Are Contractors Now Adding More Value?

I was in discussion the other evening with the director of a recruitment firm that supplies large numbers of both permanent and contractor resources to financial services companies in London. In the midst of our conversation he stated that he thought contractors were adding more value to employers these days and asked my opinion.

His comment was not about depressed rates making the financial assessment more attractive, but more about the "content" they bring to the table - how their knowledge is becoming more important in the design and delivery of projects and programmes.

I have to say that I agree in part and disagree in another part. First the part I agree with and that is that contractors are becoming more important, but this is more a reflection on changes in the body of permanent employees that has reduced the reservoir (both depth and breadth) of subject matter expertise available from within the company. For a whole bundle of reasons this reservoir is dramatically smaller than it was even 10 years ago.

In terms of capacity, the drive to eliminate unnecessary(?) cost from businesses has lead to the release of personnel/capacity that could and in the past would have been applied to changes. Of those that are still employed, their tenure (and thus experience and knowledge) is much reduced so even when they are assigned to a change they can only "give" less. This reduction of tenure has also made employment much more of a transaction than a relationship, in many instances damaging the alignment and commitment of employees and thus impacting detrimentally what is often referred to as their discretionary effort.

The same drive for financial improvement(?) also drives denial in relation to the level of resource need to drive change. Every company I have worked for has played up to the delusion that "next year" there will be less change (and thus need less resource) than "this year". As a result none are prepared to really build the sort of permanent change compliment that would allow the establishment and sustanance of good content knowledge, instead arguing that they will release the contractors at the end and not replace them. While that may happen on discrete projects, it rarely happens in the round when looking across a broader change portfolio.

The last piece has been the dramatic reduction in training effort, both in terms of hard currency spend and time devoted. In my last leadership role our training budget was £70 per head per year - what can you really provide for that? - and utilisation rates were expected to be 80%+ - which when you consider vacation time, an increasing administration load and the normal time required for team meetings and the running of the business, leaves little time to spend on "training". This is true in both that operational side of the business and in the change teams and leads to very fragmented learning - people learn/are taught just what they need to, often by word of mouth rather than structured training.

As a result one can readily see how and why the reliance on contractors has grown. I would argue that they could always bring this knowledge by dint of their experience and need to stay marketable as an individual, but in the past their knowledge was primarily supplemental rather than critical.

It is also true that the economic situation has released more "permanent" people into the market, many who in the depressed markets are now having to look at "contracting". As a result many so-called contractors are not really contractors at heart.

I can look around and still see many "true" contractors, ones who value not getting caught up in the machinations involved with being a permanent employee, and/or value at higher degree of personal flexibility. They undoubtedly add value to an organisaton, but really do have a different style and level of personal engagement with their workplace. This has not really changed in my opinion.

This leads to where I disagree the director. I think that true contractors are still contractors and perform a valuable role for firms. The difference is that unconsciously we are asking more of them and thus seeing a different contribution I also think that the director is seeing a mixed population that has a higher proportion of involuntary contarctors ie those who are really and preferrable permanent in their mindset, but are currently forced to trade in the contractor space. This distorts his assessment of contractor value.

I wonder what others think?

Leadership

We did move onto the question of should we expect contractors to fill "leadership" roles and indeed can they really do so when their engagement and alignment is different to that of a permanent employee.....but that is something for a later post.