Why contract-to-hire is a better strategy

With in-demand skills and high standards, independent workers often prefer the flexibility to select from various opportunities. | Freepik

With in-demand skills and high standards, independent workers often prefer the flexibility to select from various opportunities. | Freepik

Published Jul 8, 2024


Johann van Niekerk

THE need for efficient and effective recruitment strategies has never been more critical. Traditional recruitment models, with their complex and drawn-out processes, are fundamentally flawed - and fail both companies and the talent they seek to hire.

A quick look at most LinkedIn job postings reveals the lengthy hiring procedures with multiple interviews, tests and tasks. This outdated process is painful for organisations and negatively impacts candidates. The worst part is that despite these efforts, there is no guarantee that the business and the talent will be the right fit.

The best way to determine fit is to see how someone performs in the role. This is why a shift to contract-to-hire is the emerging strategy for forward-thinking organisations looking to “de-risk” the hiring process and ensure a good fit. When executed fairly and transparently, the contract-to-hire approach benefits both employers and independent talent, and eliminates the painful and largely ineffective processes embedded in traditional recruitment.

Growing trend

Contract-to-hire is still a relatively new concept in the South African workplace. However, it is growing in acceptance as more businesses grapple with the struggle of finding good permanent resources and the inefficiency of long recruitment cycles.

By upgrading recruitment practices to the contract-to-hire approach, organisations are able to meet their immediate objectives of plugging urgent talent gaps while also assessing candidates in the role, with the potential to go permanent later down the line.

It is important to note that in South Africa, labour law states that you cannot hire someone on a contract basis with the promise of being made permanent later. Therefore, communication needs to be clear and transparent that there is an option for the employer to make a permanent offer based on performance, but this is not guaranteed.

The contract-to-hire process moves faster, costs less and the realities of the job - as well as the actual skill level of the worker - come to light a whole lot faster. It’s a win-win situation.

Reducing risks

One of the most appealing reasons for organisations to pursue a contract-to-hire model is its ability to decrease recruitment risk. Hiring someone new always carries a risk, as you won't know their true capability until they've been in the job for a while. However, with a contract-to-hire model, a business does not have to commit to a fixed-cost until it is confident in the likelihood of a successful fit.

The flexibility and trial period inherent in the contract-to-hire model also provide significant advantages. It is particularly beneficial for attracting talent, venturing into new business areas or filling capability gaps. Rather than requiring prospective skilled talent to complete tests and assignments, employers can directly observe their performance in a real-world context.

Mutually beneficial

The positive aspects of contract-to-hire go both ways; with independent talent also benefiting from this more effective hiring model. Just like organisations, individuals need time on the ground to truly understand the work and workplace culture.

This model makes sense for skilled talent because it provides a trial period for them to assess whether the employer is a good fit for their needs and services before making a commitment.

Many independents choose to work for themselves to maintain control over their work terms. With high standards and sought-after skills, they have the flexibility to select from various opportunities - whether short-term or permanent.

Contract-to-hire allows talent to evaluate if a company enables them to perform well and grow their skill-set. It also offers a chance to get a foot in the door at dream companies on a contract basis, with the potential for a permanent position. When they showcase their skills, create value and meet deadlines, they can leverage their performance to negotiate a permanent offer. This provides both talent and employers with tangible evidence of value, which is more compelling than negotiating based on a resume and often unverifiable past performance details.

Contract-to-hire is a win-win model, particularly at a time when the pool of independent talent is surging and businesses are looking to reduce recruitment costs. This model is especially useful for industries struggling to attract talent, organisations cautiously expanding into new areas or teams needing to hire quickly to fill gaps.

As the demand for skilled talent continues to rise, adopting a contract-to-hire approach ensures that businesses can adapt quickly while providing independent talent with opportunities to showcase their abilities and secure long-term positions. This model truly benefits both employers and skilled talent - fostering successful, sustainable working relationships.

  • Van Niekerk is CEO of Outsized