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Contractor vs. employee: what's best for you? You might be currently contemplating whether or not to join the growing ranks of contract employees, also known as consultants. All of the national trends show that the numbers of people engaged in this type of employment are destined to virtually explode in the coming decade.

Kevin Thomas* is loving life.

He plans his own flexible work hours around the school schedule of his eight-year-old twin sons. He requests and receives challenging contracts management consulting projects that are enviably close to his home in Northern Virginia's congested Fairfax County, exercises his creativity on the job, and earns a competitive wage in the turbo-charged, do-more-faster metro D.C. market.

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Welcome to the world of contracts management consulting, the "It" job of the new economy. It's a world where career growth doesn't end with your final full-time paycheck and job satisfaction isn't measured by title, salary grade, or GS rating. And it just might be right for you.

The switch proved to be ideal for Thomas, who was a contracts director at a "Big Six" consulting firm and also held positions with the Air Force and the Department of Defense, among others. In 2003, he began developing a year-long exit strategy from full-time employment, so he and his wife could transition their twins into a new public school, with half-day hours every Monday.

"Both of our director-level jobs were extremely demanding, often requiring 50-60 hours per week," explains Thomas. "Family concerns and logistics forced a decision that one of us had to be more flexible during the work day." Thomas quit a director-level post in July 2004, took a week off, then immediately accepted an assignment through YRCI, an out-source solutions provider, as a contracts manager consultant for one of the nation's leading providers of national security services.

"I thought I'd done just about everything possible in my years as a permanent employee," comments Thomas, "but this particular contract is so unique, creative, and interesting. I'm really enjoying it immensely. Becoming a contract consultant was absolutely the right thing for me during this time of transition for my family."

Stats Indicate Growth in Contract Consultants

If you're reading this article, you might be currently contemplating whether or not to join the growing ranks of contract employees, also known as consultants. All of the national trends show that the numbers of people engaged in this type of employment are destined to virtually explode in the coming decade.

As of September 2004, the U.S. Bureau of Labor Statistics conservatively reported that 10,450,000 Americans nationwide are classified as non-permanent employees, representing 7.5 percent of the nation's entire workforce. However, since it is virtually impossible to capture rock-solid data about non-permanent employees, the actual number of "contingent" workers that would include contract consultants, considered by many to be one of the fastest-growing sectors of the economy, is probably much higher, based on research conducted by Daniel H. Pink, acclaimed author of the soloist worker's manifesto, Free Agent Nation.

In his landmark book (2001), Pink asserts that a whopping 33 million free agents--about one in four Americans--are at work in the United States today, perhaps the largest single cluster of workers in the economy.

There's another statistic that is especially relevant for those of us in the metro Washington, D.C., market, home of the region's largest employer--the U.S. government. At www.federaljobs.net, the on-line career center for federal job openings, the big, bold print on the home page states, "The federal government employs more than 2,715,000 workers. Over half of the federal workforce will be eligible for regular or early retirement next year. That means tremendous opportunities for those seeking federal employment."

Guess what, Uncle Sam: This also signals a wealth of opportunities for federal retirees to explore contract consulting opportunities as a viable career change. But you might be wondering if your personal DNA includes the genetic code makeup to survive and thrive on a series of outsourced job assignments in different office environments.

Ex-government Employees Share Stories

According to Rick Cooley, who retired from the government when he became eligible after 30 years, the positives of contract consulting far outweigh any negatives. For the past year, he has managed a contract awarded to YRCI by the Department of Homeland Security Headquarters, helping the agency expand from about 250-300 employees at startup to its current roster of 2,200 with an expected final headcount exceeding 3,000.

"Under this DHS contract, my daily duties are very similar to what I did as a full-time federal employee," he observes. "We're responsible for all aspects of hiring for a federal agency, such as announcing jobs, screening and interviewing applicants, writing, and evaluating job descriptions and more."

He notes that, as an outside contractor, the emphasis is on processing actions within the federal government's established system. "There's a great need for a staff of people who have experience with the complex rules and regulations of the federal government," he states.

"There can be quite a steep learning curve if you've never done this type of work before. That's why many former government employees make ideal candidates as contract employees. For agencies like DHS, it's like hiring an insider who knows the business. I've never felt 'us versus them' conflicts with the permanent employees of DHS. Plus, we can train some of the younger members of the team on how to process things the way the government wants. A good mix of talent on a contract team will include old government bureaucrats along with some new blood," says Cooley with a laugh.

