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Contracting/Temping - Viable Alternates in Tough Times

#1
Contracting/Temping – Is it in YOUR career future?
(a companion thread to Consulting – Is it in YOUR Career Future?)

Added in edit to bump this thread and add specific link to a chapter in Jim Ziegler's Contract Employee's Handbook
Resumes for Contract Workers
http://www.cehandbook.com/cehandbook/docs/cehandbook_chapter_05.pdf
(If you are contemplating Contract Work, at least READ THIS before you send out a resume. Note: The pages load slowly - be patient!)

I do not have permission to post a copy here in the Cove. The complete handbook can be found here:
http://www.cehandbook.com/

In my experience over the last forty years, every time there is a downturn in the economy and full-time jobs seem to become scarce, a lot of folks think they can easily join the ranks of those “high paid consultants” they hear about and occasionally see as shadowy figures talking and dealing with top managers at their organization. What if you, personally, are not at the level of "consultant" (yet?)

Reason for this thread:
As the economic noose tightens more and more in the USA and the dreaded "R" word (recession) rears its ugly head and the ripple effect expands across the globe, more and more organizations are loathe to hire full-time employees. However, they still need "warm bodies" to perform day-to-day tasks within the organization. To fulfill that need, they take one or both of two courses:

  1. direct hire of temporary or part-time workers
  2. contracting with an agency to provide workers for temporary or part-time employment.
As this thread progresses,

  1. We'll talk about the pros and cons of both avenues and compare them against full-time employment.
  2. We'll talk about the tips and traps BOTH employers and employees need to be aware of.
  3. We'll talk about wage scales, hidden costs, benefits, risks, and many other things associated with "working without a net."
Background
(an excerpt from Consulting – Is it in YOUR Career Future?)
Many of my colleagues and associates around the world actually ARE those high paid consultants who deal with the top managers at organizations. When we talk and correspond, one of the main topics that comes up almost every time are the folks who hold themselves out to be “consultants,” but the only thing “consultant” about them is the title they put on a business card. Often we say, “What a shame this guy is so clueless about how to be a REAL consultant.” And then we jump to another topic and mentally dismiss the person from further consideration. On a few occasions, we say, “Wow! That guy is a menace to the profession. He’s so bad, his stink rubs off on the rest of us!” But again, we do nothing, because our “professional ethics” prevent us from bad mouthing a competitor in public, even a stumblebum who gives the word “consultant” a bad taste in anyone’s mouth who crosses his path.
So, everybody isn't ready to step up and be one of those high paid [sometimes] consultants. What else can they do when jobs are tight?

Well, I can’t inject them with skill, experience, and a psychological attitude to become an instant consultant, but I can create a thread folks can read and do a little self-assessment and gap analysis to see where they stand on the road to getting gainful employment in ANY field, not just the Quality profession.

Basics
First, we need just a few important definitions. Many folks confuse the terms “consultant” and ”contractor” and often use them interchangeably. Most folks I consider “consultants” probably will agree on the following definitions (If you do NOT agree, feel free to write a post detailing your reasoning.):

Consultant: An independent business person (or member of a firm of such business persons) whose primary value given is ADVICE or EDUCATION. This would include, but not be limited to, folks who advise about mergers and acquisitions and whether to add or delete product lines or enter new markets. It would also include on-site and off-site trainers of employees of an organization who come in to teach something not readily available from experts within the organization (Hazmat processes and procedures, English as a second language, etc.)
Contractor. In the sense we use here, a contractor may be completely independent or work for an agency, but he is essentially a temporary worker performing a job which would be handled by a full-time employee at an organization, but for a number of reasons , the organization prefers the temporary status of the person fulfilling the function. Such temporary contractors include folks working as technical writers, inspectors, assemblers, internal auditors, statisticians, accountants, bookkeepers, typists, clerks, even at supervisor levels, like crew chiefs, quality managers, design engineers, process engineers, etc.

The primary difference for the purpose of this discussion is the contractor is bringing technical skill to the table, but rarely is he giving advice in planning or strategy or spending time training folks to do a task or learn a skill so he can move on to the next organization.

A secondary difference, but often blurred, is that most consultants get paid a fee for accomplishment that rarely has a direct connection to the number of hours worked or the number of pieces inspected or the number of documents written. Blurring may occur when trainers get paid according to the number of students who successfully pass a class. A consultant who comes in to help an organization achieve registration to ISO 9001:2000 may get a flat fee for educating and training the staff to be ready for a third party audit, with a bonus paid when the organization actually gets the certificate of registration. Such a consultant helps select the proper registrar, helps organization personnel write manuals and procedures, trains organization personnel to conduct a gap analysis and become internal auditors for continuing evaluation of the operations against the organization plan.

