The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Vanessa Williams
Published on

9 Best Practices in Hiring and Working with Subcontractors

The employment environment is always changing as workers consider their options and businesses look for flexible, cost-effective solutions. 

employees-421Let’s look at some ADVANTAGES of working with independent contractors (or subcontractors).

Independent contractors help you quickly fill skills gaps in your team. This enables business growth without taking on employee costs such as taxes, benefits, training, onboarding, equipment, and office space.

You can also hire independent contractors on a project basis, meaning that once they complete a job, you part ways. That means no ongoing payroll commitment. 

Finally, an independent subcontractor might expose you to their network so you gain access to additional skills and resources. 

Now for some BEST PRACTICES when engaging independent contractors

  1. Most important is to clearly define the tasks, the skills, and the commitment you need. Develop a detailed project description including what you need to be done and how long it will take. Knowing what is required will narrow your search, saving you time in recruitment and training. 
  2. Follow a simple hiring process. This starts with publishing your job description in appropriate job forums. Many have had success with sites such as Upwork, Freelancer, and Fiverr. Remember, you are NOT looking for an employee - in which case, a long-term cultural fit would be very important. Instead, you are most focused on whether the candidate will effectively complete the job you have defined.  Many experienced sub-contractors will have their own website, social media, reviews, and portfolio. Review them in detail and assess how the individual presents themselves as a potential business partner. Generally, you won’t need multiple interviews for this.
  3. Establish any ground rules in addition to the Scope of Work. These could include legal requirements such as confidentiality, ownership of intellectual property, and non-solicitation. You might explain how they will communicate with your team, who they will interact with, as well as schedules for ongoing communications, activities, or milestones. Most important is to agree on the price, payment terms, and any contingencies or performance-based metrics. 
  4. Get started – and set your subcontractor up to succeed. Identify some small wins they can accomplish early on. Help them build confidence. Check-in frequently and provide feedback. If they fail, you fail...and that means wasted cash and time. The best subcontractors will appreciate your efforts and try to make a good first impression – that’s the beginning of a successful interaction. 
  5. Monitor Progress and take quick action. Not every project will go exactly as planned and you may need to modify terms. Speed is of the essence, especially in the early stages – even if that means amending or even cancelling the engagement. Don’t allow things to linger because problems generally get bigger the longer they are left. 
  6. Where possible, leave the subcontractor to work autonomously. Many subcontractors have chosen NOT to be employees to avoid the micromanagement they could experience in full-time employment.
  7. Facilitate teamwork as required. Some of your employees will be intrigued and very positive about subcontractor relationships. Others may be dubious or even hostile. Take the time to explain things to your team so they support the direction. In many cases, they can learn from subcontractors and a ‘fresh perspective’ will be valued. 
  8. Build a feedback loop. At the outset, there should be frequent feedback meetings but these can become less frequent over time. The purpose is to ensure things are on track OR to quickly take action when they’re off track. Keep a written record of important discussions so there’s a paper trail later in the event of disputes.
  9. Consider longer-term arrangements, if appropriate. Perhaps the first project will spawn an additional project. If you are working well with a subcontractor, engage them for additional work to avoid going through another lengthy hiring and training process. (As an aside, check the local laws on the definition of ‘subcontractor’ because some jurisdictions deem recurring subcontractor relationships as employment). 
As you see, there’s no magic to working with independent contractors… but you can gain access to valuable skills on attractive terms. Follow these Best Practices for the best results! 

Need help with financial analysis including employee costing? Contact the award-winning team at Alliotts in Auckland on 09 520 9200.

Topics: best practice Payroll subcontractors success talent team