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.

Keys to Selecting an Indian Outsourcing Partner

OutsourcingFinding someone with an India offshore horror story is a little like trying to find fireworks on the 4th of July (or Diwali, for my Indian friends…).  They’re everywhere.
That’s odd, frankly.
To believe the mantra of “Brand India,” offshoring buyers get superior East Indian technical training coupled with the best available processes, resulting in far superior results than you can achieve on your own.  “We’re better than you” – that’s supposed to be the value.
Something is going wrong.
Brand India’s bravado-bordering-on-hubris isn’t borne out by current trends.  Witness 20% of the InformationWeek 500 pulling offshore work back in-house in the year prior to November 2007.1 Add in a Robert Half Technology survey of 1,400 CIOs: of those who canceled offshore projects, the top three reasons were: need for excessive management/oversight, unrealized savings, and work quality.2 Finish with a new survey by the Washington Information Technology Alliance of area of venture firms, 71% of whom predict no significant use of offshoring in the coming quarter by portfolio companies.3
The value proposition is often unrealized. Why?
Simple, though harder to fix.  Many companies go into offshoring with unrealistic expectations.  Often offshore vendors don’t understand what’s expected, either.  Finally, we tend to ask the wrong questions and make decisions on the basis an incomplete reality.
Make no mistake: I’m not here to hold court on whether offshoring is “good” or “bad,” or defend anyone.  Simply, part of my role as a management advisor is to help my clients do fewer dumb things, less often.  And blowing it on misguided relationships is not only dumb, it kills stakeholder value.
This article is about selecting better relationships for better reasons.  And the process begins with you.
Self Selection
For many, the offshore vendor selection process should be remarkably short: you, the buyer, don’t have what it takes.  Don’t do it.
The prototypical offshore relationship works best for companies with an IS/IT group featuring 1) a culture of accountability, 2) discipline to produce deliberate, detailed specifications (preparation), 3) the desire to intelligently and affordably expand existing capacity and capabilities (motivation), and 4) acumen for cross-cultural issues.
Accountability-based organizations do not struggle with deadlines.  Be brutally honest: do you have the teeth, processes, and contractual backing to enforce performance?  Especially if you’re adopting the resource/retainer model, how will you tie monthly value to monthly payment?
Regarding motivation, crises like tight deadlines or budget cuts don’t work.  Similarly, using offshoring to make up for the lack of good internal project management, effective enterprise-wide application planning, effective testing and acceptance procedures also don’t work.  If you’re not getting things right internally, you’re not going to get them right with a multinational virtual team.
That’s also the point of preparation. In a report on offshoring, Forrester Research notes that decreased satisfaction often stems from unrealistic expectations, and that companies are finding the benefits from tooling themselves to optimize internal IT are prerequisites when managing offshore.
Arguably the least valuable – yet prototypical – offshore relationship requires clients to supply vendors with complete, exceptionally precise specifications.  This is one of the most critical factors when working with most offshore teams and lies at the heart of the mismatch in expectations, often owing to cultural differences in management style.
Finally, the cultural question.  Indian culture is rich and beautiful but carries a very different set of norms from those found in the West, including a strong need to preserve harmony and please, often paid in personal sacrifices we wouldn’t contemplate.  In his classic work, A Passage to India, E. M. Forster captures this when he describes Mrs. Bhattacharya’s quiet cancellation of a planned trip in response to Mrs. Moore’s request to visit her home: “[Bhattacharya’s] gesture implied that she had known, since Thursdays began, that English ladies would come to see her on one of them, and so always stayed in.  Everything pleased her, nothing surprised.”
The story is fiction, but the issues are real: I personally have unwittingly rearranged at least one marriage that I know of.  Seek professional help to understand the culture and prevent miscommunication.  At the very least, read a book – Speaking of India by Craig Storti is an exceptional self-study course on bridging the cultural divide.
Vendor Selection
The best way to find offshore vendors is through referrals from colleagues.  If you’re looking for more guidance, check out The Black Book of Outsourcingby Douglas Brown and Scott Wilson.
The real question is how to sort through the maze of companies as vendor variety, maturity, and value grow beyond the prototypical offering.
To get a sense of where to start, look at the situation from the vendor’s point of view.  India today is an exceptionally competitive technology employment market, with more than 30% average annual growth since 2004.5 A casual review of job boards reveals tech positions with as many as 40+ vacancies each.  Stories of turnover include teams of people hired away over a weekend.  For one of my own clients it has meant the team introduced prior to signing was no longer available when the deal was done.
No matter the size of the vendor, if there is no verified strategy to deliver and secure the right resources for the right time at the right risk, frustration will result.  A valid place to start is by evaluating vendors of every size on organizational maturity.  Important issues include ensuring resource selectivity through recruitment screening processes, understanding the training and mentorship programs that establish and control quality, and most importantly, retention rates and strategies.  Clay Loges, CEO of Seattle-based Yodio.com, notes, “[Retention] is far more important to me than an impressive corporate resume.  I care how the company is going to ensure the team stays with my project.”
Real experience is important, too, but hard to get at.  First, it’s unrealistic to think any vendor has a full bench of seasoned consultants waiting, particularly in uber-competitive India. That means the staff assigned to your project may not have had anything to do with building the success of your vendor.  Validate that key project roles are staffed by veterans.
Additionally, there’s nothing cultural about a salesperson over-promising – happens every day.  But interviewing offshore vendors does add cultural factors.  Between the “Indian Yes,” “Indian No” or rather the frequent lack of “No,” and the drive to simultaneously succeed yet be agreeable… honest attempts to validate capabilities will get caught in misunderstandings.
Ask about particular capabilities and any consultant may push the envelope of accuracy.  Avoid the temptation to begin by asking about the specific things you need done – this comes last.  Instead probe what the vendor has done in depth until you hear what you need, treating the process more like a job interview.  This discussion reveals true core competencies of the vendor without building a façade of capabilities.  Look not only at the experience of the firm but at the track record of the key resources assigned to your project where possible.    And yes, check references.
Another strategy particularly useful with specialty and mid-tier shops is to use a written skills/experience inventory.  By having vendors go on record as to their past experience and current actual capacity in the skills you need, you establish a more objective benchmark for cross-comparison.
There’s nothing wrong with rejecting the prototypical relationship and striving for a vendor that lifts more weight.  If that’s your goal, start a discussion of development methodology.  The conspicuous absence or presence of a full Software Development Life Cycle replete with discussion of project management and design philosophy will be your cue as to the vendor’s actual maturity level.
Finally, I strongly advocate running a short, low budget test project.  This will confirm compatibility or immediately uncover issues.  Finding a new vendor after one month is indeed very painful, but much less so than re-starting a major initiative.
First and foremost, the goal in all this is to uncover your own versus the vendor’s assumptions regarding the working relationship, add in knowledge about the depth and breadth of the talent bench, and how the vendor is managed.  Armed with this, you’re in a much better position to make a calculated bet.
Pulling it Together
Of course many people offshore contrary to these prescriptions and meet with success.  That’s why I haven’t called anything “rules.”  These are guidelines and your mileage will vary… largely based on the vendor you find, the homework you do, and the investment you both make in understanding each other, your expectations, and in building a relationship of accountability and trust.  That’s the real point.

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.