Why We Avoid Contract to Hire

Information Technology workers are bombarded with “Contract to Hire” positions, often daily.  There are reasons why this method of hiring and working is fundamentally wrong and while workers immediately identify these positions as bad choices to make, but few really take the time to move beyond emotional reaction to understand why these working method is so flawed and, more importantly, few companies take the time to explore why using tactics such as this undermine their staffing goals.

To begin we must understand that there are two basic types of technology workers: consultants (also called contractors) and permanent employees (commonly known as the FTEs.)  Nearly all IT workers fall into a desire to be one of these two categories. Neither is better or worse, they are simply two different approaches to employment engagements and represent differences in personality, career goals, life situations and so forth.  Workers do not always get to work they way that they desire, but basically all IT workers seek to be in either one camp or the other.

Understanding the desires and motivations of IT workers seeking to be full time employees is generally very easy to do.  Employees, in theory, have good salaries, stable work situations, comfort, continuity, benefits, vacations, protection and so forth.  At least this is how it seems, whether these aspects are real or just illusionary can be debated elsewhere.  What is important is that most people understand why people want to be employees, but the opposite is rarely true.  Many people lack the empathy for those seeking to not be employees.

Understanding professional or intentional consultants can be difficult.  Consultants live a less settled life but generally earn higher salaries and advance in their careers faster, see more diverse environments, get a better chance to learn and grow, are pushed harder and have more flexibility.  There are many factors which can make consulting or contracting intentionally a sensible decision.  Intentional contracting is very often favored by younger professionals looking to grow quickly and gain experience that they otherwise could not obtain.

What makes this matter more confusing is that the majority of workers in IT wish to work as full time employees but a great many end up settling for contract positions to hold them over until a desired full time position can be acquired.  The commonality of this situation has created a situation wherein a great many people both inside and outside of the industry and on both sides of the interview table may mistakenly believe that all cases are this way and that consulting is a lower form of employment.  This is completely wrong.  In many cases consulting is highly desired and contractors can benefit greatly for their choice of engagement methodology.  I, myself, spent most of my early career, around fifteen years, seeking only to work as a contractor and had little desire to land a permanent post.  I wanted rapid advancement, opportunities to learn, chances to travel and variety.

It is not uncommon at all for the desired mode of employment to change over time.  It is most common for contractors to seek to move to full employment at some point in their careers. Contracting is often exhausting and harder to sustain over a long career.  But certainly full time employees sometimes chose to move into a more mobile and adventurous contracting mode as well.  And many choose to only work one style or the other for the entirety of their careers.

Understanding these two models is key.  What does not fit into this model is the concept of a Contract to Hire.  This hiring methodology starts by hiring someone willing to work a contract position and then, sometimes after a set period of time and sometimes after an indefinite period of time, either promises to make a second determination to see if said team member should be “converted” into an employee, or let go.  This does not work well when we attempt to match it up against the two types of workers.  Neither type is a “want to start as one thing and then do another”.  Possibly somewhere there is an IT worker who would like to work as a contractor for four months and then become an employee, getting benefits but only after a four month delay, but I am not aware of such a person and it is reasonable to assume that if there is such a person he is unique and already has done this process and would not want to do it again.

This leaves us with two resulting models to match into this situation.  The first is the more common model of an IT worker seeking permanent employment and being offered a Contract to Hire position.  For this worker the situation is not ideal, the first four months represent a likely jarring and complex situation and a scary one that lacks the benefits and stability that is needed and the second decision point as to whether to offer the conversion is very scary.  The worker must behave and plan as if there was no conversion and must be actively seeking other opportunities during the contract period, opportunities that are pure employment from the beginning.  If there was any certainty of a position becoming a full employment one then there would be no contract period at all.  The risk is exceptionally high to the employee that no conversion will be offered.  In fact, it is almost unheard of in the industry for this to happen.

