It has become a very popular form of employment for many companies. I can’t speak for other industries, but we as an IT staffing company, see A LOT of requisitions that are structured as contract to hires (CTH). It is natural that many candidates are reluctant to pursue CTH positions, but by doing a little homework and understanding what to look for, CTH can be every bit as secure and rewarding as a direct hire position. I tell candidates all the time, that by discounting CTH positions, you could be closing the door on your dream job.
Generally, I’ve noticed 2 different types of Contract to Hire (CTH) scenarios:
One is where the company already has the approved budget to hire this person as a FTE once the contract duration is satisfied (typically 3-6 months). The upfront interviewing/screening is conducted as if this person were to be a direct employee from day one. Even the full-time salary is negotiated upfront, so that there are no surprises on either end come conversion time.
The other is where the company has every intention of hiring the candidate, assuming they deliver of course, but do not currently have the approved FTE budget. Based on my experience in these cases, our clients will be transparent with this fact upfront so that no one is misled. So really, this is more of a contract with a good possibility of converting, and we position it to candidates as such.
So why do companies elect to go the CTH route?
- To ensure it is the right long term match for both the candidate and company. The advantage for the company here is, should the candidate not live up to expectations, the company can move in another direction without any risk or long delays. I’ve seen situations where hiring managers have made full-time hires only to find out within a couple weeks that they are not the right fit, and then be handcuffed by HR for months when trying to end the new hire’s employment.
- There is an uptick in projects, new work is won or news of a major initiative has created staffing needs, and fast! CTH can help expedite the onboarding process.
- It can help companies spread out the fee they pay to agencies over the life of the contract versus a one-time lump sum.
- It’s a logistical thing, and simply the way the company prefers to do their hiring.
As a candidate, some things to look for when you are considering a CTH
- Does your recruiting agency have real life stories about successful CTH placements, particularly with the client in consideration?
- How many candidates have you placed with this client? What percentage converted?
- Is CTH normal for this client, or is this a one off situation?
- What is the interview process like? Thoroughness in this case can be a good indicator of a company’s intention to eventually bring this person on as a FTE.
- Is the recruiting or hiring company interested in what your eventual conversion salary expectations are?