Want to reap all the best benefits from your contract worker? Here's how.
Hiring your first independent contractor is an exciting step for your business! But once you’ve made the big decision, what comes next?
Managing a freelancer, subcontractor or consultant isn’t quite like managing an employee, but it’s not altogether different either. Turns out there’s a delicate balance you’ll need to achieve in order to reap all the best benefits of hiring an independent contractor for your business – and we’ve rounded them up into one tidy list.
Why is managing your independent contractors so important?
Many people take a set it and forget it approach to their independent contractors – and while it’s true that they are different from employees in many ways (and should be treated differently as a result) – there are still plenty of reasons why you’ll want to manage them effectively.
Here are the main ones:
Good work is hard to come by: Hiring a contractor is beneficial for your business because it allows you access to people who have specialized skills without having to guarantee them a certain number of hours or pay for employee benefits.
But our workforce is changing rapidly, and freelancers, consultants, and subcontractors are now more popular – and more in-demand – than ever. So, when you find a good one, you’ll want to make sure they’re motivated to stick around.
Hiring is hard: Finding a good contractor takes a lot of effort. From advertising the job, to checking qualifications, interviewing and onboarding, the entire process takes time – and there’s no guarantee that you’ll find a solid candidate right away. When you do, you’ll want to offer an environment that’s appealing enough to keep them coming back.
Every dollar counts: Contractors typically receive higher hourly rates than traditional employees, so you’ll want to be mindful of how you’re using their time. Being organized and efficient will help you get more bang for your buck – so you can save money while still benefiting from their fresh perspective and expertise.
7 ways to manage your contractors effectively
Now that you know why it’s beneficial to invest a little extra effort into managing your contractors, it’s time to talk about what that looks like. Here are 7 simple steps to follow:
1. Get clear about why you hired them
You can’t make important decisions about how to manage your new hire until you’ve pinned down exactly what you’re asking them to do. Without this information, they’ll be confused, you’ll be frustrated, and there won’t be any clear parameters to measure their success.
Make sure you provide a detailed timeline (including a final completion date), what the output you’re expecting is, what their role and responsibility will be in the team, and how any changes to this existing plan will be managed if (and when) they arise.
2. Ask what they want out of your partnership
Many entrepreneurs assume that an independent contractor is only interested in their gig because of the money, but this isn’t always the case. Maybe a graphic designer is particularly motivated by a specific creative project you’re completing, or maybe a construction subcontractor wants to expand their skills and feels like your upcoming remodel offers that opportunity.
Whatever the reason, you can use this intel to your advantage because now you can offer your independent contractor the specific benefits you know are most important to them.
3. Set your expectations
Now that everyone’s clear on what you need from your contractor and what they need from you, it’s time to set expectations about what your partnership will look like. The best way to do this is to create a formal contract that outlines a clear scope for your project – including a schedule, milestones, key dates and tasks, project goals, privacy requirements and payment terms.
When creating your contract, it’s important to make sure you don’t overstep your boundaries in terms of how many hours you’re asking your contractor to work and how often you're asking them to come to your job site or office. If you do, the IRS may consider them to be a full-time employee (and you to be their full-time employer) and penalize you for not taxing them properly. As a general rule, you can control the outcome of the work that you hire your contractors to do, but not the specifics about how the work is completed.
Also keep in mind that, if you’re hiring a contractor to work significant hours for you, you may need to issue them a 1099 tax form.
4. Onboard them
This can seem counter-intuitive since they’re not a regular employee – but stick with us. Good consultants or freelancers offer expertise that you may currently lack, but they’re also completely new to your business, so they’ll need to be brought up to speed on how your work gets completed. Take time to explain the goal of the project they’re working on and how it connects to the larger picture for your organization so they can make strategic decisions that align with your business' priorities.
To ensure they get all the information they need quickly and clearly, assign them a single point of contact. You may also want to ask this point of contact to monitor and document all change requests so you can settle any disputes if you run into any communication or compliance issues.
5. Treat them like a team member
Freelancers are human too, so – just like employees – they prefer to work for companies that make them feel good. Rather than accidentally icing them out because they’re not technically part of your team, include them where you can. If possible, ask them to attend important meetings at your workplace, add them to the company email list, invite them to the team lunch and ask about their family and interests outside of work.
Sure, it's important to only extend a contractor access to confidential or proprietary information that they really need to do their work, but taking advantage of opportunities to make them feel more included can go a long way without causing any harm.
6. Respect their independence
Most people who decide to go the contracting route do it because they like the flexibility and autonomy that it offers – so while, yes, we did just tell you to onboard your contract workers and treat them like team members – it’s also important to back off when it comes to when, where and how they do their work.
Rather than micro-managing, trust them to balance their own workload (they will likely have commitments to other clients, too) and don’t be too prescriptive about how they plan to complete the job.
7. Offer feedback
People who work with independent contractors often feel like they can’t, or shouldn’t, offer feedback, but this simply isn’t true. Are you going to set up a full-blown performance review? No, but, at the end of the day, this person has been contracted to work for your business – so it’s you who is going to be held accountable for the job they’re completing.
Start with a simple discussion about what is and isn't working so they can feel more invested in doing what’s right by your business and go from there. Try to include specific examples and client feedback where possible and, if you can, schedule a few one-on-ones to keep the lines of communication open.
One last tip to manage your independent contractors more effectively: save time with Practice
Good management is key to getting the best out of your contractors, but it requires time and energy – two things that you may not feel like you have a lot of as a solopreneur. That's where we come in. At Practice, we've created a client relationship management (CRM) system that's simple, easy to use, and designed to save you (and your clients) loads of time. Try it free today!