This week’s post is written by Lucy Rose. Thank you, Lucy, for writing this for me.

The question of whether to employ or contract is one as an old as time, yet the difference might not be as clear cut as you think. Significant upheaval is expected in light of the IR35 tax changes, according to consumer watchdog Which?, and this is making employers re-assess their relationship with contractors and look further into their freelancing policy. Contractors typically bring an ease of interaction for employers, with payroll and tax freed up, but they don’t build the company up. New hires often bring a converse set of benefits and problems. However, for the simple matter of productivity, it’s arguable that workplace culture is more determinative than the title of the employee.

Understanding the base benefits

Before looking to shift workplace culture away from the employee vs contractor conversation, it’s important to look at why you would hire one or the other. A good example of this is in the recent high-profile news case of civil service contracting, where it was seen that a £56m bill had been racked up over years for consultancy fees. The benefits of contracting are clear — contractors are ready made, have the skills to get straight to work, and do not require the same range of benefits (such as pensions) that you would have to offer a full-time hire. Their work is contractual, meaning it has to be completed to a good level — no performance management is needed, as good work will be rewarded and is already paid for. Avoiding poor results is as easy as avoiding the consultancy. However, consistently approaching contractors does lead to a lack of built-in skills within that business, resulting in a skills gap that is built up over years. The company will not grow equally. This is a long-term strategy perspective — what does this mean for the short term?

Not too much

In reality, productivity is not hurt by hiring from either side of the divide. Productivity is instead determined by the workplace environment and culture. This much has been confirmed by research analysed by the Harvard Business Review, who outlined that in workplaces with disengaged workers, healthcare expenditure rises by 50% when compared to other low-pressure environments. Furthermore, there’s a 50% higher rate of voluntary turnover — making new hires practically irrelevant, as you gain none of the benefits of having a continuity culture. Having a progressive environment for both contractor and full-time hire is crucial, then — but how?

The remote worker

According to Consultancy.uk, the rise of remote working has shed a lot of light on how this can be achieved. Home working has been overwhelmingly positive, and for a few key reasons — work/life balance, communication and decision making. Workers feel more able to enjoy their personal life, more able to pick and choose when they communicate, and more empowered to make decisions. This all points towards the value of a hands-off workplace. Allowing workers the space to enjoy their role and work at their own pace is going to be more beneficial than any concern over the contractor vs full time divide.

With that in mind, focus on creating a productive workplace. Empower staff, contractor or not, to work independently. Give them the benefits of the freelance work pattern, and you’ll realise the benefits rapidly.

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