Introduction for meeting topic discussion:
Our next meeting topic is contributed by Louise Woollett-Ratcliffe of Hello Contractors. Hiring someone as a contractor can potentially be a great solution for your business; however, as in most things, ‘’what you don’t know you don’t know” can get you in trouble. In this article, Louise outlines 7 key mistakes you can avoid simply by being informed! From hiring a contractor into what is really an employee role to not getting the paperwork quite right, it’s easy to be tripped up! Not all of you will have hired (or have the need to hire) a contractor, so feel free to share your 60-second introduction with your group. For those of you who HAVE hired a contractor or are considering doing so in the new year, read the article carefully and share with your group a lesson you have learned about hiring a contractor OR something you’ll do differently next time as a result of reading the article.
Seven Mistakes You Don’t Want to Make When Hiring a Contractor Louise Woollett-Ratcliffe
Contracting has long been a popular solution for both businesses and individuals who seek flexibility. Now in this unpredictable environment we are seeing the number of contractors on the rise.
Many businesses enjoy the flexibility and convenience of engaging contractors who are skilled specialists and require little supervision. And many individuals enjoy the flexibility that contracting brings: they enjoy being small business owners and having control over the work they do.
However, there are pitfalls and risks to contracting. Below are seven mistakes to avoid that can be very costly in terms of money, time and resources.
1. Hiring a contractor in an employee role
Businesses should not use a contracting arrangement to avoid paying employee entitlements. Not only is this morally wrong, but it can be financially very costly.
Suppose a business hires someone as a contractor when they are actually an employee. The business may be liable for unpaid entitlements and penalties, as well as the cost of the reputation damage they may incur.
Contractors are generally highly skilled individuals who have a degree of control over when and how they work; they are often business owners on their own account. In contrast, employees have less control over when, how and what they do.
(Note also that the government may be tightening some of the rules concerning dependent contractors: we await the outcome from the consultant document and public feedback of early 2020.)
2. Not getting the paperwork in order
Both the business and the contractor should agree and sign an Independent Contractor Agreement before the job begins. This agreement will clearly establish the role’s requirements, including remuneration, deliverables, ownership of work, insurance obligations, confidentiality, and the notice period. The contractor needs to have an opportunity to review and seek legal advice before signing.
The Independent Contract Agreement ensures that everyone understands the nature and expectations of the role. It will reduce disputes and misunderstandings, and it also ‘adds weight’ to defining the position as a contracting rather than employment role.
3. Breaking promises
The business needs to keep its promises and do everything it said it would do. It makes sense to keep your contractors happy. This will build a strong, trusting relationship, and help ensure that contractors are motivated to do the best they can to create value for the business.
One super important task to get right is contractor payments – contractors need to be paid on time. Contractors rely on on-time invoice payment for their livelihood, and it is just not fair to push their payment out one or two days (or longer) to help the business cashflow.
4. Not defining the role before hiring
Before hiring a contractor, the business should clearly define what the contractor will do: what problems they will solve, what tasks they will undertake, their performance expectations, and where the role is physically based (remote, onsite or a mix of both).
Without a clear role description, the risk is that the contractor will not add the anticipated value to the business. The problems or opportunities they were meant to be addressing will remain unresolved.
5. Not considering both the pros AND CONS of overseas contractors
Once you have defined the role, you may decide to employ a contractor from overseas. Lower cost can be a significant advantage here. But it pays to be aware of the potential pitfalls, with the main one being that many overseas contractors require more management and supervision. Also consider communication issues, time zone delays, the need for local New Zealand knowledge, and (if they are customer facing) your market’s expectations.
There are plenty of agencies and mega-contracting recruitment platforms that can help you find overseas contractors. Be aware that many of these intermediaries take a high commission (and it can be challenging to ascertain how much the contractor is actually being paid).
6. Cutting corners when finding the right person
Depending on the size of the role and the value to the business, a similar approach should be taken to hiring contractors as to hiring employees. No matter where or how you decide to hire your contractor, face-to-face interviews (in person or via live streaming), references and (if appropriate) portfolio checks should be undertaken. Cutting corners here can be costly – the business needs to be as sure as they can, that the contractor is going to meet their expectations.
Note that, as well as the skills, experience and technical knowledge, the business also must consider whether the contractor has the communication skills, self-motivation, independence, organization and confidence to work as a contractor.
7. Not giving the contractor the time they need
The business needs to plan how they will manage the contractor, especially if it is a remote arrangement. Will there be set deadlines? Will regular weekly meetings? Who will be responsible for communications to the contractor?
Although most contractors are skilled professionals and require less supervision, they need some management time to ensure that they do their best work. They can’t do it alone! The general rule of thumb is: the lower the contractor’s cost, the more management time will be required. Managers need to commit and be disciplined, ensuring they give their contractors the time that they need.
There is a wonderful talent pool of skilled professionals who are making a lifestyle choice to be contractors. With a bit of planning and forethought, the mistakes listed above are easy to avoid, which means that contractors can be a fantastic and valuable resource for businesses in today’s environment.
