Top 10 reasons why contracting is better than permanent employment

I was a permanent employee for 10 years. I’ve been a contractor for 4.

I will never go back to being permanent.

Why? Because it doesn’t stack up. Ask any contractor and 95% will agree. We can’t all be wrong…

Here’s the definitive top 10 reasons why contracting is better than being permanently employed.

The comparison we’ll use is that of 2 business analysts, the same age, gender, race, ability, sexuality, weight, hair colour, ability and experience, on the same team, working on the same project. In fact let’s assume they are identical twins. ‘Jackie’ is employed on a permanent basis, the other ‘Jo’ is a contractor. And they are both hot blondes, which is irrelevant, but may make you enjoy reading about them a bit more.

Top 10

1. More money

Let’s get this one out of the way early. Jackie earns a good wage, but Jo will be earning at least 50% on top (probably more). So – if Jackie is earning 60k per year, Jo will be earning at least 90k per year (and paying less tax).

Jo is also more in tune with her value in the market place and can negotiate her rates more frequently than Jackie,  to ensure that she is getting a fair income.

2. Less meetings

It is easier to say no to bullshit meetings when you are a contractor. If it’s not relevant to the project, or it’s not something she can add value to then Jo can (and should) say no. Jackie is more likely to feel obliged to go along 1. because that’s what’s expected of permanent staff, and 2. because that’s just what people do around here.

3. More focus

Jackie is easily distracted by the white noise of an organisation. She hears more gossip. She attends more unnecessary meetings (see point 2). She gets more emails. She gets more instant messages.

Because Jo is being employed to work on a specific project for a specific amount of time her attention and activity is tuned in to just that. Anything that is not related to that end is not relevant and is therefore less likely to draw her attention.

4. More productivity

With less meetings to attend and more focus on the job at hand, guess what?

5. More contacts

Jackie has worked with the same people for the last 3 years. It’s a small team and retention is good.

Jo has worked on 3 projects over the last 4 years for different clients, and as such has built up a big network of people across multiple organisations.

6. More opportunities

It stands to reason that if you have more contacts, in more places, then more opportunities are going to come your way. (Unless you are a passenger)

7. More freedom

If more opportunities come Jo’s way, she has more freedom to choose her path. If Jo doesn’t agree with the way a company operates, the way a project is being run or finds that she is unable to influence change, then she can choose to move on at the end of her contract.

Jackie could of course do the same, but without a set end date to aim for is more likely to stick around for longer. After all it’s only 3 months till the annual salary review/bonus round… Then another month before bonuses are paid… Then another month before salary increase takes effect… Then only a couple of months till the mid-year review…

8. Less office politics

Jackie is chasing promotion. She needs to play the corporate game. To look over her shoulder at her peers and try to keep up. To be seen to be doing over and above her day job so that she is deemed ‘worthy’ of a coveted title.

Jo doesn’t. She has been hired to do a specific role so she can concentrate on doing that and doing it well. She can still get promoted and actually has more opportunity to negotiate her rates and role, with each new contract or contract extension.

9. No appraisals

What a ball ache these are. Twice a year Jackie needs to justify herself. Her role, her skills, her achievements. She needs to take up to a whole day (or more) to write this all down and fit it into a template that doesn’t work, in a system that will crash as everyone else is doing the same thing at the same time, to be given a grade that was already decided before she even started.

Jo really is judged based on her skills and ability at the job she’s been brought in to do. If she is no good, she will not get renewed. This knowledge drives her to show up and do a good job each day.

10. Better motivation and therefore better performance

As Dan Pink told us money is not what motivates people. What does is Fairness, Autonomy, Mastery and Purpose.

Jo is closer to all of these things than Jackie – why? Because she is a self employed contractor.

To give a little balance to the argument, here’s the 2 worst things about being a contractor.

1. More calls from recruiters

Sharks. The lot of them.

2. It takes longer for permanent staff to trust you

If you are placed in a team of permanent staff then it can take longer for people to open up and be comfortable with your presence. New permanent members of staff seem to be more openly welcomed and included earlier on than contractors. Of course you can get there, but you typically need to work harder in order to break down the barriers.

Summary

Obviously contracting is not for everyone.

Some people like the pretense of feeling secure in a permanent job. They like the familiarity, not having to think about whether the tax man is going to come a drag them out of their bed in the middle of the night, or having to worry about taking unpaid days off.

But having seen both side of this coin, I am in no doubt which one is preferable.

If you’ve never tried contracting then I hope this post at least makes you consider it and reminds you that you always have a choice in the path you take. If an opportunity comes up, don’t just rule it out because it’s unfamiliar, consider the benefits first.

If you don’t like it you can always switch back, but unless you try it you’ll never know…

  1. More money
  2. Less meetings
  3. More focus
  4. More productivity
  5. More contacts
  6. More opportunities
  7. More freedom
  8. Less office politics
  9. No appraisals
  10. More motivation and therefore better performance

Contract v perm

 

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There are 2 comments for this article
  1. Dhaval at 11:20 am

    Hi Noel,

    I agree with a lot of the pros for contracting that you’ve mentioned, but to make this a more balanced argument I think we should consider the following:

    – Contracting is more unstable; I recently had a contract ended 6 months early due to issues with the pipeline of work that was available. Finding a decent role in a quiet market (which Janaury is) is difficult. It would also be interesting to understand how you factor in your earnings estimates, as whilst contracting can be more lucrative it’s also based on an assumption that you’re working for a fair amount of the year i.e. > 160 billing days

    – Career progression can be difficult to achieve – you’re hired to do a specific job and it’s difficult to convince clients that you’re capable of doing other roles

    – A lot of the issues around appraisals etc depends entirely on the working environment. Not all places are dogmatic in their approach to monitoring progress etc

    – Funding your own training is actually very expensive

    My opinion on this is that your experiences are geared by the background you have come from (IB/Retail Banking), and that a more representative view of other people’s experiences would be beneficial here.

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