Contracting correctly

How to get the best from contractors

Contract staff come with their own set of challenges, and it’s important to get management of them right, for both harmony and cost reasons.

A UK report commissioned in 1999 by Highams Systems Services Group revealed that finance organisations were spending hundreds of thousands of pounds worth of management time finding and managing external IT contractors. While part of that was driven by Y2K compliance, a lot of money is still being spent on contractors.

A article says organisations need to ensure they have sound reasons for bringing contractors on board.

“As a general guide, permanent staff are used for strategy and business architecture, while freelancers are hired for specialised project work or time-sensitive developments.”

The article says contractors can also be used to “cover employment shortages within IT departments, to transfer skills to full-time personnel, or to improve performance figures by keeping permanent headcount low”.

Companies can hire contractors directly or go through an agency. "Agencies act as high-speed links to skilled resources," the article says. They can advise on rates, skill shortages and availability. Even if they can’t find a perfect fit for an organisation immediately, they can advertise for the right person and then carry out screening and interviewing and, if necessary, testing.

When an agency finds a suitable person it can draw up contracts and offer ongoing support to both parties.

The article warns that the quality of such agencies can vary and organisations should screen them just as they would a potential employee, and look for ones that understand the culture of their company and the technology they use.

The article advises that organisations establish early on what they are looking for in a contractor. In addition to the obvious — technical knowledge, ability and previous experience — issues like personality fit, flexibility, problem-solving and attitudes to supervision also need to be considered.

"Even if the contractor is only with us for a short time, he needs to become an integral part of the team, and so must be trusted by other members of staff,” says one IT leader quoted in the article. “He also needs to be able to communicate well with others, and give and receive feedback."

The article says that while contractors value their autonomy, they can’t just be left alone after they’ve been briefed.

“Particularly because they do not have the luxury of a 'settling in period', freelancers need care and attention, in the early days of a contract at least. A good manager will therefore provide clear direction, and agree a set of structured goals with the contractor.”

Because of the need for a good reputation, there are rarely problems with contractors, the article says. However, managers should watch out for friction.

“Tensions can occur between permanent and contract staff, typically when there is resentment about the amount of money the freelancer is being paid (although such details should be kept strictly confidential), or the contractor is not seen to be pulling his weight.”

Other issues can include weak technical skills, unsatisfactory levels of productivity or absenteeism, poor time keeping on the part of the contractor and browsing the internet.

An article in Human Resources Magazine quotes Telstra’s IT sourcing vendor manager, Diane Grant, on how she manages the company's contractors.

“We make sure we keep our contractors aware of their obligations to manage their employees working at Telstra. Our vendors manage induction, timesheets, agreed timelines for completing projects, compliance with EEO, privacy and OHS policies, eyesight and hearing testing and security clearances.”

The vendor even does performance evaluations for the Telstra contractors.

When it comes to what should be contracted out, the article advises against contracting out work which could mean a loss of intellectual property.

It also says that having a written contract is vital.

“Leave nothing open to interpretation and cover everything from length of the contract, performance expectations and appraisals, terms and conditions, confidentiality agreements, pay rates, adherence to company policies and procedures, insurance and taxation responsibilities to termination provisions. Have it drafted or approved by a lawyer, preferably one who specialises in industrial law.”

Mills is a Dunedin-based writer. Contact her at

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