by Justin Grensing, Esq., MBA
Staffing is one of the biggest challenges for small and mid-sized businesses. The challenge can be especially acute when a company reaches the stage in which it thinks it needs more help but maybe not necessarily an FTE or when a single FTE might not be enough, but two might be too many.
Just as many workers crave flexibility in their employment relationships—as illustrated by the growth of the gig economy—small and medium-sized businesses (SMBs) also value flexibility in their labor relationships. Rideshare companies like Uber and Lyft, for example, go to great lengths to ensure their workers are classified as contractors instead of employees. The costs of ongoing disagreements over this classification is something Lyft cited as a potential risk in its recent IPO.
Here, we’ll discuss some of the pros and cons of hiring contractors versus employees for SMBs.
Employee Pros
Employees are hired directly by the company and dedicated to your business—as opposed to working for multiple clients simultaneously. Additionally, an employer has greater control over the specifics of how an employee does her work in addition to what work she does.
Employee Cons
Employees are often more costly than hiring contractors, because of federal and state laws and regulations about wage and benefit requirements as well as tax considerations. Employees are generally a longer-term investment as well because of the training and onboarding that goes into ramping them up.
Contractor Pros
By contrast, contractors are often expected to hit the ground running. They may need some guidance on the specific needs, culture and practices of your business, but they should know the industry pretty well already.
Contractors also offer a more flexible arrangement for employers who can more quickly scale their staffing levels up or down than is the case with employees.
As mentioned above, contractors also place fewer financial burdens on companies in the form of legally-required benefits and minimum wages.
Contractor Cons
Contractors don’t typically have the same level of long-term commitment to your company that an employee would. They stick around for a short period of time and move on to the next job.
Additionally, employers have less control over how they do their work. This could be a pro or a con, depending on where a business owner falls on the micromanager/delegator scale.
When it’s time for an entrepreneur to start adding staff, adding them in the right way is crucial for managing costs and enabling smooth growth. Deciding between contractors and employees is a big part of that calculus.
There’s great risk in misclassifying employees as contractors that every business, regardless of size, should be aware of. The government offers some guidelines but, before making a decision, it’s a good idea to gt the input of legal counsel.
About Us
Strategic Communications, LLC, works with B2B clients to help them achieve their goals through effective content marketing and management with both internal and external audiences. We’re adept at evaluating and analyzing communication efforts. We work with clients to plan, create and publish high-quality, unique content, through both on- and offline media to achieve desired results. Our background in business journalism, marketing, PR/media relations and online communications makes us well-positioned to serve the needs of 21st-century marketers.
We serve clients who are looking for help creating content for a wide array of channels—from social media posts to full-length manuscripts, and everything in between. We focus primarily on service-related B2B topics and work with a number of independent consultants interested in building their thought leadership through online channels. For ongoing content management, our first step is to fully understand your goals, objectives and competitive landscape.
Then we’ll conduct a thorough analysis and assessment of your digital presence, compared to competitors, and recommend a communication strategy to achieve your goals. But, we also regularly take on individual projects – white papers, blog posts, contributed articles, etc. If you’re interested in learning more, let us know!
(Strategic Communications is certified as a Woman-Owned Business Enterprise through the Wisconsin Department of Administration.)
Recommended Reading
21st Century Secrets to Effective PR: Tips and Best Practices for Gaining Media Exposure
Tags: contract work, Employee Communication, employees vs. contractors, gig economy, managing temporary workers. freelance help, risks of misclassifying employees