Many companies use a combination of permanent and contingent workers in order to create flex within their people. Permanent staff are seen as those who have a long term future with the company, and whom the organisation will invest in with benefits, pastoral care and investments in training and development. Contractors, on the other hand, are workers with specific knowledge, skills or experience that are needed, and their higher than a salary rates reflect the fact that there is no long term commitment past the initial contract, and they tend to have shorter notice periods and considerably fewer benefits, not getting paid for holidays or sick days.
Over the years, the focus of how to best utilise your permanent and contractor workers has become heavily focused on financial reasons than the descriptions above. When business is good and growth is forecasted, there is an emphasis on hiring permanent staff to grow the organisation. When the economy contracts, contractors can plug gaps in the resourcing requirements with the company safe in the knowledge that, if needed, the contracts can be cancelled quickly and cleanly. In larger organisations, the decision can also be made on where the line manager has the most influence. They may have the ability to hire contractors (or consultants) more easily than permanent staff (which tends to trigger a host of further HR processes) and so will make the decision accordingly. If you are under pressure to deliver quickly, then naturally you gravitate to the options that can move fast and under your influence as much as possible.
But there is a growing problem - on many occasions, organisations bring someone in who they would ideally like as a permanent member of staff, but who is working as a contractor and does not want to take the inevitable hit to their monthly take home pay. So they hire the contractor, justifying it by using the argument that as a contingent worker, they can be dismissed when needed. If this individual brings in real value to the team, whether by generating income, or by having technical knowledge that their permanent team mates do not have, then the ability to remove them reduces until a point in time where they ultimately have the power over how long they stay with you and how much you pay them for doing so.
When the decision to hire is made on financial considerations, but the decision to fire is made on ability to deliver considerations, it creates the risk for many companies that they will continue to see increasing financial burdens as the amount of people who are relied upon increases, which could lead to spiralling costs and ultimately, the decision to reduce spending via reducing the workforce for both permanent and contingent staff.
As part of the Ditching the CV, the assessment of the right mix of perm and contractor staff is a critical first step. By returning to the distinction between the two types of worker, it becomes clearer that your decision on who to hire should originate from your expectations of that hire: if you are expecting them to be part of the future of the organisation, to help it grow and commit to building it to new heights, then you need permanent hires. If you are looking for specific knowledge, technical skills or targeted experience, which will be applied to current projects but that may not be needed in the future once the project is completed, you select contractors. The selection of the right people is made based on an understanding of the right mix needed to be effective in your organisation, and makes it far simpler for hiring managers to know what type of team member they need related to what type of objective they have.