Employees, Contractors, Consultants – Oh My!

Self Organizing Teams – what does it really mean
February 22, 2017
An Analysis of Analytics [Part 1]
February 22, 2017

Employees, Contractors, Consultants – Oh My!

[Fair warning, I will try to avoid Wizard of Oz references, but no promises]

Staffing modalities are a challenge for many companies, especially for technical people. It is rare (in the USA, at least) for everyone to be a “W-2 career employee”; even among those companies that focus on direct-hire employees, the percentage of people who remain with a single company for the entirety (or even majority) of their career is fairly small.

As employees’ tenure at a given company has (statistically) decreased, companies have become less willing to invest in them, lest they spend the money, and then have the person “jump ship”. Additionally the economic variability in recent decades have caused employees lose faith that they have a “job for life”, if only they perform well.

Couple this with the additional costs (beyond direct salary) of an employee, such as benefits, and the utilization of alternate staffing methodologies becomes increasingly common. This leaves use with Contractors and Consultants; terms which are often used interchangeably but actually have radically different Etymologies.

  • Contractor: “one who enters into a contract to provide work, services, or goods”
  • Consultant: “one qualified to give professional advice”

When one looks at “non-management” employees (i.e. those who perform actual work – (sorry, there was no better way to phrase that!)], there is a clear correlation with Contractor. The key difference being the business arrangement [aka terms and conditions] of the relationship].

The intent changes when one looks to a Consultant. Instead of “work, services, or goods” the focus is on “professional advice”. There are a number of significant implications that are rarely explicated considered.

If one is seeking advice, then there is the implicit need for information that once does not possess (or at least confirmation of said information from an independent party). For this to be effective there must be a level of trust between the Client and the Consultant. Building this trust is usually an ongoing process, but must be rooted in the qualifications of the consultant.

From the consultants’ perspective, this requires a much broader base of knowledge and experience. In nearly every situation, there are alternatives which need to be considered rather than a simple statement of fact about specific questions. The most appropriate alternative for a given situation will involve analysis of the choices in the context of the specific environment.

Another common trait that is more common with Consultant relationships than the others is the duration and level of the interaction. At critical junctures, a short but intense consultation will be the most effective means of evaluating alternatives, and kickstarting an effort. Many times, a lower level of periodic involvement is appropriate to provide ongoing review and additional advice/guidance.

There are times when a long term dedicated (i.e. 40 hour per week) Consulting role is appropriate, but experience has shown that these typically involve much more of a Contractor role rather than pure consulting. These hybrid relationships can be very effective when the goal is to gain both the advice (Consultant) and then have the agreed upon solution implemented (Contractor) by the same person.  However, they can become problematic when the expectations differ between the parties involved. 

Hybrid arrangements also occur when a client cannot locate and retain a Consultant who is available at the appropriate duty cycle, or if their corporate organization inhibits such variable arrangements.

There are also organizations which give the title of “Consultant” to every non-direct employee. Alas, it is quite common to see someone at these organizations that have a Consultant title, but when they are asked what professional advice they have provided to the client  getting a response similar to “I just do what I am told, they don’t ask me what I think”.

The company (or individual) who knows everything simply does not exist. There are always times where soliciting the professional advice of a qualified person will provide significant value. It is also true that there is always work to be done that could be facilitated by having additional staff (however, it may not be true that the budget exists for this). Consultants and Contractors each fill a need, but they are different and best results are always achieved when the distinction is clear.

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