Wednesday, 08 July 2009

The pros and cons of contracting versus permanent employment

If you value your independence, contracting is for you. Permanent employment may offer a certain amount of stability and security, but contracting provides the ability to be free from the politics of the corporate environment. As a contractor you are your own boss, and it is up to you to provide what is required by the company that you are contracting to.

Permanent employment involves fitting into a corporate culture. While it may offer security, that security may prove to be illusory. Political games and struggles arise all the time. It is necessary to play these games with some skill to get the right promotions. Losing a political struggle could mean the effective ending of career growth in the business. The only choices are to move on or to accept the limitations.

Contacting provides independence. You are your own boss providing a service for a client. The service that you perform has to be done professionally. The length of the contract and future contracting opportunities could depend on that.

Variety is the spice of a contracting career. Variety leads to continuous learning. It is necessary to develop the ability to adapt to each environment that you meet.

Some of the negatives associated with contracting include the uncertainty of finding another contract when when one ends. There can be career development, but no formal promotions. When the economy is going through a downturn, the risks increase. Sometimes contracts are eneded prematurely when companies change direction.

As an outsider, a contracter is only in a position to advise, never determine the direction of the company. Coming into a project that lacks direction, can be a problem for a contractor. It is often up to the contractor to take the initiative and begin to research the environment and the possibilities that are available.

Contractors often need to be assertive. The client is sometimes only able to offer a vague idea of what they actually want the contractor to achieve. It is up to the contractor to engage with the client to find out the requirement and required outcomes of the contract.

Most of the time one contract follows another, but there may be times when there is a gap between contracts. This is the major risk of contracting. The result can be several months of unemployment. As a result the contractor may be forced to accept the first offer, even though the rate is below his or her usual rate.

Then there are contracts that are extended year after year. The contract is almost like a permanent position.

In a recessionary climate it is often the contractors that go first. With cutbacks in almost every sector, permanent employees are given preference. While permanent employees may receive severance pay, even the contractor that has been with the same employer for many years receives nothing.

Permanent employment may include such benefits as medical insurance, annual paid leave and sick leave. The contractor must cover himself for such events. A contractor has to remain healthy as he cannot afford to be sick. Contractors may opt for less leave than their permanent counterparts as leave is unpaid.

Contacting offers independence, variety, wide experience and continual learning. The contractor must learn to be professional in all encounters with the client. Contracting is higher risk with no guarantee of continuous employment. The contractor must make his own arrangements for retirement funding, holiday pay, medical insurance and sickness cover.

Permanent employment offers security and stability. The permanent employee becomes a part of the enterprise. He or she has the opportunity to climb the corporate ladder. Medical insurance, leave pay and sickness benefits are covered. Most employers arrange some sort of retirement funding.

A permanent employee must be prepared to get involved in office politics and the security may prove to be illusory. There is always a boss to answer to.

Both types of employment have pros and cons. Some prefer the stability of longer term employment while other prefer not to answer to a boss. The choice is very much that of the individual. Good skills will usually keep the contractor off the streets, but there could be periods of unemployment between contracts. Permanent employment provides a sense of belonging and a degree of security.

1 comment:

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