If the guy just comes in and grinds out a manual and a pile of procedures by himself in a little room, then turns them over to the organization without training the organization folks to do it themselves, the guy is really only a contractor – a technical writer for hire!

Who are these contractors and temporary employees?
Most often, these are folk who, as employees of various sized organizations were able to fulfill their tasks, but they didn’t have to worry about the business side of paying for everything like travel, business cards, phones, computers, temporary housing away from home, health insurance, next week’s or next month’s or next year’s assignment and income. Then, almost always for reasons that had nothing to do with their skill level, they find themselves laid off from a full-time job. Money is tight and they need some income while they look for another full-time job. They are not ready (by virtue of skills, experience, or psychological attitude) to take on the role of "consultant" as outlined above. Many really want full-time employment with all the security (less and less as time goes by) and the benefits (sick pay, medical insurance, 401k, etc., etc.) and some are content to take a less stressful path of working only a few months a year and pursuing other things when they aren't working.

Let’s summarize
  1. A consultant gets paid for giving someone advice or showing him how to do something
  2. A contractor gets paid for doing something or performing tasks which in some organizations are done by full-time employees
  3. Just calling oneself a consultant does not make one a consultant – it requires running a BUSINESS of consulting.
  4. Technical skill in a subject is not sufficient to be a successful consultant – one has to be able to transfer knowledge and skill or convince others to perform tasks based on that technical skill.
  5. There are resources available to determine via “gap analysis” whether one has the “right stuff” to be an independent consultant.
  6. Many folks do not aspire to be consultants; they prefer working for someone else so they can focus on the technical aspect and skill required for the task.
The primary choice - independent or work for an agency?
This is really a more difficult decision than most people may think. There is a lot of anecdotal evidence that many folks have built up such good personal networks of people familiar with their skills and experience that those people come rushing with offers for temporary employment once word gets out the individual is available.

Sadly, the evidence is anecdotal, and most folks finding themselves unemployed don't have that kind of network. The remaining (and sometimes ONLY) choice is to find an agency which handles workers with similar skills and depend on that agency to find employers needing folks with those skills and do all the negotiating to obtain assignments for the contractors in the agency pool of workers.


TIPS, TRICKS, AND TRAPS OF TEMP AGENCIES
I could waste time and space recounting some of the horrors of dealing with BAD agencies. Further, I could list the detailed reasons for each of the trips and tricks agencies put up as roadblocks to contractors getting a fair percentage of the total compensation paid by the employer who uses the contractor's services. I am providing a link to a website of an old acquaintance (Jim Ziegler) who does the rant much better than I.
CAVEAT!:
Jim Ziegler has an ax to grind in that he operates a service for contractors who choose to deal "directly" with employers. It's not a bad deal, but if you reach the point you can deal directly with employers without an agency interceding, you really don't need Jim Ziegler's middleman service.

That said, Jim's website is
[SIZE=-1]The Contract Employee's Handbook[/SIZE]
(http://www.cehandbook.com) - be sure to look over his Contract Employee's Bill of Rights.
From my own point of view, the most egregious part of dealing with any agency middleman is the contractor worker is often kept in the dark about the true value of the job he performs by not knowing the total fee paid to the agency by the employer, since some agencies siphon off 50% or more of the fee paid by the employer for performing these services:

  • Job matching.
  • Contract negotiation.
  • Invoicing, collections and payroll.
  • Accounts receivable factoring.
  • Employer of record.
Some folks are content to be exploited by the middleman agency, reasoning, "it's just until I get a full-time job." That's a personal choice!
The second most egregious factor is a "non-compete" clause between agency and contractor which requires contractor to pay a humongous fee to the agency if the contractor is offered and accepts a full-time job with the employer. Alternately, the contractor is barred from working directly for the employer (as employee or contractor) for periods up to one year after the last contract with that employee to that employer handled through the agency.

My advice: consider Deming's theory "the System of Profound Knowledge" (SoPK) in everything you do. Knowledge is power! Try to know as much about the entire relationship between agency, employer, and contractor as possible BEFORE entering into a binding contract.

This is all for now. Future posts will discuss finding an agency with which to work and positioning yourself to earn the highest possible contract fees or temporary hourly wages..
 
