Watch CBSN Live

Maximum Work Flow, Minimal Head Count

By any chance, has your organization asked you to do more
work with less head count? Funny: Ours has, too. If you haven't
already found yourself turning to independent contractors for increasingly
mission-critical tasks, don't worry. You will.

The reasons are simple: Freelancers cost less (no benefits,
and you can hire them and let them go with the ebb and flow of the work), and
there are plenty of contractors with industry-specific experience on the market
these days. But working with contractors has its challenges, as anyone who has
done it can attest. It's a delicate process: You need to assess areas
where outsourcing makes sense, negotiate solid agreements with contractors, and
incorporate the contingent workforce into the day-to-day operations of your
business—all while preserving you company's culture.

It's well worth the effort.

Define the Skill Set


Finding the right independent contractor begins with a candid
assessment of your needs, resources, and required expertise. Don’t
just do a Google search. In fact, Valerie Frederickson, who runs her own human
capital management firm, cautions that if you give this part of the process short
shrift you could end up having to hire a second person to mop up the mess and
finish your project.

It’s important to think about the types of people who
have worked out best in your organization, and to be aware of anything that
might lead to a problem. “An ex-executive may have a lot of great
experience, but if he hasn’t reported to a management team for
several years, he might not be a great fit,” warns Janice DiPietro, a
managing partner at executive services firm Tatum.

Danger! Danger! Danger!

Confusing Long-Term Success with Short-Term Potential

It’s easy to assume that someone with a great
long-term track record at one company will automatically succeed under a
shorter timeline. Not so, says DiPietro. Decades of experience in a particular
industry don’t mean that person will understand the demands that come
with a temporary position. For example, the former CFO you bring in to review a
potential acquisition may not brief the rest of the team on his accounting
methods, leaving the company in an awkward position when it opens the books to
potential investors. So look for people with both industry experience, and
experience as a contracting professional. When screening candidates, see if
they are aware of the distinctions. Even people who are just now making the
switch from full-time roles to contractual engagements should recognize that
such projects require a different mix of skills.

Find a Rock Star


The Web is a great place to find part-time employees, but use it
creatively when seeking a skilled professional. The key is to think beyond craigslist
and CareerBuilder, which will lead to a torrent of irrelevant applicants,
especially in this economy.

Scour your personal network. Your BlackBerry is often the
best resource for finding a candidate or someone who can lead you to one. A
former employee who left your company on good terms may be ideal, especially
since that person comes with an understanding of the culture and personalities
of managers. Also, seek out retired professionals. If they don’t want
the job, they’ll surely have extensive contacts. A note of caution:
Beware of self-labeled consultants. They have a tendency to exaggerate the
relevancy of their skills.

Hit up professional associations. Professional and
industry organizations are great for finding people with specific skills, such
as Web gurus, marketing consultants, and creative directors. Remember,
professional associations like to help. It validates their existence, and that
keeps members paying dues.

Consider a search firm. If you need someone fast —
a temporary lawyer, for example, an accountant, or even a top-level executive —
a good search firm can cut your headhunting time from two months to a week. But
you should expect to pay anywhere from $300 to $2,000 to initiate the search
and a success fee of $1,000 to $15,000, depending on the contractor’s

Big Idea


Finding and training a contractor takes a lot of work, so
make sure you have the time it requires. Frederickson says managers often
underestimate the necessary commitment, and they end up with low-quality work
and a high level of stress. Do yourself a favor and delegate some of these
steps to other employees.

Let Them Loose


Working a professional contractor into the mix is tricky: You
don’t want someone to become so critical to your business that it’s
hard to cut him or her loose. Here’s how to strike the perfect

Talk to your regular staff. There’s nothing
that says “welcome” like an employee calling security after
spotting a stranger (your contractor) wandering the hallways. Avoid awkward
situations by telling the staff that you’ve hired a temporary
contractor. Explain why, and take questions.

Supply necessary resources. That includes the obvious,
such as relevant documents and technology, but also be sure to introduce the
person to employees that he or she will be working with. This will allow the
person to work efficiently and avoid unnecessary communication gaps.

What Not to Do

Be Super Secretive

If you offer vague or misleading answers about why you’ve
brought on a consultant, your employees will assume the worst: that they’re
getting squeezed out. The last thing you need is a hostile relationship between
your staffers and your contractor. If you’re bringing in part-timers
because of an increase in work, then your people should welcome them. But you
might also be looking for ways to run your company more efficiently by
gradually using fewer and fewer full-timers. In that case, Frederickson gives
this advice: “Be honest, but don’t say ‘This
consultant is here because a lot of you suck,’ ” he says. “A
better option is to say, ‘I’m concerned about how the group
is performing, and this person is here to help us implement a number of
changes.’ ” Nothing you say will be perfect, but let your
regular employees know something about what’s going on.

Check In


While it’s important to check on the project’s
progress, micromanaging can strain the relationship with your contractor.
Realize that your contractor might have a different work style than you’re
accustomed to. His or her job is to deliver, not to blend in as a full-time
employee. So unless your contractor is disrupting your organization, you should
focus only on what he or she is producing. Establish clearly defined milestones
from the get-go, which will help everyone involved focus on results and not


Three Ways to Measure Progress

Typically, people set milestones with a calendar: By May 31, for example, you will submit the first 50 pages of the report. This
approach, however, might not always make sense if, say, you’re hiring
someone to be on call for emergency workload surges. Here are three other ways
to make sure you’re getting your money’s worth from the
contractor you’ve hired:

1. Account for the hours. Ask for weekly reports on
the number of hours spent on the task, with a brief description of what was

2. Show us the money. If you’ve brought
someone in to figure out how to save money, ask him to track the cost-saving
measures along with the amount saved; require e-mail updates tracking progress
toward a predetermined dollar amount.

3. Addressing those creative types. Creative
professionals may work best when evaluated on the work itself. Even so, ask
such a contractor to submit portions along the way, whether it’s
marketing material or sections of a Web site in development.

Say Goodbye . . . Or Not


Even the most experienced professionals sometimes overstay their
welcome by trying to insert themselves into other projects. Such extended
tenures can become more costly than hiring a full-time employee. Stick to the
original plan, and end the relationship once the goals are met. Experts also
recommend having a plan in place should the project drag on, such as setting up
other indicators — like money spent — that create a clear
stopping point.

Of course, some people are worth working with again, or even
bringing on full time or in another capacity. So be sure to thoroughly evaluate
your contractor’s performance and effectiveness.

Hot Tip

Looking Forward

If your contractor added a lot of value, here are
possibilities to consider:

Make him or her a board member. Often, that’s
a great option for retired executives or people with other obligations but a
keen interest in your company. Board members are generally paid a flat rate,
say $20,000 a year, plus expenses tied to board duties.

Add an adviser. Making your contractor an adviser is
a great way to keep ties with someone you want to turn to for periodic help. That
might be someone you use to help with an acquisition, or someone whom you rely
on for regular discussions about strategy. Compensation can be a flat rate,
equity, or a mix of cash and stock.

Ask them to invest. Many contractors have money.
Retired managers, for instance, often have the resources to invest but still
work as consultants to stay involved in an industry they enjoy. Plenty of
private firms have option pools for investors.