Over the past month or two, I’ve had the opportunity of engaging with individuals from the tech and product industries, each with their unique experiences during the past 15 months. Whether they’ve been fortunate enough to maintain their positions or have faced the uncertainties of the job market, it’s become clear that discussions around staffing strategies have become increasingly important.
One intriguing topic that has surfaced is the approach taken by a select number of companies to balance their books or restructure their workforce. There have been stories of long-serving employees pushed towards the exit door, others let go before reaching the two-year tenure mark, and some simply left in limbo instead of being temporarily redeployed.
This discussion has prompted reflection on why, in a volatile job market, more companies haven’t embraced the option of hiring more contractors. Permanent positions, especially given the complexities introduced by post-IR35 changes a few years back, are often seen as the safer choice to avoid the intricacies of hiring a contractor and ensuring compliance with status determinations.
However, it raises questions about why these changes, initially set to take effect in 2020 and then delayed to 2021, still pose challenges for medium to large-sized businesses seeking to leverage the expertise of experienced professionals for specific durations.
The benefits of hiring contractors are both clear and subtle. On the surface, these advantages include:
- Access to the top 10% of skills in a more readily available pool.
- Flexibility in adjusting your workforce according to project needs.
- Contractor efficiency: Their varied experiences often allow them to hit the ground running, completing tasks more efficiently.
- A focus on project requirements: Contractors tend to be self-sufficient, requiring minimal management or training.
- Furthermore, it provides an excellent opportunity to develop your permanent staff, pushing them for potential promotions when the time is right.
However, there are subtle aspects to consider, particularly the impact on your existing staff & company culture. Many individuals, both those affected by redundancy and those who remain within the company, have felt the profound effects of the cultural shifts brought about by waves of layoffs.
Questions arise, such as, “Could my role be next on the chopping block?” or “Is this a necessity or a return to the old-fashioned annual bell curve where the perceived bottom 5-10% might be let go?” Some teams have had to pick up the slack, filling positions once deemed essential but now vacant.
While these concerns may be subjective and emotionally charged, it’s easy to see how structural changes within companies can significantly influence workforce retention and engagement, particularly in a challenging economy.
Thankfully, to provide a more balanced perspective, a proportion of companies have achieved a healthier equilibrium between permanent and contract staffing, typically maintaining around 65-80% permanent positions. These organizations at least statistically and from a sample of conversations do seem to have more engaged, purpose-driven teams.
Whether you’re a C-level executive, a Head of People, or Talent, and you’re interested in discussing market trends and examples of successful workforce navigation while maintaining a strong company identity and culture, please feel free to send me a message.
All thoughts and observations on this topic are more than welcome. Let’s discuss (this isn’t a binary argument).
