There are various myths surrounding employee hires versus workers and vice versa – but which is the most efficient and sustainable option for the energy industry to see it through the next 50 years?
Legally, people are either ‘employees’ or ‘workers’, the latter bill the employer through an invoice for a provision of services and the former are on the payroll. There’s a myth that we have two options, ‘staff’ and ‘contract’, but there are a variety of options available and a lack of creativity in this area can create issues for businesses.
Employees are generally seen as lower cost, more loyal and, by some leaders, more productive than workers. However, in my experience, companies aren’t required to manage the quality of delivery of ‘workers’ any more than ‘employees’.
In many cases, workers, or ‘contractors’ as they are more commonly known as, cost more than employees. But depending on the sector – and the pecking order of the ‘food chain’ – hiring an employee over a worker can cost more.
It’s not just the payroll burdens, but the bonuses, shares, training courses, retention payments and subscriptions, as well as time to supervise, guide and mentor.
Additionally, workers are not less loyal than employees. Typically, their commitment comes from the fact they work longer hours, take on some of the work employees wouldn’t want to do, and have lower expectations around the ‘client’.
Despite the myths, self-employed people have as great a need for security as employees – they have the same financial commitments.
A worker who is self-employed – has a company name and a brand – could be even more concerned about delivery when their name is ‘above the door’, than an employee in a large service company. Ultimately, the decision to hire employees or workers for reasons of cost, loyalty or delivery could be a red herring.
The reasons for choosing to hire employees should be that they are willing to coach, mentor and develop others long-term.
These roles should be on a company payroll: our leaders; the people you couldn’t replace tomorrow; the key line managers; the offshore installation managers; the site managers and the discipline lead engineers. Our key people have a role to lead, manage, develop and succession plan for the team of tomorrow.
But employees have big expectations around training, communication, culture and engagement which all cost money.
Workers expect interesting tasks, a market rate and are clearly of benefit when a specialist skill or short-term project is required. An employee can have a lot of ‘hidden costs’ which may not help the profit and loss sheet. Ultimately, a flexible, changeable model can be more attractive for companies.
A compromise comes in the form of interim management, or managed service provision, which is proving popular in the financial and banking sector. This provides all the benefits of a worker but removes the fears around cost, loyalty and delivery.
The staff of the managed interim firm have a career path, a pension, and a market package. They don’t compete with their clients around reward. They hire the best people who provide solutions to the client and are focused on delivering on a project – whilst adding to their own progression.
This is productivity at its best with no involvement in company politics. Their support comes directly from their employer as does any action to ensure delivery. Businesses get market cost, loyalty and delivery. We know this model exists and works as we use it ourselves.
In such a cyclical market, these models need more consideration as they are people-focused and much more creative. Doing everything in-house is great – until you get really busy or really quiet.
Dean Hunter is the managing director of Hunter Adams