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#2
Re: Contracting/Temping - a viable alternate in tough times

  1. Questions or comments so far?
  2. Are you currently working for an agency as a contract worker?
  3. If yes, what do you like/not like about the arrangement?
  4. How's your net annual income compared to your last full-time job?
  5. If not currently working as an "agency contractor," did you ever work as one?
  6. For all who ever worked as an "agency contractor," what did you like best about the arrangement? Least?
Most importantly, what do you hope to learn from reading this thread as we continue to add to it?
 

harry

Super Moderator
#3
Re: Contracting/Temping - a viable alternate in tough times

A disgruntled 'Cover' from Singapore started this thread recently: Can an unsatisfied client withhold the consultant's fee?

To me, this post is closely connected to this subject because the business model of many Consultants (especially the big ones with hundreds of clients) over this region is based on the 'Agency' model. The marketing team of the 'Consultant' goes around soliciting for jobs with an impressive list of projects completed and when a job is landed, they engaged a 'Contractor' to implement it and get a cut of up to 40%-50% of the already low fees due to fierce competition.

With such a meager fee, it is without doubt that the Contractor will try to be 'skimpy' in their service and time. The 'Client' suffers, the 'Contractor' barely survives and the 'agent' is still smiling - and growing from strength to strength because uninformed end users are every where.
 
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Jen Kirley

Quality and Auditing Expert
Staff member
Admin
#4
I tried going this route when my SCI plant closed in 2001, and I found the going exceedingly difficult. I gained a new respect for consultants who can make a go of it. I was asked to write a quality manual for a government contractor that clearly had no real intention of using it, and I did a USDA SBIR research study to project the wider economic benefits of improving QMS consulting and making it widely available in rural areas. The idea was to improve the consulting model (too often the consultants are inept and there is too much variation in the application of quality tools) to the point where it could be...franchised, for the lack of a better term. The project did not make it to Phase II, so I was not able to launch the model. I think the idea was before its time.

I did write a book (not published) titled Herding Squirrels, as well as an accompanying workbook of simplified Seven Management Tools (designed for laymen). I developed my Master Scorekeeper I and II tool kit (I believe you have seen them Wes) and received mixed reviews about them.

I remain open to the idea that these products might yet get published and distributed, but I am once again happily employed with a good benefits plan (phew), so the sense of urgency has cooled.
 

CarolX

Super Moderator
Super Moderator
#5
Re: Contracting/Temping - a viable alternate in tough times

For all who ever worked as an "agency contractor," what did you like best about the arrangement? Least?
I actually started with my current employer as a "temp" (as we call them). This arrangement worked nicely for me at the time. I did not need benefits, and with 2 small children - I felt no guilt when I took time off to care for the fever or runny nose.

I was a "temp" for almost 2 years - the only thing I didn't like was the constant battle for my holiday pay (a benefit that became available thru the temp agency after 6 months).
 

Jim Wynne

Staff member
Admin
#6
I took a six-month contract position that turned into eight years. It was unusual nopt only in duration but also in the fact that most contract arrangments that don't include benefits, but I was considered a full-time employee of the agency I worked for, so I did get good benefits. All in all it was a pretty good arrangement. The reasons that I wasn't ever directly hired are complicated, but suffice it to say that I was happy with the situation and was glad in the end that I had remained independent.
 
#7
The disparity between Harry's post and Jim's reflect my experience and that of my fellow executives as we talk about the pros and cons of hiring temporary workers either directly or through agencies.

Even Scott Adams, the creator of the Dilbert comic strip, visits the topic of contract workers from time to time, pointing out the ironies inherent in the system.

The plain fact is the bad agencies which exist are able to stay in business only because so many employers are ignorant about what they really need for the best value to their organizations. Worse, there are large numbers of people in the position of contracting temp agencies who are downright greedy and on the take for personal enrichment, fed by unscrupulous agencies who provide dinners, vacations, luxury gifts, and cash to those greedy folks and provide substandard workers in return to afford the under the table payments to the employer. This kind of sums up Harry's post.

The good agencies, exemplified, perhaps, by the one in Jim Wynne's experience, look to the long term view and try to excel by providing top notch workers who can fulfill an employer's requirements, avoiding the costly process (for both employer and agency) of continually cycling in new workers who have unproductive time getting oriented to the employer's systems.

When a good agency finds a good worker (skilled, talented, and stable [willing to work for extended periods at the same employer]), it recognizes a valuable asset and will find ways to keep such an asset, paying the worker a greater percentage of the employer fee and including the "stable" ones in its own employee benefit plans. In fact, many contract workers are happy with the golden handcuff aspect of remaining with a good agency rather than seeking full-time employment with a direct employer.