Like thousands of federal employees, Cooley valued the comfortable sense of security that accompanies a permanent position with the U.S. government. Although he hadn't originally planned to retire so soon, he noticed the increasing amount of work that was being contracted out during his final year of full-time employment.

Soon after reaching retirement eligibility status, he saw a chance to work as a consultant at a nearby office, which is much closer to his home and eliminated the daily mind-numbing commute to New York Avenue in downtown D.C. Cooley recognized his tipping point, and jumped at the opportunity.

"For me, it was worth the risk of leaving my permanent job because I have my full government benefits to fall back on," acknowledges Cooley. "As a contractor, you never know how long a contract will last or if it will be renewed. That's where working with a good outsourcing agency comes into play because they'll be actively looking for your next assignment when the current one is about to end."

Another ex-government employee with a 30-year track record, Shelia Graves, traveled the world with the Department of the Army and the Department of Defense. She then retired in 1996. For several years, she ran her own successful business as an independent contractor before becoming affiliated with an outsourcing provider to become a consultant.

She readily admits that operating as a stand-alone company or being an independent contractor takes nerves of steel and high energy levels. "I was always selling myself to get new contracts and each one had to be negotiated from scratch. My client companies often paid me when they wanted," she says, meaning she never quite knew when the payments would arrive for her services. "There's much more continuity and consistency with paychecks when you work through an outsourcing specialist that's administering the contract."

If you have the self-discipline to manage your time wisely, you'll know why Graves relishes the flexibility of contract consulting. "Often, when consulting, you can arrive early or stay late, but only if you want to. I can basically set my own hours since the client companies are more accommodating with consultants. As long as I'm getting the job done right, I can structure my own day," she states.

With a shrewd understanding of the basic laws of supply and demand, Graves prefers to deal from a position of strength. "When you've got a name and reputation out there as an experienced government contractor, companies and outsource agencies will come seeking you," she confides. "If you have what they're looking for, you can negotiate your way into a nice salary and a win-win situation overall. There's good money in being a contractor if you know how to get it."

Reflecting on the relationship between permanent employees and contractors, her card-playing analogy continues when she quotes that line from Kenny Rogers' famous ballad "The Gambler": "You gotta know when to hold 'em, know when to fold 'em, know when to walk away, know when to run."

"Contract employees have to adapt rapidly to the culture of the office where they're working on a project. Depending on the contract, it's possible that the permanent employees might be a little jealous or intimidated by your expertise," Graves says. At times, there were situations when she made compromises and others where she was forced to take a stand.

Graves believes that any underlying tensions between permanent employees and contractors are unfortunate but often unavoidable in today's employment landscape where RIF downsizing is a real-world fact of life. "Some of the permanent employees feel like you're competing for their job. Always remember that your reputation is at stake. You have to be confident and strong," she adds.

Both Cooley and Graves favor staying in permanent government employment until full retirement status is attained. If you have a substantial mortgage payment or children in college, contract consulting might inject unwanted stress into your life. "No need to age yourself any faster than necessary," Graves advocates.

Time for Reality Check

So how do you determine what's best for your individual career path? Perhaps the choice to be a contractor sounds more enticing, more entrepreneurial, but is it right for you? Basically, it's time for a soul-searching reality check.

Brian Digby, a consultant since 1997 and a corporate employee for many years, empathizes with employees who opt to remain on the permanent payroll instead of launching a career as a contractor. On one hand, if your career goals include moving up into mid-level, senior, or executive management within an organization, or if you enjoy the relative security of a full-time job and well-delineated job responsibilities, then a corporate or government agency position is probably the right choice.

"On the other hand," remarks Digby, "there are some compelling advantages to being a contractor or consultant." For starters, many men and women in the full-time workforce crave the work/life balance that allows for more flexibility and time to spend with children, volunteer activities, or in leisure pursuits.

In addition, corporations and government agencies regard contractors as "subject matter experts" according to Digby, commenting, "The expectations are extremely high. If you like challenges, there are plenty of them in consulting." He believes that most consultants pride themselves on their ability to make out-of-the-box contributions quickly by crafting creative solutions for their contract assignments.

And you won't find consultants in charge of planning the office holiday party or ordering the weekly coffee supplies or calling the copy machine repair company. Because they are hired to execute a specific program, project or initiative, consultants can really focus on getting the job done, not on getting sidetracked or bogged down in nonessential tasks that can erode productive minutes from the workday.

