Budgeting, Forecasting Key to Blended Workforce Success

Budgeting, Forecasting Key to Blended Workforce Success

Workplaces are increasingly "mixed" in the sense that contractors and consultants on hourly rates are working alongside permanent, salaried employees who are, in most cases, usually not eligible for overtime.

On the one hand, there is a benefit in promoting a team environment, where everyone is pulling in the same direction and for the success of the project. But ignoring the fact that there are different incentives, compensation being the most obvious one, presents a couple of problems to team dynamics, but thankfully there's a single solution.

The Scenario

Let's say your company has contractors and full-time salaried employees working alongside each other on the same project.

The contractors are hired for a fixed amount of time at a set rate, so to accomplish the goals that have been set out for them, they might end up working well over 40 hours per week. A salaried worker, on the other hand, will—in most cases—likely not get paid for extra time they devote to a project.

Someone being paid by the hour might take on more and more work, even if it's not justified. While their productivity is to be commended, it can reduce the overall effectiveness of the team as a whole.

Problem 1

You've hired a contractor to lead a project at a rate of $65 per hour. At 40 hours per week, that person's gross yearly salary would be $135,200.

Due to unforeseen delays, however, the contractor is working 60 hours per week to help get the project caught up to its original timeline. Now that person's gross yearly salary is $202,800—leaps and bounds higher than anyone else on the team.

Your project is over-budget and the contractor's willingness to go above and beyond the call of duty reduces the amount of work available to the rest of the team. Your salaried workers might feel underpaid, undervalued, and underutilized. Team dynamics suffer when such inequalities arise.

Problem 2

You've hired a contractor for 40 hours of work per week but the job you've hired them to do requires only 30.

The contractor might lose motivation and focus if he or she doesn't know how much effort is required, creating a distraction that affects team dynamics. Or, the contractor might pad his or her schedule with long breaks. Either way, the contractor's idleness and lack of productivity could draw the ire of other team members.

The Solution: Forecast and Budget

When hiring contractors, try to forecast, as much as possible, how much work will be available. Then, to keep all team members happy and motivated, set a budget and stick to it. You should budget funds, of course, but also roles and responsibilities. Try to allocate appropriate levels of work for your salaried employees so you aren't paying them to be idle while your $65/hour hire racks up overtime and blows out your budget.

You can use a managed-service provider (MSP) to identify and hire contractors who charge reasonable rates relative to the service you expect them to provide. If you're paying someone $100 per hour for eight hours of work per day and they're taking two-hour lunch breaks, that's a bad deal, just like Problem 1, in which they're working far too many hours.

Formulating a strategy for hiring contractors based on detailed forecasts—and then setting clear expectations based on that strategy—will also ensure that, unlike Problem 2, you aren't being billed for hours that could have been budgeted to your salaried workers or eliminated altogether.