It must be noted that, for most IT professionals, the idea that a Contract to Hire will truly offer a conversion at the end of the contract duration is so unlikely that it is generally assumed that the enticement of the conversion process is purely a fake one and that there is no possibility of it happening at all.  And for reasons we will discover here it is obvious why companies would not honestly expect to attempt this process.  The term Contract to Hire spells almost certain unemployment for IT works going down that path.  The “to Hire” portion is almost universally nothing more than a marketing ploy and a very dishonest one.

The other model that we must consider is the model of the contract-desiring employee accepting a Contract to Hire position.  In this model we have the better outcome for both parties.  The worker is happy with the contract arrangement and the company is able to employ someone who is happy to be there and not seeking something that they likely will be unable to get.  In cases where the company was less than forthcoming about the fact that the “to Hire” conversion would never be considered this might actually even work out well, but is fall less likely to do so long term and in repeating engagements than if both parties were up front and honest about their intentions on a regular basis.  Even for professional contracts seeing the “to Hire” addendum is a red flag that something is amiss.

The results for a company, however, when obtaining an intentional contractor via a Contract to Hire posting is risky.  For one contractors are highly volatile and are skilled and trained at finding other positions.  They are generally well prepared to leave a position the moment that the original contract is done.

One reason that the term Contract to Hire is used is so that companies can easily “string along” someone desiring a conversion to a full time position by dangling the conversion like a carrot and prolonging contact situations indefinitely.  Intentional contractors will see no carrot in this situation and will be, normally, prepared to leave immediately upon completion of their contract time and can leave without any notice as they simply need not renew their contract leaving the company in a lurch of their own making.

Even in scenarios where an intentional contractor is offered a conversion at the end of a contract period there is the very real possibility that they will simply turn down the conversion.  Just as the company maintains the right to not offer the conversion, the IT worker maintains an equal right to not agree to offered terms.  The conversion process is completely optional by both parties.  This, too, can leave the company in a tight position if they were banking on the assumption that all IT workers were highly desirous of permanent employment positions.

This may be the better situation, however.  Potentially even worse is an intentional contractor accepting a permanent employment position when they were not actually desiring an arrangement of that type.  They are likely to find the position to be something that they do not enjoy, or else they would have been seeking such an arrangement already, and will be easily tempted to leave for greener pastures very soon defeating the purpose of having hiring an employee to the company again.

The idea behind the Contract to Hire movement is the mistaken belief by companies that companies hold all of the cards and that IT workers are all desperate for work and thankful to find any job that they can.  This, combined with the incorrect assumption that nearly all IT workers truly want stable, traditional employment as a full time employee combines to make a very bad hiring situation.

Based on this, a great many companies attempt to leverage the Contract to Hire term in order to lure more and better IT workers to apply based on false promises or poor matching of employment values.  It is seen as a means of lowering cost, testing out potential employees, hedge bets against future head count needs, etc.

In a market where there is a massive over supply of IT workers a tactic such as this may actually pay off.  In the real world, however, IT workers are in very short supply and everyone is aware of the game that companies play and what this term truly means.

It might be assumed that IT workers would still consider taking Contract to Hire because they are willing to take on some risk and hope to convince the employer that conversion, in their case, would be worth while.  And certainly some companies do this process and for some people it has worked out well.  However, it should be noted, that any contract position offers the potential of a conversion offer and in positions where the to “Contract to Hire” is not used, conversions are actually quite common, or at least offers for conversion.  It is specifically when a potential future conversion is offered like a carrot that the conversions become exceptionally rare.  There is no need for an honest company and a quality workplace to mention “to Hire” when bringing on contractors.

