Mr Angry’s rules for employing contractors

I previously wrote about rules I thought contractors should follow in order to have a happy life. Of course, contractors themselves are only part of the equation. Everybody else has their part to play. This post contains suggestion for people currently employing or planning to employ contractors. The rules covered below are based on my experiences in a range of workplaces; some handled contractors very well (and are used as positive examples) and some failed badly (and provided the negative examples).
First and foremost, make sure you actually need contractors. Ideally your project planning will be well thought out enough to see staff and skill shortages coming. When you identify such a gap, consider a range of options to fill it. Would it be covered by providing additional training to existing staff (and so boost your long-term advantage)? Is the need an ongoing one and so needs a permanent solution? Can the need be covered by some reshuffling of existing staff and/or project schedules?

In other words, don’t just wake up one day and go “Oh god, we’re shorthanded. I’d better hire some contractors.” Do everyone a favour and go out and read “The Mythical Man Month.” This may sound a bit counter-intuitive, a contractor saying don’t rush to hire contractors, but I’m saying it for a number of reasons. Mainly I’m saying it because being hired onto a project as an act of desperation means I’m going to be dumped in a pile of crap. I like to think I’m good but I can’t work miracles. Plus, it tends to piss off existing staff if contractors are brought in as “saviours” before they are given the proper opportunities to deal with the situation themselves. And rightly so.
Also, I know I can say this without affecting my future job prospects because I can safely say not enough employers are going to listen to change to change anything. I’m sounding cynical (hard for any of my regular readers to believe, I know) but I’ve been doing this sort of work for around 15 years (10 as a contractor) and I’m yet to see any significant improvements in management practices.

And speaking of pissing off staff, another time when you really shouldn’t hire contractors is when the disparity in pay between the contractor and your permanent staff is too high. If you can’t get a contractor without paying them double what corresponding permanent staff get, then you should be paying your permanent staff more. I covered this issue in more detail in my previous post but in short, avoid increasing the pay-based antagonism between contract and permanent staff.

Short term, I am thinking of my own interests – I don’t like working in negative, resentful environments. Long term, it serves any company to have a stable, satisfied workforce. The simple act of not hiring people who seem to swoop in, scoop up piles of cash and then fly out can really help the job satisfaction of permanent staff.
There are always the exceptions to the rule, the super-consultants whose knowledge is so deep and/or specialised that they can command over a grand a day in any job market. This isn’t me but I’ve heard these creatures are not totally mythical. But bear in mind this sort of pay disparity is rarely justified. If you find yourself in this situation you’re either not paying your permanent staff enough or you’re paying the contractor too much. Most likely compounded by very poor resource planning on your part.

But let’s think positive, when are the right times to hire a contractor?

The obvious times to hire a contractor are when there is a skill or experience gap in your team that you can’t fill internally or when you simply need some extra hands for a set period of time. Notice I said a set period of time. It’s a common mistake to say “we’re overwhelmed so we needs some contractors” without thinking it through. The one sentence summary of the book I mentioned before, The Mythical Man Month, is that you can’t make a project go faster simply by throwing more people at it – the management and communication overhead for larger groups (among other things) counters the benefit of having extra people on board.

And for the sake of everyone involved, make knowledge/skills transfer part of the planned engagement for the contractor. It benefits the business overall by increasing the skill set permanently available, it benefits permanent employees by helping them develop new skills (and almost everybody in IT wants to increase their skill set) and, speaking personally, it can help make the contractor feel involved with the workplace. Set this sort of goal at the interview stage and if you discover a potential contractor who resists the idea, this is a very good reason to not hire them. Any contractor insecure enough to try to hold on to “secret knowledge” probably isn’t all that good anyway.

Another important rule for employers dealing with contractors: if the contractor has been hired through an agency you DO NOT discuss pay rates with the contractor. EVER. You discuss work issues with the contractor. You discuss contract issues (including rates) with the agency. The agency discusses contract issues with the contractor. It’s like the separation of church and state. Except more important. And don’t ever say anything along the lines of “isn’t that why you get paid so much” to a contractor. Not even in passing, not even as a joke. The rate was set when the contract was signed and shouldn’t be discussed again unless the contract is up for renewal.

Plus, it hurts. Most of the time, most contractors will let it go but they shouldn’t have to. Any discussion about performance etc. should focus on professional expectations. Talking about money is unprofessional and is almost certain to damage the working relationship, however slightly. There are a thousand legitimate things that can strain a working relationship without introducing unnecessary crap like this.

It’s only human for an employer to expect more from a contractor than from an equivalent permanent employee. But set these expectations at the interview stage and confirm them in writing with the contract. Don’t add things in after the fact and keep piling the contractor with more and more work “because they’re paid for it.” It’s unprofessional and nine times out of ten it will result in a worse performance from the contractor, not a better one.

A final word of advice, don’t be scared to ask the contractor for input on what they should be doing. No matter how unique a situation seems to you, most contractors will have seen something very similar before. You’re hiring this person as an expert or at least for their additional experience and expertise. Use that wisely.

READ PART THREE

READ PART FOUR 

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9 Comments

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9 responses to “Mr Angry’s rules for employing contractors

  1. Salamaat Mr. Angry:)
    awesome post:) i have a question…i just started contracting this year; and my six month contract renewal is up….should i ask for more at this point? and how much more (percentage wise?).

    Just curious what your thoughts are on that; or if there is a standard guide out there somewhere.

  2. Salamaat. There are no hard and fast rules, the first question is are you contracting directly through the company or via an agency? The person emplying you is the one you have to talk to first about renewals and rates. Do an internet search on pay rates for your work so you know what to compare to. What it comes down to is if someone else is prepared to offer you more than the current place then you go somewhere else (not ranking this on menoy alone).

    Six months is often seen as too short a period to ask for a raise but this isn’t a set rule. If someone else is offering you more they have to compete or lose.

  3. Jan

    how about hiring a teleworker when you can’t find anyone specialized enough in your area? any experience anyone?

  4. Jan: the joel on software forums could be a good source of info on that.

  5. Hey, every year, you can ask for an upgrade. I was able to renogatiate a contract with almost a 85% premium on what the contract was worth the year before.

    It also depends on how high your fees are. If they are quite high, let’s say over 10000 a month, you can pretty much forget getting large premiums. However, if you started lower, there is always room for improvement.

    I know of a worker who automatically increased all his rates every six months by 10%.

  6. I agree, yearly is fine with asking for a pay increase. Any shorter term than that is a bit of a grey area and you have to take it on a case by case basis.

  7. cont

    As someone who acts as an agent and formerly did a fair amount of contract work, the issue of pay increase ultimately boils down to how much value you as a contractor brings to the equation. For contractors that are light on experience, but quickly become key to the client’s operation and are on friendly terms with everyone concerned, you can get away with asking for increases every 3mo to 6mo, up to the point where your fee exceeds say 10-20% of the local going rate. If you can’t become a key person for your client and your fee is at the local going rate, then expect to have a hard time asking for increases even after a year.

    The moral of the story, get as friendly with the client company/employees and find a way to make yourself indespensable (for as long as you want to stay with that particular client). Usually the client will be more than happy to raise your fee (within reason) if it means that you will stay on for the duration of the project/job/etc. When you want out, plan out a skill transfer and at the same time price yourself a little higer than the market rate. Things will generally sort themselves out.

  8. Excellent advice cont. Perception often becomes reality so you have to seem valuable to become valuable.

  9. Pingback: How to get the most value for your consulting dollar « Alec the Geek

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