Corporate versus Consultant

A recent survey reporting that 25 percent of the American workforce is currently working as a "free agent" points to a huge trend sweeping across America: the contingent workforce is increasing whereas the "permanent" workforce is decreasing. Of course, some would argue that there is no such thing as a "permanent" workforce anymore, due to the ever-changing nature of business, reorganizations, mergers, acquisitions, downsizings, etc.

Reliance on contingent workers is growing due to a variety of reasons, the most important being flexibility to address the constantly changing needs of businesses. It is much easier for an organization to hire someone as a consultant, temporary employee, or contractor and be able to release that person with little or no notice, legal liability, or severance package. Although the contractor's rate may be higher than a permanent employee's salary, the employer doesn't have to worry about training costs, benefits, paid-time off, etc. These benefits are increasingly being provided by the contractor's agency (and passed on to the client organization through a higher bill rate, which also includes the agency's profit mark-up).

Nevertheless, corporations will continue to seek out contingent workers, whom they may or may not convert over to their "permanent" or core staff after a trial proving period. When faced with a decision about whether to pursue a job as a non-permaent employee, keep in mind several important elements and distinctions between the various types of non-permanent employees, as described below:

Consultant: A consultant is usually an independent contractor or higher-level professional working for a big-name consulting company. A consultant is usually not affiliated with an agency and consequently may have to pay for his/her own benefits. Many people decide to start their own businesses after taking an early retirement/severance package from a long-time employer and then provide consulting services back to that same employer or others in the industry. A consultant reports earnings to the IRS via a W2. Serving as a consultant temporarily may provide a foot-in-the-door to "permanent" employment. Assignments can vary from half-day class instruction to a multi-year project. If the concept of being a consultant appeals to you (working your own hours, choosing your own business), check out Freeagent.com as well as SHRM's Consultant's Forum at www.shrm.org. Even though you are "your own boss," you still have to rely on business coming in from external clients and you have to market yourself constantly.

Contractor: A contractor usually works through an agency that provides technical staffing services to other corporations. The corporation engages the agency to find a resource for their needs or may ask the agency simply to payroll a candidate they already have in mind but don't want to (or can't) hire permanently at this time. This can be due to the limited nature or variability of the assignment or because of organizational budget and head count constraints. The contractor is paid directly by his/her agency, which may also provide additional benefits usually associated with larger corporations (such as medical benefits, 401(k) plans, tuition assistance, paid time off, etc.). If you choose to go this route, check out different agencies, the clients they service, and the benefits they offer, because they
vary.

Temporary Employee: A temporary employee is usually an administrative, clerical, or light industrial worker who is paid through a temporary agency to perform short-term work for a client company. Most temporary agencies now provide benefits and training and have provisions for the clients they service to pick up their employees "permanently." Some people make careers out of being "temps" and enjoy the flexibility of assignment choice and being able to take time off between jobs.

Corporate Employee: A corporate employee is a person who is hired by a corporation and appears on its payroll. Corporate employees can be full-time, part-time, summer interns, job-shares, etc., and they usually cannot work for a competitor simultaneously. A corporate employee receives the company's standard benefits package, which may include severance in cases of separation due to downsizing. Corporate employees can carve out a career path internally by moving from position to position (in smaller organizations, this movement may have to be lateral). Keep in mind that temporary employees and contractors are corporate employees of their agencies.

These four job scenarios may be appropriate for different people at different points of their lives, but all can lead to rewarding careers. Which type of job is right for you depends on how autonomous you are, how comfortable you are in marketing yourself and your services, and how risk- and change-averse you are.