Contract To Hire: Definition, Pros and Cons

By Indeed Editorial Team

Updated March 22, 2021 | Published December 12, 2019

Updated March 22, 2021

Published December 12, 2019

Some employers may hire candidates on a contract-to-hire basis as a way to gauge their qualifications and cultural fit with the company. There are many aspects to consider when deciding whether to accept a contract-to-hire role. In this article, we discuss what contract to hire is, explore some of the pros and cons and provide you some sample questions to ask during a contract-to-hire interview to ensure it’s the right opportunity for you.

What is contract to hire?

Contract to hire is a short-term job that allows both parties to try out a role before committing to full-time employment. Also known as “temp to hire,” contract to hire agreements typically set out the length of time the contractor will work for the employer. At the end of this trial period, the employer can decide whether to hire the contractor as a full-time employee with benefits.

Many roles hire contract to hire, including:

  • Sales

  • Administrative

  • Marketing and communications

  • Graphic design

  • Project management

  • Seasonal retail

Pros of contract to hire

The flexibility built into contract to hire is beneficial in many ways, whether you’re looking for a short-term position or more long-term position or a freelance opportunity. Here are some of the pros of a contract-to-hire position:

  • Demonstrates your value

  • Increases your qualifications

  • Determines compatibility with a company or role

  • Expands your professional network

Demonstrate your value

Contract-to-hire roles can give you time to prove your value to a company and demonstrate to your employer why you would be a good long-term fit for the role. In this type of position, you can use your skills and knowledge to make a positive impact on the role, team and company as a whole during your short time there. When you have quantifiable or obvious contributions, you can use them to secure permanent employment.

Employers often use contract to hire as a way of doing a “working interview,” or testing out the fit between the potential employee and the company, which can result in making higher-quality hires. You can consider taking a contract-to-hire job while you negotiate your salary after receiving a formal offer. In this situation, you would act as part of the team in that capacity to showcase just how valuable an asset you and why they should consider paying you more.

Increase your qualifications

Temporary positions can serve an important purpose on your resume, especially if they help to fill the time between two permanent positions. They can be a productive option as you search for a more long-term role, especially if you aren’t hearing back from potential full-time employers.

Contract-to-hire jobs can also help you become an expert in your field or on a particular task. In these roles, you may be given a certain number of specialized tasks to learn and excel in very quickly. This experience can help you refine skills and focus on one or a few elements of your profession to then apply at expert status in a full-time position. Taking on a few of these roles at different companies can build your reputation as a fast-learning expert.

Determine compatibility with a company or role

Contract to hire allows you to test your suitability for a company and the position. It’s a more in-depth way of researching a company during the job search process. The experience can help you to determine whether or not the organization’s work environment, goals and values are a good fit for your future. If you are testing out career options or roles in your field, contract to hire can allow you to do so without committing to a full-time job before you’re confident in your decision.

Expand your professional network

A contract-to-hire job can also help you build your professional network. The connections you make at a company might lead you to a job offer at the same company in the future, at a client’s company or a different company with mutual connections. Additionally, having the opportunity to make a good impression on an employer, even if they do not end up offering you a long-term position, allows you to ask for a positive recommendation or referral during your next job search.

If you use a contract-to-hire position to test potential career paths, the opportunity can also introduce you to people in your industry who you can ask about their professional background and experiences. They may be able to provide you further insight and guidance as you decide on a career.

Cons of contract to hire

Along with the considerable benefits, there are other considerations for contract-to-hire positions to be aware of during your search.

Secure temporary work

Even if you love the job and thrive in your role, an employer may not hire you for permanent work at the end of your contract. Employers use contract to hire to help during busy seasons or temporarily replace a full-time, permanent employee on leave.

Though work may be temporary, employers may keep you in mind for future openings, especially if you exceed expectations and quantifiably contribute to the company’s success. In some cases, employers may have additional temporary work they may consider you for, either as an extension of your current contract or in the future.

Have lapses in employment benefits

Contract employees don’t often receive benefits like health insurance coverage, paid leave or pension options. For cases where you’re hired in a contract-to-hire role through a staffing or recruiting agency but then hired through the company full-time, your time as a contract-to-hire employee may not count toward total accruement of benefits.

Questions to ask about a contract-to-hire position

Regardless of the role, there are a set of questions you should ask about any contract-to-hire position before accepting, especially if you hope to turn the contract into a full-time position at the end.

  1. What goals will be set for this role?

  2. How will I be evaluated as a temporary employee?

  3. When do you plan to hire a permanent employee in the role?

  4. What are the expectations of a permanent employee in this role?

1. What goals will be set for this role?

This question allows you to discuss the employer’s expectations for the temporary work, including daily responsibilities and key performance indicators to track your productivity and success in the role. Consider asking what the day-to-day schedule for this role might be and what kinds of tasks should be completed in what timeframes.

2. How will I be evaluated as a temporary employee?

You can ask this question to learn more about what performance evaluation tools your prospective employer plans to use, including supervisor and coworker reviews or task-tracking software. This information can better prepare you for the type of work environment, whether it is fast-paced or more relaxed. It can also help you gauge your eligibility to have your contract extended or be hired permanently.

3. When do you plan to hire a permanent employee in the role?

During the interview process, you can ask whether the employer has a timeframe for hiring. They may have a set date when the contract is set to end and consideration of permanent employees begins. They may also have plans to extend the temporary contract if things go well.

If the employer does not have a timeline in mind, consider suggesting one yourself based on how long you think you need to become comfortable enough with the position to be best considered for the permanent role. You can also wait to have that discussion until after you’ve begun work, as long as you’re comfortable accepting the contract-to-hire position without confirmation of the hiring timeline.

4. What are the expectations of a permanent employee in this role?

Understanding what the company is looking for in an ideal candidate can help you align your work style and productivity while on the job. Consider asking what the hiring manager views as most important about the role to determine how you can best demonstrate your value to the team.

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