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Your 7-Step Guide To Hiring Temp Workers (Infographic)

May 24, 2011

From American Express OPEN Forum

By Katie Morell – Contributor, OPEN Forum Editors

Original Post May 24, 2011

Temporary employees can be tremendous assets to small business owners. Best case scenario: they can come in, get the job done, and leave—all without burdening business resources associated with sick pay and insurance premiums.

The catch can be the cost (many charge high hourly or project rates), but according to Kyle Hawke, co-founder/owner of Whinot, a Charlottesville, Virginia-based company that connects small business owners to independent workers, the price can be worth it.

“Contract workers may look more expensive just based on their hourly rates, but when you look at the loaded hourly rate of full-time employees, it is about equal, if not more,” he says.

Hawke’s reasoning is this: business owners are forced to pay for sick days, jury duty days, vacation time, and insurance for their employees. Take that all out and he says full-time workers may only be productive about 70 percent of the time.

“If you were to look at a $100,000 employee that was only productive 70 percent of the time, they cost quite a bit per hour,” he adds. “But with a contractor, you are only paying them for the hours they are focused on your project.”

Before running out to hire a temp/contract worker, keep a few things in mind.

Start small

Hawke says small business owners should slow down before hiring a new-to-them contractor for a boatload of work.

Instead, he recommends starting each temp with a test project. Pay them a couple hundred dollars for a small project and see how it goes.

Talk to your employees

Work teams can be like high school cliques—very difficult to penetrate. You don’t want your temp to feel like an outsider, so Daniel I. Shostak, president of Strategic Affairs Forecasting LLC, a business consultancy in Silver Spring, Maryland, recommends talking to your team first.

“Ask all of the appropriate people to cooperate and help the contractor; you want to avoid turf battles and other forms of sabotage,” he says.

Get estimates

The first person you approach may quote 200 hours and $300 per hour—to which you almost faint. Hawke says it’s important to get multiple estimates, consult employees, talk to colleagues and other members of your professional network, and come prepared to negotiate.

That said, he also says not to make decisions based solely on price.

“There is a reason some people charge $20 per hour and others charge $200,” Hawke says. “Contractors are not all made equal, so look at the price of the overall package—the worker’s experience, timeline and consider your gut feeling.”

Protect yourself

A contract is arguably the most important component in temp hiring. While with your company, a temporary worker will likely have access to intellectual property.

Hawke says business owners should consult with an attorney when drafting a contract to ensure work done by a contractor will be owned by the company. Also, confidential work integral to a business should be done by a full-time employee, not a temporary worker.

Get detailed

Create a scope of work with as much detail as possible.

“The more specific you can be about the job and the workplace culture, the better off you will be,” says Shostak.

Make it legal

It can be awfully tempting to pay a contractor under the table. You may only hire them once for a short project and you’d rather not deal with the IRS. Bad idea.

“Some consultants may offer a reduced fee if you pay them in cash,” saysDenise Beeson, a professor of small business management at Santa Rosa Junior College in Santa Rosa, California. “That can be a slippery slope and is not a good practice. It is always best to have a 1099 to prove their employment status.”

Document everything

One of the biggest problems in any contractor/business owner relationship is that of the amorphous project, Shostak says. You start having them do one thing…the project expands, and then expands some more. Pretty soon you are under water in fees and your contractor is annoyed.

This is an incredibly common—almost expected—course of events, so Shostak suggests business owners revisit the project on a continual basis to discuss (and possibly alter) the contractual agreement, and, most importantly, document everything.

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