The Value of a Contract-to-Perm Engineering Hiring Strategy

The latest job statistics show that unemployment continues to decrease as the Great Recession fades in the rear-view mirror. More and more businesses are starting to emerge from their holding patterns – making new plans for expansion and ramping up their workforce.

In February 2018, the Bureau of Labor Statistics (BLS) projected that 41,500 new engineering jobs will be added to the engineering industry between 2016 and 2026. However, general employment statistics usually lag behind economic trends, while the hiring of temporary employees more closely mirrors economic activity.

Indeed, one indicator of the recent economic expansion is the 3.0% increase in temporary hiring during the fourth quarter of 2018, as reported by BLS.

“Staffing companies are reporting steady demand across most sectors as businesses continue to increase the size of their flexible and permanent workforces," Richard Wahlquist, president and chief executive officer of the American Staffing Associationsaid in a press release. “Hiring activity remains healthy in the industry, with an increasing number of businesses identifying the shortage of qualified candidates as a constraint to further staffing job growth."

As a result of the well-publicized engineering skills gap, companies need a good hiring strategy to compete for scarce talent. One of the key methods businesses can use to build a pipeline of potential talent is contract-to-perm hiring.

Contract-to-Perm: What is it?

Many job offers are through talent placement agencies are classified as “contract-to-perm." This type of offer consists of an agreement that for a given time period (e.g., 3 months or 6 months) the employee will perform the job for an hourly rate, in the hopes that the company will convert him or her to permanent status after the contract term has elapsed.

It's important to note that even though the company has a vested interest in converting the employee to permanent status, there is no guarantee that this will happen. The employee may continue on as an hourly hire, with the hope of converting later. Or the employee could be laid off, either because company priorities have shifted, or for poor performance.

Benefits for Businesses

A contract-to-perm hiring strategy provides several important benefits to employers. First, it gives them the opportunity to get a feel for the talent before they bring the person on board permanently.

The requirements for many positions in the IT/engineering sector depend not only upon specific technical knowledge and skills, but also on less quantifiable “soft skills," such as flexibility, teamwork, oral communication, and growth potential. These attributes can make or break the new employee's ability to work with the existing team to accomplish its long-term goals, and a short-term temporary position gives the company assurance that it is not making a costly error.

Second, contract-to-perm engineering hiring may give companies a leg-up on the competition by allowing them to move quickly to offer a position to a talented prospect, before completing the time-consuming evaluation process required to bring on a full-time permanent employee. In this way, the company may have a better chance of recruiting talent whenever available and follow up with further paperwork later.

Another benefit of contract-to-perm engineering hiring is contingency planning and management. Companies use temporary employees to quickly meet changes in demand for products and services. At the same time, by maintaining a pool of temporary and contract workers, they have a ready source for hiring permanent workers as company finances fluctuate and business plans and goals change.

Benefits for Job Seekers

Contract-to-perm engineering hiring provides benefits to job seekers as well. For those needing short-term, flexible work, it gives them the opportunity to gain new experience and earn good pay, without making a long-term commitment to a company or a specific career path. At the same time, contract employees can evaluate the employer and the job to determine whether they are a good fit.

Another benefit for job seekers is the fact that employers don't have as much to lose financially and legally when onboarding temps versus permanent employees. In this situation the company may “settle" for someone who does not fit all the desired qualifications, giving that person a chance to prove herself on the job.

For example, non-traditional job seekers include newly retired military vets transitioning to the civilian workforce. In many cases, it is difficult for them to explain their hard-earned skills to an HR staff unfamiliar with military organizational structure and technology. The short-term temporary position could solve this problem, as the employer can evaluate the vet's abilities and experience in action.

On the other hand, subject matter experts in the exact hardware or software the company requires, who are less well-rounded in terms of soft skills, may also benefit from contract-to-perm. With a good track record, the company may give you the opportunity to prove your worth, and eventually move you to permanent status.