Are you thinking about converting your contractors into employees?
The pandemic caused a drop in independent workers, which has since increased to 51.1 million in 2021. It’s caused all industries to have their pick of contractors to help support business operations, keeping things moving.
Sometimes, contractors perform more than most would expect from them. This compels some employers to convert them into permanent employees. Most call this process contractor conversion, and many companies regularly do this to improve their staff.
Is it right for you, though? Still can’t decide because you’re unsure of what the contractor conversion definition is? If so, check out what we’ve prepared below and see if it’s the right choice for your business.
Contractors vs Employees
Independence sets contractors apart from employees. They’re often on their own when managing their finances and paying taxes. Contractors can also work for multiple companies at once so long as they can manage their time.
Despite this, they don’t receive benefits from any of the companies they work for. They have flexibility, though, which is a valuable commodity for workers. Not working on company time means they need not worry about taking a break when they need one.
Employees don’t have as much control over their work hours as contractors. However, the company makes up for it by providing them with various benefits. They can handle their taxes for them and can even provide healthcare and dental welfare.
An employee also has to abide by company guidelines. Companies set these to protect their employees and themselves from any legal trouble. Work conversion seeks to place contractors in the same situation as the company’s employees.
Why Undergo Employee Conversion?
Are you still wondering why you need to consider the position conversion? Here are some benefits to having contractors as permanent employees instead.
Builds and Improves Company Culture
Accepting an independent worker as an employee shows everyone what your company culture is, especially for the newly hired worker. It shows them you appreciate their work enough to make them a permanent addition to the team.
Adding them to the company also strengthens the company’s culture, making workplace conversion possible. Having a strong culture makes employees feel like a family working together.
It improves company morale and makes it so workers will stick around longer. Strong cultures also make the company more attractive, compelling more to want to be a part of it.
Gives Your Company the Competitive Edge
Adding a new employee into your ranks means other companies won’t be able to use their skills anymore. The contractor will work for your company alone from now on.
Doing so gives your company a competitive edge. You’ll become an even more attractive business in the eyes of potential clients.
Going through employee conversion also makes the company more appealing to workers. A high-quality workforce makes your company look more professional. Others will want to be a part of such a company, meaning you attract more high-quality workers.
Helps Avoid Legal Trouble
Giving a contractor a legitimate work position helps to avoid legal troubles. One way it does so is through proper employee classification.
Costly penalties await whatever company misclassifies their workers. With all paperwork on contractors in order, you need not worry about having to face these penalties. However, employing them means you need not worry about it at all.
Converting them into employees also means they comply with company guidelines. As mentioned above, companies often have these guidelines to help employees. These regulations ensure employees don’t commit egregious mistakes while working.
Steps to Take for Successful Contractor Conversions
If you’re on board with the idea of converting an independent worker, then here are the steps you should take. These will help you ensure the conversion is as smooth and successful as it can be.
Make a Compelling Offer
The first thing to do is make an offer that’s appealing to them. Remember that independent workers were in charge of their time before working with you. If you want to make them work regular hours, you must make an offer that compensates them for sacrificing their time.
Offer a big sign-up bonus, too. Having to work full-time for your company means they’ll drop their other clients. Know their rates and offer compensation for that with each dropped client, too.
Introduce them to the world of benefits after that. Entice them with a wellness budget, career development program, and work-from-home allowances. Anything less will make them hesitate to give up their independence.
Collect Their Information
To proceed with the conversion, collect more of their information. You’ll only likely have the info linked with their banks when sending an invoice for payment. Now that you’re making them an employee, conduct a thorough background check.
You’ll need all the information you can get to fill out their tax forms. Discrepancies here can put a damper on the contractor conversion process.
Use this opportunity to see what other benefits you can provide. If they have a family, secure them with childcare assistance and update their healthcare packages to extend to them.
Have a Good Onboarding Program
The last thing to do is introduce them to the rest of the team. Have a good onboarding program to ensure all goes well here. Answer any question they have and show them who does what in the company.
By doing so, you can improve the quality of their first day on the job. The only thing you have left to do is add them to your payroll. Show them how your payroll system works, too, to avoid any potential conflict.
Know the Contractor Conversion Definition Today
The contractor conversion definition need not be a mystery to you. Learn all about it and whether it’s the best choice for your business. Make the right calls and reinforce your staff now!
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