5 lessons for taking on contractors

Leading trouble shooter Rouji Begum-Arnold explains what to do and not to do when taking on contractors

“So the auditors are in and you’re telling me we don’t have proper books and records for them to audit because you don’t have sufficient staff with the right expertise?”

An option in dealing with this kind of situation is to get some temps in. The dilemma for you is what type of temps or contractors do you need for your small business.

Temps, contractors, consultants or whatever title they’re given all mean the same thing. They are providing you with a service that you are going to pay for.

In reality a temp is someone who provides a service for a short period of time and the level of work is often more on a routine basis, mainly to clear backlog or provide additional support when there is sudden shortage of staff.

A contractor on the other hand is providing a service on a longer period, say for six months to a year for a specific task with set objectives to be delivered within a set period, i.e. project work. A consultant is an expert and who could potentially be extremely expensive.

The differences between each of these categories can get hazy. Sometimes a temp can become a long-term temp (two years), sometimes a contractor can be as expensive as a consultant and a consultant doesn’t always turn out to be the expert or at least not in the field you were expecting.

Despite these differences in job titles I shall refer to them as contractors.

The quality of the service that you get from a contractor is largely dependent on your relationship with them. The key is that both the company and the contractor understand very clearly the rules. The contractor should be aware that they are there to achieve a set number of goals within a given, achievable timescale. The company needs to ensure that they receive the results within the time and budgeted requirements.

Lesson 1 – Time invested is time saved. It is critical the company spends an initial 30 minutes or more with the contractor to outline their remit. Specifically, to provide them with essential facts about the company and information required to do the job (It is amazing how many times I have come across companies who just don’t have the time to show someone what they want but need someone in desperately to relieve the pressure from them).

Contrary to popular belief, a contractor cannot just come in and pick things up – there is some basic information that you need to provide. For example, main contact points, giving them access to the necessary computer drives, files, system tools and email.

It’s pointless asking a contractor to set up budget templates if you haven’t bothered to tell them about your organisational structure or the set-up of your chart of accounts. Of course, a good contractor will go and find out, either by interrogating the system or simply asking.

However, this does not help if you haven’t enabled them access to the accounting package. In the meantime the clock’s ticking or more importantly in most cases the costs are escalating.

Lesson 2 – Keep an eye on the clock It is up to you as an employer to periodically monitor that the contractor is meeting your expectations. In addition, it is up to you to keep a tab on the hours that they work. Is it necessary for them to work say 50 hours a week? Moreover, what benefit did you gain from all those extra hours?

One contractor confessed spending a week on a contract sorting out her husband’s stamp collection! After all, why should they have their time wasted just because you do not have any work for them? Another contractor spent six month flitting around looking busy by digging out copies of invoices and then putting them back. At £60 per hr x 50 hrs a week – you do the maths!

Lesson 3 – Terminating the contract When the contract finally ends, either by running its course in terms of timescales or more importantly by the delivery of the objective, you as a company should be taking the initiative to end the contract. This is another key area where many companies go wrong. They let contractors stay on for longer than required mainly as it gives a sense of comfort.

They now have this resource at their disposal and whether they make use of them or not it is a nice to have. However, remember that the whole point of getting a contractor in is because by definition a contractor is not a permanent employee of the company. Therefore, the cost to the company for terminating the contract is zero.

Lesson 4 – What did you pay for? The objective should be clear – “I need you to be able to complete phase X of the project within Y months”. Of course, it might over run. However, this should not be a contentious issue as long there is a reasonable explanation for the delay and you get the delivery of the result.

When a contractor spends six months documenting processes, which are then just filed away, is it his or her fault that you didn’t clarify in their contract that they needed to implement these processes or worse still that you did not give them the empowerment to do so.

Lesson 5 – Value for Money “Those contractors don’t keep me informed of what they are up to”. This was a comment coming from one of my managers. I only had one word to say to her “ASK!” You don’t have to get shirty, just enquire how they are progressing and request that they keep you informed. After all, it’s in your interest to build a relationship with them.

In a particular instant, the manager liked to have contractors with “advanced” technical knowledge. What this manager failed to realise due to not reviewing the contractor’s work, was that they were not so advanced. After all, what is advanced to you may not be advanced to me! Moreover, why pay a premium if you didn’t have to.

In conclusion, the next time you start complaining about the cost of temps, pause for a moment. Ask yourself if you really did invest the time communicating your requirements, doing the reviews early on or even building that all-important working relationship to get the result you expected. If you are dissatisfied then you need to ask yourself what you did wrong! Finally do not be afraid of dismissing under-performing contractors as in all walks of life there are good ones and bad ones.

Rouji Begum-Arnold – ACCA qualified accountant, specialising in trouble shooting. You can contact Rouji by emailing rouji@rouji.co.uk

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