible for all applicable taxes, insurance, and other employment fees.  It assigns you ownership of all work product.  Additionally, it lays out important timelines and rates, including hourly and overtime rates, minimum contract lengths, the waiting period before converting a contractor to full time without penalty (e.g. – six months), the amount of that penalty (e.g. – 25%), and work quality guarantee periods, just to name a few.  Review them carefully and understand each clearly.  Consult your attorney, accountant, or management consultant for advice.
  • Don’t go with the first company you talk to.
    That’s not to say never hire them.  Rather, it’s a different way of saying “shop around first.”  Have some points of comparison.  Agencies do differ – slightly – on their terms, screening procedures, and even rates.  If you’re not finding what you’re looking for, look some more.

Hiring Staff

  • Write a specific, detailed position description.
    If you want to master the game and review only a few quality resumes before you make a confident hiring decision, the first step is to get in the habit of writing an accurate description of the position.  Tip: Don’t write to the “perfect candidate.”  Instead, apply the 80/20 rule: write to the majority of what the qualified candidate would know.
  • Don’t use just one staffing company.
    I’m not necessarily advocating pitting two agencies against each other, though at times there are reasons to do so.  Sometimes it simply makes sense to buy elsewhere.  For example, you can get data entry people from your technical services staffing company, but they’ll probably be cheaper through a clerical company – and just as good.

After the Hire

  • Proactively manage contract staff.
    Work with your agency to ensure that the work performed is satisfactory.  Remember: contract staff are people, too.  They need guidance and feedback.  Keep your account executive close at hand.
  • Don’t view your work as “done.”

This is contract staffing.  It’s not permanent.  Have a game plan – and end game – in mind.  Communicate openly and professionally about the temporary nature of the engagement and about any chance of conversion to permanent status.  Then keep your word.

It’s no accident that the planning section is longest.  As with most things in life, preparation is everything.  But applied smartly, contract staffing is a useful tool for the proactive manager of any SMB seeking higher profit, improved productivity, and managed risk.


Dustin Walling is Principal of Dustin Walling Associates, a Seattle-based management consulting firm providing strategy and operational consulting to small and medium businesses.  For article topics, questions, or comments, Dustin can be reached at http://www.DustinWalling.com.