Business startup

The Risks of the Contractor Hack

By David Brown, co-CEO of Techstars

Right here’s a “hack” that I’ve noticed rising startups usually try. I name it the “contractor hack.” And it may be harmful.

It begins off as a result of a division head doesn’t have the funds to rent an individual. To undergo the approval course of to get one employed is an unimaginable gauntlet. So as an alternative, they use the contractor hack.

Right here is the hack: first, you rent a short lived contractor. It’s not arduous to do, and even to get approval for. You simply say, “I do know the hourly charge is a bit excessive, however it’s just for a short while to recover from a hump, and we will cancel them at any time.” Simple-peasy. You may have a “non permanent” contractor.

After a  12 months or so, your contractor turns into indispensable. Then you definitely say you could have an incredible concept: “Let’s avoid wasting cash by changing this contractor to a full time function. We are able to pay her much less, since we’ll be offering well being or different advantages!” Genius.

All of the sudden, you could have plenty of staff who began as contractors, and your center managers have discovered methods to hack your hiring system. If you’re a startup, please don’t get into or permit this behavior as you scale. Ask your CFO to maintain shut monitor of contractor expense and put a vice grip on this kind of nonsense.  


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entrepreneurship, hacks, Startup


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