So, you’ve decided that it’s time to hire your first employee—or maybe multiple employees.
But what kind of employee fits your business needs? Do you need a stable, full-time workforce, or will a few part-time employees suffice? Or, should you just hire freelancers?
While it’s hard to nail down an exact statistic, it’s estimated that around 40 percent of the U.S. works on what is referred to as a “contingent” basis. This includes freelancers or contractors as well as standard part-time workers. Not only that, but freelance employment is on the rise, with Intuit estimating that by 2020, 40 percent of the U.S. workforce will be freelance-based.
For better or worse, the “gig economy” is growing—so what kind of employees should you hire?
First, you’ll want to determine what you actually need an employee for. To help you figure that out, I’ve outlined three common business needs: businesses that need help for a specific type of project; businesses that need help with an ongoing smaller amount of work; and businesses that need an employee for a larger amount of regular work. I’ve also discussed the pros and cons of full-time, part-time, and freelance or contract employees, which will help you determine which is right for you.
If you need an employee for a specific type of project…
Hire a freelancer or a contractor
Do you need extra help for something very specific?
Maybe you need help redesigning your website, or setting up a marketing strategy for a specific project. Perhaps you need some new images to help with your branding, and you’d like to hire a graphic designer to create them.
These are examples of instances in which hiring a freelancer or independent contractor would be a good fit for your business’s needs. I’ll go into more detail on this in the pros and cons section below.
Pros of hiring a freelancer or contractor:
You can hire for specific skills
When you hire a freelancer or a contractor, you are hiring them to complete a specific project. So, you’ll be evaluating, for example, whether or not they are a skilled writer, graphic designer, or similar.
While culture fit is still a factor, it matters a lot less when it comes to freelance or contract employees. What really matters is their specific skill set, and if they have the ability to complete the task you need them to complete.
This makes it a lot easier to find someone who will meet your needs. Rather than hiring for the whole package, you’re just looking at their abilities.
It can be less expensive
You might balk at the upfront cost per hour or per project that a freelancer or contract employee is charging.
For example, the average hourly rate for webpage design has been quoted at $40-100 dollars an hour—understandably, you might see those figures and have some serious sticker shock.
However, before you write off the idea and decide a full-time employee is more cost-effective, consider the actual cost of hiring a full-time employee.
When you hire a full-time employee, you’ll be paying for more than just their services. You’ll be paying health insurance and other benefits, as well as paying taxes on your share of the employee’s Social Security and Medicare taxes, state unemployment compensation insurance, and workers’ compensation insurance. This can increase your payroll costs by 20 to 30 percent or more.
There are definite benefits to hiring a full-time employee, and I’ll get to those later on. However, cost isn’t necessarily one of them—a freelancer will generally be much less expensive in the long run.
You can hire from anywhere
As remote teams are quickly becoming the norm, hiring freelancers or independent contractors may mean you’re able to tap into this trend.
Programmers, developers, and content creators are often hired remotely as they can generally work anywhere as long as they have an internet connection and a computer. If your project can be done with minimal face time, hiring freelancers or contractors will open up your options considerably.
If you’d like to take advantage of talent outside your specific region, are interested in building a virtual team, or even simply have limited office space, this could be a huge perk.
There’s less commitment
If it doesn’t work out between you and your freelancer or contractor, you are under no obligation to continue working with them, period.
You are less tied to a freelance or contract employee, which means you may have more control when it comes to making sure the services you get are exactly what you are after.
Cons of hiring a freelancer or contractor:
They may be less committed to your business beyond the scope of the project
This lack of commitment works both ways: Your freelancer or contractor may not feel a huge sense of commitment or loyalty to your business.
Depending on the project, this may not matter. However, if you’re hoping to hire an employee who embodies your company values and goals and is committed to the future success of your business, a freelancer or contractor might not be the way to go.
You’ll only be able to utilize their skills for specific projects
Even if you think your new contractor or freelancer would be a great fit for some other role within your company, it’s unlikely that you’ll be able to use their services for anything beyond what you’ve hired them for.
While it’s possible for permanent employees to wear multiple hats, this isn’t really done when it comes to contractors and freelancers.
If you need an employee for an ongoing smaller amount of work…
Hire a part-time employee
So, you need someone for an ongoing project, and you want someone who is a fixed part of your team. But, you don’t necessarily think you need a full-time employee; maybe because you don’t think you’ll have enough work to merit hiring them on a full-time basis, or because it feels cost prohibitive.
In this case, consider hiring someone part-time. In some ways, it’s the best of both worlds.
Pros of hiring a part-time employee:
They can be paid hourly, which will likely cost you less
If you’re worried about your budget, hiring part-time employees may be in your favor.