Digby warns would-be consultants against venturing out on their own if their financial obligations and spending habits would put The Donald to shame. "A somewhat more conservative lifestyle might fit better with the life of a consultant because, let's face it, there could be some downtime between assignments," he advises. Working with a consulting firm specializing in your area of expertise--your "Unique Selling Proposition" or your "industry" to use business jargon--potentially allows for a much steadier stream of consulting engagements.

Niche Knowledge Opens Doors

Corporations and government agencies welcome the presence of contractors and consultants for their niche knowledge and expertise. In fact, when Diana Jaeger left the National Institutes of Health in 2000 after 20 years as a grant policy administrator, she was soon sought out by another government agency to assist with their grant procedures on a part-time contractual basis.

"Whenever hiring a contractor is a viable option for the federal government, it's often the ideal way to bring in the best person with the exact background required," says Jaeger, who started her government career as a GS-4 clerk typist and rose to the coveted senior executive service level. "This practice is a very cost-effective way to manage employment spikes throughout the year."

Best of all, Jaeger is enjoying her daughter's senior year in high school and volunteering in the community, now that she's not burdened with the start-to-finish accountability of the grant projects.

"I'm no longer responsible for the actual implementation of the grant policies, even though I might do all the research, make the recommendations and advise the staff," she explains. "A government employee has to make sure that the grant is complied with, while I know that my part of the job is over and I can move to the next grant. When you're the full-time employee in charge of the grant, the job can go on and on." Through a firm, Contracts and Grants Consultants, LLC, she consults to several federal and state agencies, offering her more diverse work experience.

Client Opinions

From the client's perspective, a talented and fully engaged corps of contract consultants can achieve unprecedented levels of business transparency and also up the productivity ante for savvy corporations or government agencies. Sometimes even on a global scale.

Just ask Dennis Negran, formerly with Harris Corporation, a $2.5 billion organization, and now senior vice president of organizational development for Man Tech International. At one time, he managed a number of contract engineers for a high-tech project between California and Russia.

"While the contractors in California slept, their counterparts in Russia worked on the project, sending the code back to the USA," he relates. "When the West Coast team reported for work in the morning, they had what they needed to keep things moving seamlessly. Each day, the cycle would repeat, making this truly a 24/7 operation. I would definitely do it again."

More recently, one of the divisions at Man Tech needed to hire hundreds of people in a very short time period. Negran rounded up some HR "gunslingers," his favorite term for contract consultants, who scheduled eight job fairs resulting in 225 hires in eight weeks. "There was zero ramp-up time since the experienced contractors could hit the ground running," Negran says, "Sometimes we've offered full-time jobs to contractors and they decline because they want to remain in consultative positions. It really suits some people well."

After 20 years as a full-time federal contractor with the U.S. military, Ed Rinkavage retired in 1996 to become vice president of the LEADS Corporation, which provides acquisition support services to federal agencies. Now that he sits on the client side of the contract business table, responsible for hiring contract consultants to manage a variety of projects, he agrees with Negran that non-government industries regard former federal contractors as valuable commodities for their expertise.

"Government employees who make a career commitment to consulting should wait for an offer that will bring them the most job satisfaction," counsels Rinkavage, "or one that will be a lot of fun." However, reminds Rinkavage, consultants must never forget that their workplace time must be 100-percent billable or their contract assignments could be in jeopardy.

A rewarding by-product of consulting jobs often involves working with senior-level individuals who would not ordinarily cross paths with a permanent government employee. "The sky's the limit on the opportunities to interact with executives," claims Rinkavage. "I currently work with a high-ranking defense officer whom I would never have known personally in my job with the government, even though I was in the military."

Search Firms and Outsource Specialists

Whether you're a permanent employee or a contract consultant, charting your career path often includes a close encounter with executive search firms and/or outsource providers.

Brian Digby worked for a national executive search firm based in Chicago for several years, placing IT professionals, HR executives, and various project officers up to vice president levels. In his opinion, the benefits in aligning yourself with a professional recruiter are considerable.

First and foremost are the contacts, contacts, contacts. A good recruiter stays "dialed-in" with a constantly expanding network of HR managers and hiring managers in corporations, organizations and government agencies where the job opportunities abound.

"No way does the average job seeker, whether they are looking for another permanent career position or a consulting engagement, have access to as many names, hiring companies, and potential positions," claims Digby. "The best jobs often come through networking and an introduction from the recruiter, which is much better than sending a blind resume to an employer."

Other requisite resources in the smart recruiter's trusty toolkit include career counseling, advising candidates on resume formatting and wording, and prepping candidates for job interviews. Furthermore, gifted recruiters are blessed with intuition and insight based on extensive market research and a solid understanding about the client organizations that will be interviewing candidates. Armed with this versatile skill-set, recruiters can help candidates secure a lucrative job offer worthy of high-fives all around.

