The Permanent vs Contract HR hires question is one that many businesses grapple with when adding to their HR workforce.
And it can be a tough one to answer as both options have advantages and drawbacks.
In this blog, we look at the differences between permanent and contract hiring to help you determine the best choice for your organisation.
Understanding Permanent HR Hiring
Permanent HR hires are full-time employees who work directly for your organisation. They typically have access to company benefits, such as health insurance, paid time off, and retirement plans.
Benefits of Permanent HR Hires
Continuity and Stability: Having a permanent HR team ensures that your HR policies and practices are consistently implemented, fostering stability within the organisation.
Long-term commitment: Permanent employees are more likely to stay with the company for longer periods, contributing to organisational growth and development.
Investment in Employee Development: Permanent HR hires can participate in ongoing training and development programs, enhancing their skills and benefiting the company.
Drawbacks of Permanent HR Hires
Overheads: Permanent staff members can increase a business’s overheads and require an investment in further internal resources. Such as administering incentive and benefits schemes, NI contributions, and providing career development and enhancement opportunities. This can require substantial time and resources.
Lack of Flexibility: Permanent hires may be less adaptable to changing business needs and may require more time and resources for training and development.
Understanding Contract HR Hires
Contract HR hires are temporary professionals employed for a specific duration or project. They usually work as independent contractors or through recruitment agencies.
Benefits of Contract HR Hires
Cost Savings: Contract hires typically do not receive benefits and are only paid for the work that they actually carry out.
Flexibility: Contract HR professionals can be brought on board as needed, providing flexibility to address short-term or project-based needs.
Access to Specialised Expertise: Contract hires often have specialised skills that can be leveraged for specific projects or initiatives.
Drawbacks of Contract HR Hires
Expense: Contract professionals typically command a higher pay rate than permanent staff. This is partly due to their specific expertise and also because they are generally not paid for holidays, and also need to make provisions for gaps between contract assignments.
Lack of Continuity: Contract hires may not be as invested in the company culture, leading to potential disruptions in consistency and continuity.
Short-term Focus: Contract HR professionals may be more focused on their specific project or contract, limiting their long-term impact on the organisation.
Comparing Permanent and Contract HR Hires
Cost Comparison: Permanent HR hires generally come with a higher overall cost due to salaries, benefits, ongoing management and taxes. Contract HR hires, however, usually cost less overall but may charge higher day rates.
Flexibility: Contract HR hires offer greater flexibility, as they can be engaged on an as-needed basis. Permanent HR hires, on the other hand, may require more time and resources to adapt to changing business needs.
Expertise: While permanent HR hires can be trained and developed over time, contract HR professionals often bring specialised expertise that can be beneficial for specific projects or initiatives.
Company Culture and Employee Engagement: Permanent HR hires are more likely to be invested in the company culture and focused on long-term employee engagement. Contract HR hires, on the other hand, might not have the same level of commitment to the organisation’s culture and values.
How to Choose the Right HR Hire for Your Business
Assess Your Needs: Identify the specific HR needs of your organisation. Consider whether you require generalist HR support, specialised expertise, or a combination of both.
Budget Considerations: Determine the budget you have available for making this HR hire. Keep in mind the potential cost savings of making a contract hire versus the long-term investment involved in recruiting someone on a permanent basis.
Timeframe: Consider the duration of your HR needs. If you require support for a short-term project or specific initiative, a contract hire might be the most suitable option. For long-term, ongoing HR support, a permanent hire could be the better choice.
Employee Development: Evaluate your organisation’s commitment to employee development. A permanent HR employee is more likely to benefit from and contribute to a culture of ongoing learning and growth.
Legal and Compliance Factors: Consider any legal or compliance requirements related to HR hiring. Permanent hires will be subject to different employment laws and regulations compared to contract hires, who will need to be vetted in line with IR35 regulations.
Concluding Thoughts
Choosing between a permanent and contract hire depends on your organisation’s specific needs, budget, and long-term goals. By carefully considering the factors discussed in this article, you can make an informed decision that best supports your business.
