What’s the difference between an employee and a contractor?

In the ideal world, I like to see a contractor as someone knowingly entering into a short term relationship. In some ways it can be compared with an affair or holiday romance, full of passion and focus but each party knowing from the outset that it is not likely to be (or ever intended to be) anything more!

There are some contractors that are invited to become employees after successful contracts. But what really is the difference between the two? Let’s examine the facts:

How long does the average employee work for your company 3 years, 30 years? How long does the average contractor work for your company? (I know many companies that have contractors on their pay role for several years). Is an employee ‘married’ to the company? And those employees that feel that they are married to their company, do they work any better than their contractor counterparts? Or, are they more focused on their internal (dare I say) ‘political’ career , than the content and results of their work? I know many married people that should feel secure and yet are constantly worried about divorce and hidden agendas. In theory, it is only the type of contract that should make any difference and yet it is often so much more.

There are basically two types of contractor: Firstly, the self employed contractor working either directly with the end customer or via an intermediary and secondly the employee contractor that is an employee of the clients subcontracting company.

In my experience the latter, is an excellent breeding ground for contractors (they acquire diverse experience over a short timeframe, as they move from one assignment to another) but the ‘real’ contractors are all self employed. The contractors that voluntarily gave up the security of their employee lifestyle to break away to prove their net worth on the open market.

Right now there are many self employed contractors that are regretting their decision, but (thankfully) there are still many rejoicing in their freedom. However, I do have one end word on this topic:

The pain and loss that some contractors feel at the end of a project can be surprisingly substantial (possibly the same as at the end of a short term affair)? The supposedly reassuring comment ‘but you knew it was going to end, when you started out’ does not help. Why? Because the pensioned contractor allowed themselves to become submerged in their assignment, they get in so deep that the desire to achieve excellence for their customer and colleagues, takes them over, even without them fully realizing it.

Sure there are many contractors, that never commit and only perform the minimum of what they are contracted to do – but then again, how many employees are the same? And if these contractors are self employed, then it is quite likely that the recession will filter them out of the market.

So my advice for business leaders and employers: choosing for short term relationships is often the best way forward for all goal oriented assignments and especially in these days of restricted OPEX. But please leaders, remind your employees to appreciate the fact that contractors are humans too, that they have families and friends outside the workplace that depend on them. Remember that it is absolutely fine to benefit personally by absorbing the passion that the new contractor can bring, but when the contract is over (or forcibly cut short) the contractor’s pain is probably not likely to be their loss of short term earnings but something much deeper – their pride, their unfulfilled ambition.

In the time that a contractor is working alongside their employee colleagues, they should be encouraged to feel part of the workforce family and they should be treated and respected as such, yet always knowing that there is an end date, not so far away. Any forced exclusion from the employee group is tricky, and often de-motivational, even when it is understood why it is necessary.

Have a good week,

Harley