Scaling a team can be challenging, especially in today’s tight labor market. As you look to add to your team, you might be struggling with which path to go down first. Should you hire a full-time employee or work with an independent contractor? 

Both options have their merits, but there are specific reasons you might go with one over the other. So we created this guide to help you understand the differences between the two. 

Understanding What Makes a Full-Time Employee

Let’s begin by discussing the work arrangement you’re likely most familiar with, full-time employees. While bringing on a full-time employee takes a lot of dedication, it’s often the first way businesses scale their teams. So let's get started by defining what a full-time employee is. 

What is a Full-Time Employee?

The IRS defines a full-time employee as someone who works with your company "on average at least 30 hours of service per week, or 130 hours of service per month." Under this arrangement, you're responsible for reporting employees' taxes, work, and job behavior. 

The working relationship is long-term, meaning there's no end date compared to an independent contractor. You have control over their hours and how and where work gets done and can also get employees to sign exclusivity agreements to ensure they don't work with competitors during and after their tenure (within reason). 

Another major difference between an independent contractor and a full-time employee is how they’re paid. As the employer, you’re expected to pay payroll taxes and must provide a W2 at the end of the year. Likewise, you're also expected to cover benefits like health insurance, worker compensation insurance, accident and health, and paid time off (PTO).  

When to Onboard a Full-Time Employee?

As you decide when to onboard or hire a full-time employee, it's crucial to consider your business needs and your ability to support the employee's long-term success. Ultimately, you want to onboard a full-time employee when you have recurrent, core business needs that better suit a long-term arrangement that can offer career advancement opportunities to the individual. 

Other reasons why you may want to consider a full-time employee is if you want to build your company culture or if the role requires you to work closely with that employee. 

Advantages of Onboarding a Full-Time Employee

Work with a Person Who is Dedicated to Your Business

Full-time jobs require about 40 hours a week in dedication to one employer. As your business grows, this dedication is key to building a solid foundation by being a key contributing member of the team.

Improved Business Knowledge and Continuity

Full-time employees get to know your business deeply. Because of the nature of the arrangement, they’re better able to understand where they fit in your business and how they can best contribute to your goals. Having employees with key business knowledge is important to ensuring business continuity during times of change or for orienting new employees. 

Reduce Training Costs Overall

Once you’ve trained a full-time employee, they’re ready to tackle business objectives. If you work on reducing employee turnover, you can typically go months or even years without aggressive training costs/time. When you rely too heavily on short-term labor, you’ll consistently work to get people up to speed and introduce them to your brand or clients. 

Independent Contractors 

Onboarding a full-time hire takes a lot of capital and time. And sometimes, investing in a full-time employee simply doesn't make sense. You could instead onboard independent contractors to get work started quickly.

Independent contractors, or experts as we call them at Graphite, give your organization more flexibility, and their hours often coincide with the amount of support companies need when kicking off a highly specialized initiative. 

But first, let’s define what an independent contractor is. 

What is an Independent Contractor?

An independent contractor is a separate individual or business that helps you with a specific need in your organization. You do not employ these parties. They work for themselves. And unlike a full-time employee, you're not responsible for paying payroll taxes, providing health benefits, or vacation time. 

Contractors handle specific tasks for your business for a determined price and period of time. 

In exchange, independent contractors have freedom. You cannot dictate when or how long they work on your projects. Outside of what’s clearly outlined in a contract, they control how they work with you and your business.

When to Hire an Independent Contractor

There are many reasons you might decide to hire an independent contractor. The most common reason companies hire independent talent is to address specific subject matter expertise or capacity gaps in project teams. 

Onboarding an independent expert can bring your team up to speed and help you launch a project quicker than hiring full-time. Another difference between a full-time hire and an independent contractor is time-to-hire. 

Hiring a full-time employee, for example, can take months, but independent talent can typically be onboarded in days. This can be beneficial if you're unsure if you will need a specific role/function down the line or if you don't need that person's time for more than 40 hours a week. 

Employee burnout is another reason you may want to hire independent experts. Your full-time team may be experiencing burnout, but independent talent can lighten the load and take on a few projects while in-house teams get things back on track.

You might also want to onboard independent talent if you’re trying to pivot into a new market. Making new decisions for your organization can be challenging, especially when you don’t know the landscape. There are opportunities like boot camps and non-traditional schools you can recruit from to get stellar independent talent.

Lastly, there's the opportunity to operate as lean as possible if you onboard independent contractors. It enables companies to scale up and scale as business and client needs evolve. You also save on additional expenses associated with equipment, insurance, benefits, and taxes. 

Advantages of Onboarding an Independent Contractor

Onboard Talent Quicker

Hiring a full-time employee can be a timely process. If you’re working on a quick project, you don’t have months to waste. From deciding which role to open to interviewing to hiring, you could be looking at a 100+ day process. When you need talent quickly, you can rely on independent talent. Using an on-demand talent acquisition platform like Graphite, for example, you can find an independent expert to work with within 24-48 hours. 

Get Access to Specialized Talent

Often, companies require specialized skills that aren’t needed for 40 hours a week. For example, companies may hire a consultant to help them design and launch a market research study. Unless you need to conduct these studies consistently, it doesn’t make sense to hire a full-time employee. 

Improve Speed To Market

Another benefit of working with independent experts is speed to market. For example, your organization might want to deploy an enterprise risk management (ERM) framework, but to do that, you need to sift through large sets of data. By tapping into independent talent, you can deploy a subject matter expert who can quickly review the data, provide their recommendations, and even facilitate the execution of the ERM framework.

Accelerate Innovation 

One key advantage of working with independent talent is leaning into their prior work experience to drive innovation at your organization. Because independent talent tends to come from diverse backgrounds, they're better able to connect disparate ideas faster than employees who've only been in one industry or role. This breadth of knowledge can also benefit employees who can learn from these individuals, thereby elevating the skillset of the entire team. 

Deciding With Confidence 

It can be challenging to determine whether to onboard a full-time employee or an independent contractor. Unfortunately, we will not have a straightforward answer because it depends on your situation. Both of these talent acquisition methods have their merits depending on what you need help with.

So, let’s keep it simple:

As you can tell, based on what you need from your talent, you might decide to go with either of these options. If you’re considering the independent talent route, learn more about our expert network to see if Graphite could be right for your talent needs.

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