Hiring is a challenge for many small businesses, especially for those without human resources departments or recruiting experience. Many companies are addressing that challenge by hiring workers on a temporary basis before making them full-fledged members of the team. In doing so, companies can evaluate prospective team members in action, hire faster, and mitigate some of the risks of growing their payroll in uncertain times.
“A lot of companies are not good at interviewing and screening,” says Jay Loewi, CEO of The QTI Group, an employment agency in Madison, Wisconsin. Regardless of recruiting skill, “sometimes the interview process and background checks don’t give the whole picture,” he says.
Loewi recommends small businesses use what he calls a “try before you buy” approach by starting potential long-term employees on a temporary basis before hiring. Doing so, Loewi says, is “a great way to make sure it’s the right fit for all concerned.” During the temporary period, employers can see qualities in the employee—such as their compatibility with the team—that might not be evident during the interview phase. At the same time, employees can decide whether the company and their role is what they are looking for before committing to stay. If it’s not a good fit, it’s easier for either side to end the arrangement early.
Faster way to hire
Temp-to-hire can also be a way to hire faster. Paul Temple, an attorney who was previously involved with hiring at a tech startup, used temp-to-hire to quickly bring on and test out new employees.
“We really wanted to get people in the door and we were having trouble doing that ourselves,” Temple says. The startup at first turned to an agency to help vet candidates and then evaluated those employees during temporary periods, Temple explains. Once the firm felt more comfortable with recruiting, it continued to use temp-to-hire arrangements independent of the agency. Temple says the firm valued the ability to test out potential employees’ capabilities before bringing them on permanently
Temp-to-hire can also be a smart way to meet cyclical personnel demand. “It could be temporary blip, it could be long term,” Loewi says. Given the nature of temporary employment, it’s easier for a small business to tell someone on a temporary basis that the need for his or her service has disappeared. Other times, the uncertainty is less about fluctuating demand and more about whether a new position will work at a company in the first place.
Such was the case for Stephen Anderson, founder of Bendyworks, a software development company. In the early days of his firm, he wanted to hire its first graphic designer. Anderson wasn’t completely confident that demand would permanently justify the hire, and wanted to be transparent about that uncertainty. Bendyworks set an initial trial period for their new employee. It was a success, and the designer is one of the company’s longest tenured employees. Today, Anderson prefers traditional hiring when possible, but he recommends temp-to-hire for positions that are experimental or risky.
The nature of a temporary arrangement does come with potential drawbacks for employers. Because the company isn’t completely committing to the employee, the employee may be less committed in return and may carry on a job search through the temp-to-hire relationship.
With that in mind, if the employee is a great fit, hiring experts say act fast. “Communicate early on if you like the person, or be ready to hire them quicker than you planned,” Loewi says. In the case that the temporary hire doesn’t fit well, deliver early constructive feedback, or be prepared to let the employee go.
Some small business owners find that working with an employment agency helps to identify the workers they’re looking to bring on board. Others, such as Anderson and Temple, were able to find potential employees on their own.
“If an employer knows what they’re supposed to do and not supposed to do on the recruiting end, I don’t see the benefit of going through a recruiting agency,” says Nilesh Patel, a lawyer specializing in human resources and employment law compliance for businesses.
For business owners less experienced in the process, an agency is a good choice because it will be familiar with hiring rules. It might be more expensive, says Patel, but it can help a small business to do a more thorough job recruiting the right employees.
A final consideration in temp-to-hire arrangements is the length of the temporary period. Three months is common, Patel says, because typically after 90 days, employee benefit plans kick in. A three-month screening period should also be an adequate amount of time to determine if an employee is a good fit, Patel adds. “If you can’t figure it out after ninety days,” he says “what more do you need to know?”