Contract-to-hire: Why this recruitment strategy makes sense for new talent acquisitions

Johann van Niekerk, co-founder & CEO, Outsized

A quick look at most LinkedIn job postings reveals the lengthy hiring procedures with multiple interviews, tests, and tasks. This outdated process is painful for organisations and negatively impacts candidates. The worst part is that, despite these efforts, there is no guarantee that the business and the talent will be the right fit.

The best way to determine fit is to see how someone performs in the role. This is why a shift to contract-to-hire is the emerging strategy for forward-thinking organisations looking to de-risk the hiring process and ensure good-fit. When executed fairly and transparently, the contract-to-hire approach benefits both employers and independent talent and eliminates the painful and largely ineffective processes embedded in traditional recruitment.

Growing trend in South Africa's recruitment landscape

Contract-to-hire is still a relatively new concept in South Africa, but it is growing in acceptance as more businesses grapple with the struggle of finding good permanent resources and the inefficiency of long recruitment cycles.

Contract-to-hire empowers organisations to do two things:

1. Tap into the booming freelancer ecosystem full of top-tier talent
   
2. Try out skilled talent on a temporary basis before deciding whether to commit to a permanent engagement
   

By upgrading recruitment practices to the contract-to-hire approach, organisations are able to meet their immediate objectives of plugging urgent talent gaps, while also assessing candidates in the role with the potential to go permanent later down the line.

It is important to note that in South Africa, labour law states that you cannot hire someone on a contract basis with the promise of being made permanent later. Communication thus needs to be clear and transparent that there is an option for the employer to make a permanent offer based on performance, but this is not guaranteed.

The contract-to-hire process moves faster, costs less, and the realities of the job (as well as the actual skill level of the worker) come to light a whole lot faster. Win-win.

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Why contract-to-hire is the smart choice for reducing recruitment risks

One of the most appealing reasons for organisations to pursue a contract-to-hire model is its ability to decrease risk. Hiring someone new always carries a risk, as you won't know their true capability until they've been in the job for a while. However, with a contract-to-hire model, a business does not have to commit to a fixed cost until it is confident in the likelihood of a successful fit.

The flexibility and trial period inherent in the contract-to-hire model also provide significant advantages. It is particularly beneficial for attracting talent, venturing into new business areas, or filling capability gaps. Rather than requiring skilled talent to complete tests and assignments, employers can directly observe their performance in a real-world context.

In a market where demand for skills is high, organisations need to be agile. Contract-to-hire helps eliminate the risk of losing great skill to competitors with less cumbersome recruitment processes.

How contract-to-hire serves talent and enterprises alike

The benefits of contract-to-hire go both ways. Independent talent is benefiting from this more effective hiring model. Just like organisations, individuals need time on the ground to truly understand the work and workplace culture.

This model makes sense for skilled talent because it provides a trial period for them to assess whether the employer is a good fit for their needs and services before making a commitment.

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Many independents choose to work for themselves to maintain control over their work terms. With high standards and sought-after skills, they have the flexibility to select from various opportunities, whether short-term or permanent.

Contract-to-hire allows talent to evaluate if a company enables them to perform well and grow their skillset. It also offers a chance to get a foot in the door at dream companies on a contract basis, with the potential for a permanent position. When they showcase their skills, create value, and meet deadlines, they can leverage their performance to negotiate a permanent offer. This provides both talent and employers with tangible evidence of value, which is more compelling than negotiating based on a resume and often unverifiable past performance details.

The win-win solution for today's talent and recruitment challenges

Contract-to-hire is a win-win model, particularly at a time when the pool of independent talent is surging, and businesses are looking to reduce recruitment costs. This model is especially useful for industries struggling to attract talent, organisations cautiously expanding into new areas, or teams needing to hire quickly to fill gaps.

Supported by clear communication from both sides, contract-to-hire exemplifies agility, efficiency, risk mitigation, and transparency. It offers the fastest and most effective way for both parties to determine if they are the right fit for each other.

As the demand for skilled talent continues to rise, adopting a contract-to-hire approach ensures that businesses can adapt quickly while providing independent talent with opportunities to showcase their abilities and secure long-term positions. This model truly benefits both employers and skilled talent, fostering successful, sustainable working relationships.