Signs of improvement in the economy have organizations looking to finally add some new employees to the payroll, and many CIOs see their contract workers as a good place to start, according to a recent survey from Robert Half Technology.
In a poll of more than 1,400 CIOs from a random sample of companies with 100 or more employees, 63% said that having a prospective employee work on a contract or project basis was very or at least somewhat valuable way to evaluate him for a full-time position. Thirty-five percent of respondents said they found it not valuable at all.
One might expect a higher percentage of CIOs to answer "valuable" to the survey, but some organizations don't have much experience with contract employees or use different terminology, said Katherine Spencer Lee, executive director of Robert Half Technology.
"We're certainly seeing an increase in contract-to-hire requests, and a lot of that's due to the economy improving," she said.
The trend began picking up steam in the middle of the third quarter and is continuing through January. Lee said that it's happening across all industries, particularly in financial services, health care and manufacturing.
"For some of our clients in the manufacturing realm, for the first time they're facing a situation where inventory is lower than it has been, and demand is increasing," Lee said. "They say it looks like things are improving, but we're not ready to pull the trigger for a full time hire."
The process is attractive because it also helps reduce productivity losses and costs associated with poor hiring decisions. Typically, the cost of turnover is equal to about one and a half times the annual salary for a position when factoring in hiring costs, training time and other costs, Lee said.
Larry Houk, director of support services for Carisbrook Technology, a help desk and short term software development firm in Wilsonville, Ore., said that hiring people on a contract basis has saved him $2,000 to $5,000 annually for a staff of 14.
"Three years ago with the high tech boom, there were plenty of jobs and no one to fill them," Houk said. "Several resumes would fill my desk, and I could handle that. The last time I put an ad in the paper, I got 200 or 300 resumes."
Contract to hire work through an agency has allowed Houk to save time on up front screening and phone interviews while saving employment advertising costs. He said that the method has served him well even in times when the job market wasn't so tight. But he was concerned at first that he was cutting himself off from applicants who may have a full-time job and looking to switch companies.
Lee acknowledges that this method cuts out potential employees with full-time work elsewhere, but if they're confident enough to take a chance and want to get out of where they are, the process also allows them to audition the company.
"Certainly the same methodologies apply [as traditional hiring processes], but since they have an opportunity to interview this person as they work, they're typically able to move more quickly," Lee said. "They can bring a person on board more quickly than if they went through their hiring process. They'll have the opportunity to see this person's work and see how they interact with co-workers."
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