Hiring a consultant versus hiring an employee

It is one of the most classical decisions for managers to make when they need resourcing and expertise for a project: should I hire an external consultant or hire an internal employee?

Organisations – particularly ones which have been operational for a long time – will usually have a wide range of skills among the ranks of their employees, enabling them to run their operations. However, as the digital revolution continues to rapidly transform front and back-office functions, while requiring new specialist skill-sets to adequately implement new ways of working, even the most experienced organisation may find itself lacking the knowledge and skills to overcome major hurdles.

While the most obvious solution would be to employ a full-time member of staff with the right skills to help analyse the organisation’s procedures, and draw up a plan of action for a successful overhaul, this can be expensive. Many small and mid-sized enterprises subsequently cannot afford to hire a specialist with such knowledge, while public sector organisations may also lack the budget to appoint someone permanently. In situations like this, hiring a consultant to supply the needed expertise on a temporary basis may be the best move.

Choosing between hiring a full-time employee or a consultant should be based on the specific needs of an organisation – and it will vary according to the budget and priorities of the company or department in question. The following is a collection of pros and cons for hiring consultants and internal employees, to help organisations decide which constitutes the best fit.

Hiring an employee –  the Pros

Long-term stability
Hiring an expert on a permanent basis means organisations will have access to consistent, dependable skills.

If the skill is regularly required, the organisation will not have to wait to access expertise from the employees it already has in-house.

Greater control
If a company needs an employee to work on a particular project, the ability to control and manage quality and deadlines will be greater than in the case of a consultant.

Direct motivation
An employee will be interested in the long-term prosperity of the organisation, meaning they will be motivated to focus on goals, and not focused on their fees and the need to juggle the demands of other clients.

Hiring an employee –  the Cons

Difficult to dismiss
If despite their best efforts during recruitment, an organisation hands a permanent contract to someone who turns out not to fit the bill it can be an expensive and exhausting process to have to start again.

In order to get ‘more for their money’, many organisations compromise by hiring a generalist rather than a specialist, meaning they still lack key knowledge when it comes to addressing more niche problems.

On the other side of that, hiring someone extremely specialised on a permanent basis does not always make business sense. Organisations can rarely afford to pay for specialised knowledge that they do not use often.

Extra expenses
When hiring a permanent member of staff, companies will need to pay their salary all year, along with benefits such as pensions, holiday and sick pay.

Hiring a consultant –  the Pros

While an employee may be subject to the internal ‘politics’ of an organisation, meaning they may agree to things to please their boss rather than because they make good sense, a consultant can provide an objective outside perspective for essential problem solving.

Trend setting
As consultants work with multiple clients in their specialist area, they will be aware of the latest trends and developments in the sector; something which can help organisations stay ahead of the curve and get the maximum potential out of new methods and models.

By appointing a consultant as and when specialist problems emerge, organisations economise on niche issues, as they only pay for labour which they actually use.

Lower cost
Beyond the immediate fees paid to the consultant, organisations deploying external expertise for individual projects do not incur overhead costs, such as providing benefits, or even having to supply a computer and a workspace.

Hiring a consultant –  the Cons

Less availability
While appointing a consultant for short-term problem solving can add flexibility and agility to an organisation, many rival organisations are also aware of this, so consultants may not always be available.

Less control
Permanent employees may be more devoted to the long-term survival of a business, while the incomes of consultants do not depend on anything beyond the immediate engagements they have with an organisation – and other clients and priorities may affect their ability to meet deadlines.

Consultants charge fees for their services, and in particular the top firms in the market can charge hefty fees. Hiring a consultant can be expensive, especially if the engagements runs for a long period and if consultants are not used effectively i.e. on tasks that other cheaper labour could also perform.

Lack of standardisation
While there have been efforts to issue a charter to help standardise the industry, it is not a legal requirement and as such anyone can theoretically call themselves a consultant – meaning  an organisation’s knowledge of the consultant’s abilities may be limited, and could affect its subsequent success or reputation.

Legal considerations
Legal considerations may affect the consultant due to conflicts with competitive clients – in which case, organisations should consult a legal professional for guidance.