An independent contractor is an individual who’s self-employed or hired by an outside organisation to work in another (that is, your) organisation. They are paid by you for work performed according to your specifications. The contractor will bill you for the service.
This individual must work according to the procedures and culture of your business. The length of service may be limited, meaning that you hire them for a specific, finite project, or it may be ongoing. Usually, the independent contractor doesn’t receive fringe benefits from the hiring organisation.
On The Up Side
There are two good reasons to hire an independent contractor: your business doesn’t have the expertise in-house to complete a project; and hiring someone through a third party usually ensures the worker has been screened and is competent. If the worker’s productivity is unacceptable, the person can easily be replaced.
Another reason to take on an independent contractor is when an “extra hand” is needed on a task that’s time or project limited. It’s easy to end the working relationship and avoid any legal complications.
As far as work ethic goes, generally, the notion that you get “an honest day’s work for an honest day’s pay” remains true. The hiring company expects the employee be diligent and get the task done on time and under budget while working well with other employees. On the other hand, the independent contractor expects the employer to be available to answer questions, offer appropriate direction and a suitable working climate, and to pay promptly.
This concept is called the psychological contract. If the independent contractor is hired because they have expertise your regular employees don’t have, then the former can earn the admiration of the latter. In this case, the contractor will usually continue to shine so as to receive ongoing approval. This achievement may even lead to an extension of the working contract, which will benefit everyone involved.
On The Down Side
When hiring an independent contractor, there are other factors that could negatively impact the quality of output. These factors are:
- Complacency. This would occur if the independent contractor falsely believes that their job skills are so highly valued by you that they don’t have to make an effort. The result is that while the work output might be acceptable, it wouldn’t be optimal.
- The fact that the employment is time-limited. The independent contractor may work diligently in the beginning, but as time goes by, the quality of their work may falter. If their employment is for a specific period of time, the contractor may rightly assume that once the task is at least halfway complete, you won’t pull the plug on the contract and terminate the contractor.
- Decreased productivity due to a lack of commitment on the part of the independent contractor. If the job is time-limited, this employee might assume that “doing just enough to get by” will not cause negative ramifications. Indeed, you may find it difficult to terminate a contractor who accomplishes only part of a job. This is especially true if the project has a deadline. The contractor can think that even if their work is just okay, there’s no time for you to terminate them and hire someone new to finish the task.
But this individual owes you a high level of performance that should equal, if not exceed, the standards you set for your own employees. After all, this individual is still working to receive a pay cheque. It’s not uncommon for entrepreneurs to want to give these subcontractors “special treatment” out of fear that if they don’t like the job, they’ll leave.
Managing Independent Contractors
While it’s true they have the freedom to more easily leave your employ, that doesn’t mean you should give them preferential treatment. It could make regular employees jealous, resulting in decreased morale and productivity. There are some ways of managing contractors that are similar to other employees and some that are different.
Things that are similar:
- Clearly state expected work outcomes.
- Let the contractor know that you value the work produced.
- Quickly inform the contractor when output fails to meet your expectations in terms of time, quality, quantity, cost and so on.
Things that are different:
- Check in with this individual more frequently to determine work satisfaction and challenges.
- Reinforce the positive aspects of the individual’s performance. Remember, an independent contractor is used to working for various bosses for a variety of time periods. Therefore, while leaving your employ may not have a significant effect on this person, it could have a marked impact on your company’s productivity.