Differences between Employees, Volunteers/Interns and Contractors

You need to hire someone, but who?

Confused Woman
Confused Woman

A business needs a workforce to function. A business owner has limited hours in the day to complete tasks and as such, roles need to be assigned and delegated. Hiring can be an exciting or scary experience, based on how you work through the process.

I have seen in all sectors (private, government, and non-profit), managers and those in authority confuse the roles of employees, volunteers, and contractors.

This article seeks to define each role and as an owner, how to assign tasks appropriately. This should all part of your business plan. Here is a e-book on how to create a hiring plan.

Let's compare and contrast the purpose of an employee, contractor, volunteer or intern.

Employee

Employees are great when you need to have a steady workforce

Hire an employee when you need a specific set of tasks completed for a fixed rate. In return for a fixed rate (by hour) and agreed upon schedule (part time, temporary or full time), you can enforce rules and procedures as to how, when and where the work is to be done.

Beware of labor laws

The main downside of hiring employees is that you are required to pay for their training, space, and supplies. You are also limited by labor labors. The law varies by local governing bodies (state or federal) and is industry specific. This means you are subject to taxation, workers compensation, social security as well as other employer-related mandates. Here a link to view most major U.S. labor laws.

Positive Aspects of Hiring an Employee

  • Provides longterm program continuity
  • Maintains a high level of quality for the company product and/or service. This is essential to maintain brand integrity.
  • Can become “home grown” managers who are cheaper to recruit than hiring executes directly from outside. These are seasoned employees who are intimately familiar with the company culture.
  • Provides loyalty to ensure the long term success and viability of the company.

Contractor

Hire a contractor when you are short on time and need a specialized task done

A contractor is an independent agent hired to perform a specific set of tasks. A statement of work as well as the scope of work is created to ensure that you and the contractor are held responsible to the contract’s terms and conditions. However, unless explicitly written, the contractor is free to define their work schedule and methodology to satisfy the contract terms.

Contractors are great because they absorb all the project rewards and risk. Rewards as it relates to savings in time and/or resources as well as contract stipulated bonuses. This reward incentives them to work smarter to save time and money. Risk relates to the damage or loss of resources (workers, equipment, supplies and/or materials) in order to fulfill the contract terms.

The contractor is also responsible for the recruitment and management of their staff. The contractor (and staff, if relevant) are responsible to ensure their staff are trained and capable workers. Since you do not employee them, the billable rate tends to be higher to absorb the costs of labor and materials.

Beware: a contractor wants to spend your more for as long as possible

Your contractor wants to stay in business with you for as long as possible. Shady contractors may create new problems or issues in order to create more work for themselves. You are responsible to make sure you only hire a contractor when you need work.

Positive Aspects of Hiring a Contractor

  • They are great when you need to complete a time and scope specific task. Recruit a contractor when you cannot afford an employee to learn to complete a task or tasks
  • Your contractor will exposure you to other complementary services. For example, your HVAC specialist can recommended a reputable electrician.
  • Contractors are easy to terminate if they fail to abide by the contract terms. Make sure you write a good contract though!

Volunteers and Interns

Business team looking at their boss speaking about working plans

Volunteers are cheap, yet inefficient labor

Volunteers and interns are funny animals because they are neither contractor or employee. Similar to an employer relationship, your organization must provide a volunteer resources (workspace, supplies, training) and a defined work schedule.

Generally, volunteers exist in a non-profit organization where the focus is to help the disenfranchised. However, they can also exist in private sectors for academic purposes (accumulation of volunteer hours) to satisfy admission into a university. In such cases, they are called “internships,” where the organization may or may not provide the intern a stipend to compensate their time.

When to hire a volunteer or intern

  • When you need to augment a workforce for a seasonal and/or special event
  • There are simple tasks that need to be completed. This means there is no need to spend time on training or development.
  • Allows the organization to “try out” a worker, but without any commitment to a paid position.
  • Volunteers are a "Built-in advocate" for an organization’s existence or function. They can evangelize the good name of one’s organization to others.

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Make the right choice BEFORE deciding who to recruit.

Its tempting to only hire volunteers and in some cases, contractors in order to save money. While an employee is expensive to maintain, they provide continuity and loyalty. However, beware: everyone wants to stay relevant. 

Employees and contractors can create new “problems” in order to validate their existence.

That is why it is imperative to take the time to critically review the employee or contract terms. Resources (time, training, equipment and space) can be saved by making sure that each party satisfies their term conditions. If a company has a long term and company specific need, it is best to hire rather than to contract the work.

By contrast, a workforce filled with volunteers and interns is a doomed business model. While both are eager to learn and assist the organization, they are generally inexperienced, meaning that considerable time and resources are needed to train and develop their skill set. Furthermore, they do not have loyalty to the organization and should not be assigned long-term assignment(s).

While an organization can assign volunteers tasks and work-hours, the volunteer or intern is not compelled to stay due to lack of financial compensation. It does not matter if they sign an agreement. They are easier to leave if they feel dissatisfied with the work conditions.

Take a day off and work through the pros and cons.

Above all, think from a strategic vision as when to utilize help from an employee, volunteer/intern or contractor. If you need to take an administration day and think about these issues.

As I wrote earlier, there are pros and cons between each group. Make sure you assess the true cost in terms of space, training, supplies and urgency to complete the task (or provide the service). There is no such thing as a free help, especially when trying to maintain and grow your business.

Need Hiring Help?

Schedule a FREE consultation today!

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