Louise Woollett-Ratcliffe is known as The Contractor Connector. Her focus is empowering mums and parents by helping to match them with flexible working solutions they can arrange around their parental (and other) obligations. Hello Contractors connects businesses to their ideal contractors.
Next Meeting Topic
INTRODUCTION FOR NEXT MEETING TOPIC:
As a great follow-up to Catherine Stapleton’s article last time, Carole Bates of PeopleKind shares her thoughts on keeping the engagement with your team members high by communicating effectively with them! She starts by outlining the 6 different types of communication your people are looking for (use these as a checklist to audit your own communication!) and then moves into the various ‘how’ bits of implementing an effective communication and feedback strategy and system for making it happen!
As you prepare for your 60-second intro this time, read the article and (IF you have a team you manage) share your insights around how your own communication with your team stacks up against the ‘best practices’ Carole outlines.
Effective communication with your teams can have a significant impact on keeping people engaged in their work and focussed on the right priorities to support the success of your business. Unfortunately, regular communication is not always prioritized amongst the many demands of running a business. This article highlights four key areas where effective communication with the people in your business is important and shares a simple communication framework to plan these communications, along with some tips on how to communicate successfully.
What kind of communication are employees looking for?
Survey questions that are typically used to measure employee satisfaction with communication include the following:
- The leaders at my company have communicated a vision that motivates me.
- The leaders at my company demonstrate that people are important to the company’s success.
- The leaders at my company keep me informed about what is happening.
- I know what I need to do to be successful in my role.
- My manager gives me useful feedback on how well I am performing.
- I receive appropriate recognition for my work.
(These specific questions have been taken from the Culture Amp survey: www.cultureamp.com).
People are looking for their leaders and managers to keep them in the loop about long-term company goals and how the business is performing. Individuals also want to understand how their work contributes to business success, get feedback on how they’re doing and be recognised and rewarded for their efforts. If these needs are not met, people can become disillusioned and demotivated and start thinking about moving on.
A system for effective communication
The table below can be used to create a communication framework for interacting with your teams. Think about how often you need to communicate in each of the four areas and the best way of exchanging information. Make these communications a firm commitment in your calendar so that communication with your people becomes a priority.
See blog for table here.
Tips for implementing a communication framework
To help you implement your communication framework, here are some tips about when and how to communicate.
Communication about business strategy can be a great opportunity to generate enthusiasm and excitement about the future. Share your long-term goals and give people regular updates on progress. It’s a great way to remind people they’re part of a successful business. Even if your business faces challenges along the way, keeping the team updated on how challenges are being addressed can boost morale. One of my clients has a quarterly business planning session with an adviser and he provides feedback from this meeting to his team. A monthly or quarterly team meeting would suit most businesses.
Regular communication about workflow really helps people to prioritize effectively and enables you to trouble-shoot any problems in a timely manner. Technology can be useful in supporting workflow management and there are a range of workflow management and collaboration tools available. The frequency of workflow meetings depends on the nature of the business and company culture. Some teams prefer a daily, 5 minute “stand-up” meeting, while others work well with a weekly or fortnightly catch up.
Feedback is essential to keep people engaged and to develop skills – ideally a mixture of on-the-job feedback and a more formal feedback process. When providing informal feedback, remember to try and catch people doing something right, rather than defaulting to a “no news is good news” approach where they only hear from you when things go wrong.
There are several options for implementing a formal feedback process, including using HR software systems or paper-based processes, applying a rating scale, etc. Whatever approach you take, the following steps will ensure that you have a meaningful and successful feedback meeting:
- Provide the opportunity for people to evaluate their own performance.
- If you see things differently, explain your point of view with specific, objective examples.
- Constructive criticism should be delivered in a neutral tone and with empathy.
- Accept that people sometimes take a while to process feedback – they may not fully accept the feedback until after the meeting.
- Train your managers if they feel uncomfortable with this process.
- Spend more time looking forward than looking back. Talk about development opportunities and career goals.
- Focus more on maximising people’s strengths than trying to fix their weaknesses.
- Document a development plan and follow it up on a regular basis.
Formal feedback meetings should be held at least annually, with a quarterly follow up of development plans.
Communicating effectively about strategy and workflow and providing feedback to your people will impact positively on engagement. Celebrating success is another way of boosting staff morale, by acknowledging achievements. Rewards can include anything from public recognition to bonuses.
If you’re serious about driving engagement, an engagement survey can be a great tool. If you decide to take this step, you need to be prepared to accept constructive criticism and take action to address problems. Surveys can have a negative impact on morale if not taken seriously by management. On the upside, research on employee engagement shows that positive engagement results in better staff retention, productivity, profitability, growth and customer service. It also strengthens your employer brand which can help to attract talent.
Investing time in regular communication with your people about your business and their work will pay off in terms of business results. Communication in each of the four areas above doesn’t need to be time-consuming or onerous. These days it’s easier than ever to get people together, even if they’re not in the same physical space
Carole Bates is the owner of PeopleKind Consulting – you can read more about how she helps her clients here: https://www.peoplekind.co.nz/