Determining the rate for consultant work is not as simple as breaking down the annual salary for a permanent employee. If you are looking at hiring highly skilled temp-to-perm staff as part of your team, consider the following before you set an hourly or daily rate.
Accept that you’re paying a premium. The first step in determining the rate is accepting that you’re likely going to pay a premium for the work, particularly in high-demand areas like technology. As the employer, you determine both the contract length and the job security for your contractor. Therefore, skilled & available contractors demand a premium for this lack of control over their job security.
What is your end goal? Are you looking for a seasoned consultant who might consider taking on a permanent position? Or, is your goal to hire an employee who traditionally works permanent positions and is eager to make a temp job, permanent? Advertise your job in a way to attract the type of person that you are seeking. Their background may determine how you approach your rate strategy.
Evaluate your past success with temp-to-perm employees. If you have used the temp-to-perm model before, take a closer look at your process. How did it work out? Were there any surprises during the conversion process? Self-evaluation is a powerful tool to improve and streamline the contractor & temp-to-perm hiring process.
Consider the consultant’s added expenses. It’s easy to see your potential cost savings from contract employees in the form of expenses like health benefits or retirement contributions. But your savings are costs that a contractor will likely still need to cover during their tenure with your organization.
Acknowledge what the consultant is lacking. Beyond the added expenses that a consultant will need to cover, it is also important to recognize that consultants will lack benefits and perks that permanent employees enjoy; paid vacation days, paid holidays, paid sick leave, employer contributions to retirement plans, equity, bonuses, etc.
Your goal is to attract in-demand contract talent who can hit the ground running and solve your business needs now. Attracting this talent goes beyond an the hourly or daily rate. Experienced consultants who are experts in their fields are in high demand. Making a fair contract offer now will not only make the short-term contract look attractive in a competitive market, but it establishes a positive relationship if a permanent position is on the table after the contract.