The clear benefit of hiring a part-time workforce is that you’re not legally obligated to provide your employees with benefits. So, if money is tight and you need minimal work, it’s something to consider.
They are still an integrated member of your company
Unlike a freelance employee, you have the benefit of being able to onboard your new part-time employee and integrate them into your business.
This means if you’re hoping to build a cohesive, strong company culture, you may have better luck with hiring employees at least part time. You’ll be able to make sure they share your vision and build a relationship with them.
It’s a nice middle ground
If you need more just a one-time project completed but aren’t sure you’re ready for full-time help, a part-time employee can be a good way to split the difference.
For example, say you’ve just started a clothing company. You’d like to hire someone to create and send out a weekly newsletter for your business, as well as help you set up and manage your social media profiles. You don’t need a whole lot done, just a few hours every week. A part-time employee would be perfect for this situation; it’s not a one-time project, but it also may not be enough work for a full-time employee.
Cons of hiring a part-time employee:
You may have a smaller pool of skilled applicants
When it comes to the available workforce, hiring part-time employees could potentially put you at a disadvantage.
Chances are, an employee with more experience and a higher skill level will be seeking full-time employment. After all, a full-time position comes with higher compensation and benefits that part-time work just simply doesn’t afford.
Depending on the type of position you’re hiring for, this could be a problem. However, if you’re hiring for an entry-level position, you may not run into this concern.
It’s still a permanent relationship
This can be a great thing, but it also has the potential to be a negative if you and your new employee don’t mesh.
Unlike freelance or contract employees, it’s harder to sever ties in this relationship if your employee isn’t delivering the work you’d hoped.
While you can certainly fire an employee if they’re not up to snuff, this is significantly messier than simply finding a new freelance worker or contractor for the next project.
Part-time employees may be less committed to sticking with your business for the long haul
Your part-time worker may decide at some point that they’d be better off with a business that offers them full-time work, or they may be balancing multiple jobs.
This may not be an issue depending on the type of work you’re hiring for, but it’s worth keeping in mind.
If you need an employee for a larger amount of regular work…
Hire a full-time employee
So, you’ve decided you want to hire a permanent employee; you’d like to hire someone who’ll be around all the time, who can take on a larger amount of work, and who will be committed to your company.
If this is the case, a traditional full-time employee might be the right fit for your business.
Pros of hiring a full-time employee:
You’ll get a team member who you can integrate into your business
Are you concerned about establishing your new team member as an embedded part of your company, and making sure they’re a solid culture fit? There’s no better way to make sure this happens than to seek out a full-time employee.
Simply put: With a full-time employee, there’s less chance of fast turnover—and continual fast employee turnover is one of the biggest killers when it comes to establishing a great company culture.
You’ll be able to take advantage of all of their skills
If you hire an employee full-time, there’s a greater chance that you’ll be able to use them in a more multifaceted capacity.
For example, say you hire a graphic designer to create your logo. Simple, discrete, and probably a task best suited for a freelancer or contractor.
However, what if while they’re creating the logo, you realize you’d also really like them to create promotional images for banners and signs? You’ll have to hire and bill them for more work, as the additional work is outside of the specific project description you hired them to complete.
However, if they were your own in-house, full-time graphic designer, it would be assumed that they’d be available for more than just one project.
If you think you’ll have an ongoing need for an employee and want to use their services in a variety of ways, full-time could be a better way to go.
They’ll be more likely to go the extra mile for your business
A full-time employee will likely be more committed to your business as a whole, and consequently, feel more inclined to put forth more effort.
If you occasionally need everyone to stay late and put in a little extra work, a full-time employee will likely be more willing to go above and beyond the call of duty, as they have significantly more invested in your business than a part-time or freelance employee.
Cons of hiring a full-time employee:
It will likely cost significantly more
As mentioned earlier, hiring a full-time employee isn’t cheap.
That being said, if it’s within your budget and you think a full-time employee is the best bet for your business needs, the increased cost will likely be outweighed by the benefits.
You’ll be responsible for onboarding and training
When you hire a full-time employee, you’re in charge of making sure that they are trained—something you don’t need to worry about with freelancers or contractors.
However, this con can actually be a pro in some instances: Onboarding and training a new employee can be a great opportunity to make sure your new employee is doing things “the company way,” and can help you build a foundation on which your employee will be able to deliver the great results you expect every time.
It’s harder to let them go if it isn’t a good fit
As with part-time employees, if the relationship goes sour, you’ll need to let your employee go, as opposed to simply finding a new freelancer or contractor.
So, which is best?
You guessed it—that’s a trick question.
There isn’t a best type of employee; it all depends on your business needs. It’s a big decision, so make sure you sit down and evaluate all your needs, options, and concerns before you choose a direction.
Which type of employee did you determine was best for your business? What influenced your decision? Let me know in the comments.