In other threads we discuss the turmoil when an employee is saddled at a boring or dead-end job. It is a major disruption to go through the job hunt all over again to find a better work environment. Contract workers for a good agency, however, usually have much less muss and fuss in asking for a different assignment, knowing that "someone" in the agency worker pool would be willing to fill in the gap, causing relatively little disruption at agency or employer and almost zero disruption for the exiting and incoming agency workers.

In other posts, we'll explore the VALID and INVALID reasons many employers turn to temp agencies. The hallmark of a good agency is being able to recognize both valid and invalid reasons and provide appropriate staff for either. We also explore how those valid and invalid reasons for hiring temp workers affects the individual temp worker, why the worker should be aware of which situation he's entering, and how the worker can survive for the duration of the assignment.
 
G

Geoff Withnell

#8
This topic is a great idea. I have been a "professional contractor" or hired gun :) for most of my career. I am noiw working for a consulting firm (BearingPoint) and I guess that makes me now a consultant. A great reference for those interested in contract emploiyment is the magazine CE Weekly, to which I still keep an electronic subscription. They have a number of very good services for seeking contract employment, and at what I believe are reasonable rates. Of course the rates are reasonable because the contract agencies ads pay most of the cost, and Jerry Erickson makes no bones about needing to keep both the contractors and the agencies happy. His article on contracting, available here http://www.cjhunter.com/contracting_intro.html
covers most of the ground clearly and fairly, I think. If you are serious about seeking contract employment, you could do a lot worse than trying his $30 12 week subscription. I have no financial interest in CEWeekly.

Geoff Withnell
 

Coury Ferguson

Moderator here to help
Staff member
Super Moderator
#9
Re: Contracting/Temping - a viable alternate in tough times

[*]Questions or comments so far?
No.

[*]Are you currently working for an agency as a contract worker?
No.

[*]If yes, what do you like/not like about the arrangement?
No comment, since my answer was no.

[*]How's your net annual income compared to your last full-time job?
Equal to.

[[*]If not currently working as an "agency contractor," did you ever work as one?
No.

[[*]For all who ever worked as an "agency contractor," what did you like best about the arrangement? Least?[/LIST]
N/A

[Most importantly, what do you hope to learn from reading this thread as we continue to add to it?
Is it really worth it. :notme:
 
#10
This topic is a great idea. I have been a "professional contractor" or hired gun :) for most of my career. I am noiw working for a consulting firm (BearingPoint) and I guess that makes me now a consultant. A great reference for those interested in contract emploiyment is the magazine CE Weekly, to which I still keep an electronic subscription. They have a number of very good services for seeking contract employment, and at what I believe are reasonable rates. Of course the rates are reasonable because the contract agencies ads pay most of the cost, and Jerry Erickson makes no bones about needing to keep both the contractors and the agencies happy. His article on contracting, available here http://www.cjhunter.com/contracting_intro.html
covers most of the ground clearly and fairly, I think. If you are serious about seeking contract employment, you could do a lot worse than trying his $30 12 week subscription. I have no financial interest in CEWeekly.

Geoff Withnell
Excellent reference! Thanks, Geoff. I have very few quibbles with Hunter's description of contract work. His listing of VALID reasons for organizations to hire temps through an agency is excellent. His description of the problems associated with being a completely independent contractor is muddled (perhaps because of bias for the temp agencies that provide HIS revenue?)

There is one thing I want to point out about the sample resume Hunter provides: It is different in style and scope from a resume focused on generating a PERMANENT full-time job! The sample Hunter provides is exactly aimed at satisfying the "gatekeeper" humans or software who will scan the resumes looking for candidates to fill specific tasks on a specialized program. It does (and should) have lots of buzzwords, specific skills, and experience, but does not have much, if anything, about how those skills and experience will benefit the employer.

As an employer, I often drew an analogy between temp workers in a manufacturing or office situation and skilled tradesmen I might hire to repair a plumbing or electrical problem. Because I was focused on accomplishing a specific task (repairing a leak, running electrical power to a new machine, grinding out word processing, or operating a production machine for a rush order during a vacation period when full-time staff were in short supply), I knew exactly what I wanted the worker to do in the short term and had no regard for any future long term value, I was ONLY interested in the skills and didn't care much about the personality or initiative of the worker in adding value to my operation.

Because of that short-sighted focus, I was willing to trust a reputable agency to "guarantee" the skill of the temp worker (some give agency contractors practical exams to "certify" them to work specific tasks.) With such guarantee, I didn't expend much energy interviewing the temp workers. The guarantee, of course, was merely that the agency would instantly replace a worker who was incapable of performing the task as agreed and continue doing so until we got one that could perform the task. Obviously, a good agency protects its reputation by providing only competent workers, however it makes that determination or selection.
 
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