The Difference Between Managing Contractors and Managing Employees

Contractors and employees are vastly different. You’re probably already familiar with the hiring differences. You know that employees require you to pay payroll taxes, benefits, and so on, whereas contractors only get payment for work. It’s easier to hire, and fire, contractors too. However, the real differences aren’t legal or tax related. The differences between managing contractors and managing employees are significant.

Direction

The biggest difference between contractors and employees is the amount of direction you give them and the type of direction that you give them. With contractors, you generally review the end result. You’re not there sitting beside them to manage or review their process. You don’t know how they’re doing with the task or project until it has been completed.

With employees, you’re nearby to manage them along the way. Your involvement in the process is much more interactive when you are working with employees. You can make sure that your time with contractors is even more hands off, thereby giving you more free time, if you document your processes. Give the documentation to your contractor and let them take care of the rest.

Commitment and Personal Accountability

Employees tend to be more committed to the company than contractors are. Contractors are independent workers, and as such their accountability level is different. You can manage this by being an entrepreneur that provides positive and constructive feedback. This helps them feel more appreciated and connected to your business and your project.

Additionally, by adding milestones and deadlines to their projects and tasks, you can help them stay accountable. Contractors that feel respected and appreciated, rather than micromanaged, tend to have a stronger commitment to the organizations they work for.

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Payment

Finally, when you’re managing contractors it is vitally important to make sure they’re paid on time. Employee payment processing is usually based on hours or salary and is essentially automated. You can leverage technology to manage the administration of your contractors as well. For example, you might create a system where they invoice you via PayPal twice a month for the work they’ve done. You pay them within 72 hours by clicking a button, or you outsource your bookkeeping and you don’t have to do anything.

Learning and Training

Finally, training is generally part of the job for employees. It’s not part of the job with contractors. Your process and workflow documentation should be able to cover any potential gaps that a contractor may have. Because you’re hiring specialists who are already knowledgeable and familiar with the tasks you need to have completed, there should be very little to train them on. True, they’ll need to become familiar with you and how your business operates. However, documentation should be able to take care of the vast majority of this.

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