The purpose of a contractor management strategy for a consultancy is to effectively manage and leverage the use of contractors to support the consultancy’s operations and service delivery when building up your contractor base and to ensure the risks are minimised.

A contractor management strategy should address the following questions.

• How to find contractors when you need them. As well as advertising, you can go through specialist recruitment organisations (who will add their own markup). Over time you may build your own database of contractors, separating those out into close associates and occasional suppliers.
• How contractors are inducted into the company and assignment. Although not permanent employees, contractors will need an induction into the company. This should include key contacts, mission, vison and values, the services you provide, organisation policies and to make sure standards and expectations are set.
• How to maintain contact. Contractors tend to have an independent mindset and require, and take, less oversight than employees. You need to keep your eye on cultural fit and maintain both formal and social contact, else you risk an entity who works for themselves, not for you.
• How to manage quality. As contractors are independent, they are usually clear and experienced in their own ways of doing things and not as familiar with your company’s methods as your permanent employees. Setting specific expectations through contractual means and at the beginning of engagements helps set standards that might not otherwise be set. This also means that you can pitch to the client confidently about the delivery model.
• How to deal with underperformance. Underperformance of contractors will be a contractual and relationship matter, not an employment one. This needs clear steps that both parties are aware of and agree to.
• How to deal with pricing and to ensure you make money. There may be a number of parties involved between contractor and final client, each one needing to make money on the transaction. You need to have confidence that each party in the chain will accept their “cut” of the transaction before signing upwards and downwards contracts.
• How to manage invoices and payment Your company will likely follow a different process to that of permanent employees. Contractors will typically send an invoice for service. For cash flow reasons you would typically strive to match payment terms for your clients to ensure money is not going out before coming in.
• How to ensure you adhere to local tax and government regulations. Depending on the local legislation, employment of contractors may come with legal requirements, and tax obligations. Certain types of engagement whilst superficially that of two entirely separate entities, may fall under an employer-employee relationship which leads to further employment commitments such as tax collection responsibilities, leave and redundancy rights. Take legal advice where necessary.