What happens, however, is more complex and requires study.  In general the best workers in any field are those that are already employed.  It goes without saying that the better you are, the more likely you are to be employed.  This doesn’t mean that great people never change jobs or find themselves unemployed but the better you are the more time you will average not seeking employment from a position of being unemployed and the worse you are the more likely you are to be unemployed non-voluntarily.  That may seem obvious, but when you combine that with other information that we have, something is amiss.  A Contract to Hire position can never, effectively, entice currently working people in any way.  A great offer of true, full time employment with better pay and benefits might entire someone to give up an existing position for a better one, that happens every day.  But good people generally have good jobs and are not going to give up the positions that they have, the safety and stability to join an unknown situation that only offers a short term contract with an almost certain no chance conversion carrot.  It just is not going to happen.

Likewise when good IT workers are unemployed they are not very likely to be in a position of desperation and even then are very unlikely to even talk to a position listing as Contract to Hire (or contract at all) as most people want full time employment and good IT people will generally be far too busy turning down offers to waste time looking at Contract to Hire positions.  Good IT workers are flooded with employment opportunities and being able to quickly filter out those that are not serious is a necessity.  The words “Contract to Hire” are one of the best low hanging fruits of this filtering process.  You don’t need to see what company it is, what region it is in, what the position is or what experience they expect.  The position is not what you are looking for, move along, nothing to see here.

The idea that employers seem to have is the belief that everyone, employed and unemployed IT workers alike, are desperate and thankful for any possibly job opening.  This is completely flawed.  Most of the industry is doing very well and there is no way to fill all of the existing job openings that we have today, IT workers are in demand.  Certainly there is always a certain segment of the IT worker population that is desperate for work for one reason or another – personal situations, geographic ties, over staffed technology specialization or, most commonly, not being very competitive.

What Contract to Hire positions do is filter out the best people.  They effectively filter out every currently employed IT worker completely.  In demand skills groups (like Linux, storage, cloud and virtualization) will be sorted out too, they are too able to find work anywhere to consider poor offerings.  Highly skilled individuals, even when out of work, will self filter as they are looking for something good, not looking for just anything that comes along.

At the end of the day, the only people in any number seriously considering Contract to Hire positions, often even to the point of being the only ones even willing to respond to postings, are the truly desperate.  Only the group that either has so little experience that they do not realize how foolish the concept is or, more commonly by far, those that are long out of work and have few prospects and feel that the incredible risks and low quality of work associated with Contract to Hire is acceptable.

This hiring problem begins a vicious loop of low quality, if one did not already exist. But most likely issues with quality already will exist before a company considers a Contract to Hire tactic.  Once good people begin to avoid a company, and this will happen even if only some positions are Contract to Hire, – because the quality of the hiring process is exposed, the quality of those able to be hired will begin to decline.  The worse it gets, the harder to turn the ship around.  Good people attract good people.  Good IT workers want to work with great IT workers to mentor them, to train them and to provide places where they can advance by doing a good job.  Good people do not seek to work in a shop staffed by the desperate.  Both because working only with desperate people is depressing and the quality of work is very poor, but also because once a shop gains a poor reputation it is very hard to shake and good people will be very wary of having their own reputation tarnished by having worked in such a place.

Contact to Hire tactics signal desperation and a willingness to admit defeat on the part of an employer.  Once a company sinks to this level with their hiring they are no longer focusing on building great teams, acquiring amazing talent or providing a wonderful work environment.  Contract to Hire is not always something that every IT professional can avoid all of the time.  All of us have times when we have to accept something less than ideal.  But it is important for all parties involved to understand their options and just what it means when a company moves into this mode.  Contract to Hire is not a tactic for vetting potential hires, it simply does not work that way.  Contract to Hire causes companies to be vetted and filter out of consideration by the bulk of potential candidates without those metrics every being made available to hiring firms.  Potential candidates simply ignore them and write them off, sometimes noting who is hiring this way and avoiding them even when other options come along in the future.

As a company, if you desire to have a great IT department and hire good people, do not allow Contract to Hire to ever be associated with your firm.  Hire full time employees and hire intentional contractors, but do not play games with dangling false carrots hoping that contractos will change their personalities or that full time employees will take huge personal risks for no reason, that is simply not how the real world works.

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