"Most of all, recruiters must be honest and have the best interests of the candidate and the client at heart," Digby insists. "They should take the time to find out what's important to the candidate, and learn everything possible about the client and the work environment to make a match that will last."

Kevin Thomas vividly recalls the time when a former employer ran an ad in The Washington Post for some positions that were vacated by turnover. Soon afterward, the HR department deposited 1,000 resumes on his desk for review. This surreal experience convinced Thomas of the value of executive search firms or outsource agencies, which can screen through the mountain of resumes and recommend the top applicants for interviews. Rarely is there ever a high percentage of qualified applicants to job postings and/or newspaper ads; the search firms are experts at finding those passive candidates.

According to Thomas, the worst-case scenario involves an executive search firm whose priority is earning their placement fee by shooting the candidate's resume around willy-nilly to every conceivable employer, hoping for a hire. "You want a recruiter who will actually tailor your search to what matters to you," he states.

Ed Rinkavage comments on the added value that recruiters deliver by positioning the hiring organization in the most positive light for prospective candidates. "We're not staffed to be constantly recruiting and networking, so we work in partnership with the reeruiting service. They have our promotional brochures and other recruiting materials, which helps them to sell our company to the candidates."

For anyone wrestling with the decision to become a consultant, candidates should never be afraid to ask the recruiting organization the big question: What happens when the contract expires and the client doesn't renew it for whatever reason?

"Reputable recruiting organizations will discuss that issue with you before it ever happens and will help you manage it," Thomas remarks. "Although there are no guarantees, the better agencies aim for minimal breaks in service, so look for an agency with a proven track record for securing a significant number of qualified contract assignments."

Conclusion

As referenced earlier in this article, the candidate pool of contract consultants for government and corporate projects is poised for robust growth in the coming decade and beyond, especially as 77 million Baby Boomers approach retirement. Moreover, a recent AARP study shares that 80 percent of Baby Boomers plan to work in some fashion during their retirement years, indicating that consulting looms as a golden opportunity for these unconventional, break-the-mold retirees.

Another statistic to support this trend comes from Rebecca Ryan, a nationally known futurist and president of Next Generation Consulting. Ryan's research team reports that, by 2006, two Baby Boomers will be leaving the full-time workplace for every one Generation X employee coming in.

Dennis Negran, who has worked closely with government and corporate contract consultants and has also outsourced numerous projects to these consulting professionals, whole-heartedly concurs that the field of contracting and consulting is growing exponentially.

"There's an increasingly smaller labor pool to choose from, especially if an employee with federal security clearance is required. This makes the experienced government employee even more valuable as a contractor," Negran summarizes. "I predict that the rise in contracting and consulting candidates will more than match the shortage of human capital on the job front."

Ultimately, despite all the facts and statistics, the decision to become an independent contractor rests with the individual. Kevin Thomas likens the swarm of considerations and choices he faced to atoms floating around randomly until, finally, they line up with precision to form a perfect molecule. Then everything makes sense.

Just one word of warning: Don't call him or other contract managers on Friday afternoon. "You know that old saying that fish grow to the size of the bowl?" Thomas concludes. "Well, the bowl gets pretty huge at the end of the week in the contract management business."

*name changed for privacy purposes

RELATED ARTICLE: Recommended Skill-Set for Contractor Consultants

Good writer

Proficient public speaker

Excellent listener

Subject knowledge expert

Shrewd negotiator

Creative

Detail-oriented

Organized

Adaptable

Big-picture thinker

Is Consulting for Me? Questions to Ask Yourself

Do I want more freedom and flexibility in my job?

Am I self-motivated?

Can I adapt easily to new office environments?

Can I meet my financial obligations if there's a gap in contracting assignments?

Am I a creative problem solver?

Am I a good time manager?

Am I an expert in my field?

Do I want more variety in my job?

Can I work outside my comfort zone?

Am I a good negotiator?

Can I work productively from a remote location, such as my home?

About the Author

SHANE MOORE is vice president of contracts management and procurement services for YRCI, a mid-sized outsourcing organization headquartered in Centreville, Virginia. YRCI provides commercial clients and the federal government with a wide array of contracts management and HR services. Send comments on this article to cm@ncmahq.org.
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Author:Moore, Shane
Publication:Contract Management
Geographic Code:1USA
Date:Feb 1, 2005
Words:3671
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