Pros and Cons of Using Temp-to-Hire Strategies

— Mar 5, 2019 —

When you’re looking to staff a position, there are a variety of hiring options available. Even a role that the company intends to staff long term doesn’t necessarily have to be filled in a traditional manner.

Of course, the most common is a direct hire, meaning that the candidate is offered the job on a permanent basis, either full-time or part-time. Other options are also available.

Sometimes employers will decide that the position is only necessary for a short while, and hire on a contract basis — generally stipulating a set period of time that the employee is to work for them. This contract may lead to future opportunities with the company, but that is not guaranteed or even implied when it comes to a specifically defined contract role.

The space in between these two is temp- to- hire or temp- to perm (sometimes called contract- to- hire, if the pre-hire period is treated as a contract).

Temp- to- hire is a form of employment where the employee is brought on in a temporary capacity, often for a period of up to a six months, and the decision as to whether to hire the employee permanently is made during that time. In a temp-to-hire position, it is assumed that the employer is strongly considering making a hire at the end of that period, but it is not guaranteed.

Benefits of Temp- to- Hire

The primary benefit of temp- to- hire, from an employer’s perspective, is the ability to test the waters, or “try before you buy.” The employer is able to judge the temporary employee based on their on-the-job performance, and determine whether the employee is what they’re looking for.

On the flip side, the employee is able to see how they feel about the position. They can assess factors such as company culture and opportunities for advancement. This way, they are also in a position to make a more educated decision when the temporary period ends and permanent employment is a possibility.

There is certainly merit to these benefits. Allowing for a test period mitigates some risk for quick turnover within the role, and hopefully means that the the role will ultimately be filled with the right candidate. However, there are also downsides.

The Downside to Temp to Hire

The most noteworthy downside to this form of hiring is that it drastically narrows the pool of potential candidates. In particular, much sought- after currently employed candidates will likely not consider this sort of position, as it would require them leaving a stable, secure position for a position which inherently may lack long-term stability and most likely will not provide benefits.

Today’s employment market is extremely strong. It  is a candidate’s market. Great candidates are in high demand, and it behooves you to capture the interest of the most qualified potential employees. Giving up this pool of candidates should be a major consideration when deciding to make a position temp- to- hire or temp- to -perm.

Additionally, hiring on a temp-to-hire position means you might not only drive away some great, currently employed candidates, but also may attract candidates who aren’t really looking for long-term employment. These may be great employees, but if they’re not looking at this as a long-term thing and you are, that could create problems down the line.

Another thing to consider is that temp- to- hire often carries negative connotations. It is difficult for candidates to trust that you are serious about keeping someone long term when you’re not hiring a permanent employee from the start. Or it may be a red flag that there are problems associated with the role, such as a difficult and demanding boss resulting in a history of high turnover or instability within the company. Also, should the company need to undergo budget cuts, candidates understand that a temporary position is likely the first to go.

Even if you have the best of intentions, many potential candidates will be turned off by the instability of a temp-to-hire position. That is not to say that your ideal candidate won’t remain in your applicant pool, but it can certainly diminish the odds of that happening. The employee is also free to interview for other roles while working on a temp-to hire basis and the employer runs the risk of the temp-to hire employee leaving at any time for a permanent job. In the type of strong job market we have now, this is a real risk.

The last thing to consider is that, while temp-to-hire turnover may cost the firm less than a permanent employee leaving, turnover is turnover and training a new employee costs time and money no matter what. Seeing a position as temp- to- hire may lead an employer to take the hiring process less seriously, resulting in a series of temporary employees, when a direct hire process could have been more effective and ultimately cost the company much less.

Ultimately, the decision of whether you want to use temp- to -hire, direct hire, or contract hiring is an important one, and the trade offs should be carefully considered. At C-Suite Assistants, we have experience with all of these staffing practices. Generally, we advocate for direct hire whenever possible to allow you access to the best candidates, but we can help you determine what is best for your firm given the unique situation of each role.

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