Employee Versus Consultant

When it comes down to hiring a consultant or hiring an employee, a company has to base their decision on a multitude of factors. Both consultants and permanent employees have a lot to offer. How does a human resources or hiring manager decide which of the two is more appropriate for an open position in the company?

Define the Role

The role that the potential candidate is filling will define whether it is better filled by a permanent employee or a consultant. In the competitive business world, a permanent employee offers exclusivity. The employee and their work is often the 'property' of their employer. Contracts usually preclude an employee from working for a competitive company. Employee culture (FICA, worker's compensation, health benefits) encourages loyalty and permanence.

A consultant on the other hand is not committed to the permanent position and while they may not work for a competing company while doing their consulting, it does not preclude their working for a competitor later. Consultants may earn a higher per hour fee for their work, but they are typically only needed for short bursts of time and the company is not responsible for their health benefits.

Direction

Consultants are typically self-starters that require little to no direction whereas employees are given a specific position in a hierarchal structure that sets the measure and goals for them. Consultants are more interested in doing a positive and successful job for their client - which just happens to be the company. The argument can be made that employees want to do a successful job for their employer, however the relationship between company/employee and contract/client are vastly different. The consultant's primary concern is the client's satisfaction whereas an employee's concern is generally their performance review.

Needs

Finally, the company's needs often determine whether an employee or a consultant is ideal for the job. For most companies, the following situations are more typically suited to a consultant rather than hiring a permanent position.A level of expertise is required that does not match anyone already employed internally for a specific project.

• A short-term (generally defined as a year or less) need that must be filled directly related to a project.
• A fill-in for a specifically qualified employee is necessary (i.e. maternity leave, sick leave).
• A position that opens with a very specific calendar of duties that includes a starting and end point.
• A highly specialized skill set is required that is not typically required (i.e. writer, programmer).

These types of positions are more geared towards consultants as the base 'real' cost of an employee is three to four times their annual salary. A consultant on the other hand is paid exactly their hourly fee provided they work the hours. Their work remains the property of the company and the company may reap financial rewards from it after the consultant is gone. Though if needed again, the consultant may not be available whereas a permanent employee is already there. The argument of consultant versus employee can be made for most job openings; however it is the job opening itself that will dictate which of the two is truly needed.