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Contract Staffing Is Popular, but Has Its Downsides

Contract Staffing Is Popular, but Has Its Downsides

Mechanical engineers are in demand for contract staffing.
In its Future of Recruiting Report, LinkedIn found that from May to November in 2022, listings for contract jobs climbed 26% higher than the same period in 2021, while full-time roles grew by only 6%. This increasing reliance on contract workers begs two vital questions for mechanical engineers:
  • Should contract workers be part of every mechanical engineering company’s strategy?
  • Is contract work a viable career path for mechanical engineers?

To the former question, a study by staffing company Kelly Services, Inc. found that companies that reported increased employee satisfaction, productivity and revenue were nearly twice as likely (61 percent to 34 percent) to have a fully developed strategy for employing contract talent. This statistic is not specific to mechanical engineers; the survey was of 1,500 senior executives and 4,200 workers across nine industries, including engineering.

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Jorge Puente, vice president of Kelly’s engineering division, said mechanical engineering is the discipline that accounts for the largest percentage of his group’s placements. “In our Kelly Engineering business, 5 percent to 6 percent of our requests are for mechanical engineers,” Puente said. “That’s huge for a single discipline.”

He said mechanical engineering is well suited for hiring contract staff because projects tend to have boom-and-bust cycles where a surge in resources is necessary.

 “Most companies will look at full-time employees as the core of their population, but whether it’s seasonal or to ramp up for a project, they often want to top off with contract workers,” Puente said. “A mechanical engineering company may call us and say, ‘We have a new product that we’re going to launch and we’re going to need about 20 percent more mechanical engineers.’ We hire the engineers, onboard them, put them on our payroll and charge the company an hourly rate. They work through Kelly, and the company gains flexibility in its staffing without having to provide benefits or add full-time staff.”

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One complicating factor is that mechanical engineers often focus on a specific sector or skill set within the profession, for example automotive vs. A/E/C vs. biomedical. To achieve the goals associated with contract workers, a firm and its staffing partner must ensure the candidate has sufficient engineering expertise in the relevant industry or subset.

Is Contract Work a Viable Career Path?

“Contract work is not for everyone,” Puente said. “If you want to go to work for a company and stay there for 20 years, it’s not going to work for you.”

Puente cites multiple benefits to the contract work approach, but most notable among them is flexibility.

“One of the biggest benefits of contract work is that it allows both sides the opportunity to test the relationship out before making a permanent hiring decision. You both get to see if it’s a good fit. You also begin work and start getting paid faster than with a full-time hire, and usually at a premium rate,” he said.

Puente noted that many of his group’s contract placements remain in their role for several months, and assignments can even stretch into years. Additionally, nearly one-third (30 percent) of the contract workers that Kelly Engineering places are hired into a full-time position.

While recent graduates are not typically appropriate for the targeted tasks of a contract position, Puente said Kelly Engineering often provides client companies with interns. The most highly sought-after demographic is mid-career professionals with 3 to 12 years of experience who have a specific skill set to offer. Recent retirees who want to keep their hand in the profession also comprise a small, but significant percentage of Kelly Engineering’s placements.

Engineers who choose the contract work route can use the role to help transition into a related industry and bolster the breadth and depth of their experience. They can also rapidly increase their total compensation without committing to a full-time position in an entirely new company; the Bureau of Labor Statistics lists the architecture and engineering industry as having the fourth-highest average rate of pay for contract workers among all professions.

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One downside of traditional contract employment, or “temp work,” to use a term the staffing industry has tried to phase out due to negative implications, is the lack of benefits. Contract workers are usually not eligible for paid time off, health insurance, retirement accounts or other benefits that full-time employees receive. But Puente said a relatively new trend in staffing is helping contract workers get past this obstacle.

“We call it a ‘Statement of Work’ or ‘SOW’, and it’s becoming the key way that we’re supporting most of our industries,” Puente said. “SOW is usually a lot more defined assignment, which allows us to give our workers almost the same experience as a full-time employee, including benefits and paid time off. The employer still has flexibility, but instead of counting toward their employee head count, they’re on ours.”

In an SOW contract, the time period, rate of pay and often even the tasks to be performed are clearly detailed. So rather than just requiring a number of bodies with a certain general expertise, the SOW arrangement functions more like a consulting gig. With the scope more clearly defined than in a traditional contingency agreement, Kelly Engineering can add the SOW contract workers as employees eligible for all the perquisites of the position.

“SOW is less transactional,” Puente added. “Because it’s a more narrowly defined role, it’s more specifically calling out what the client wants people to do. They’re committing to a minimum amount of time, and we can provide our clients with people who have a higher skill set. This is more attractive for the worker, and usually just by the nature of the engagement, they also have a lot more involvement with the manager and the project. It’s an enhanced solution for everyone, and we’re seeing a lot of interest from folks who would otherwise never consider working on a contract basis.”

Jerry Guerra is an independent writer in Lynnfield, Mass.

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