The Evolution of Tenure Within Consulting Services

Posted by:Whitridge in Business & Technology
13 November 2013 0

Tenure - noun

1. A fixed period of time during which a person holds a job or position.
2. A status granted after a trial period.

Within higher education, the word tenure elicits visions of a college professor being recognized for many years of service to their college or university.  It symbolizes reward for a distinguished career and stability for both the educator and the employer.

Within consulting services the word tenure has created an entirely different context.  It immediately elicits fear of co-employment exposure and instability.  It has evolved into a fixed period of time before a person “loses” their job or position.  Contractors constantly worry about their assignments being extended, and hiring managers fear losing their most talented candidates before deadlines are met and projects are delivered. 

Corporations taking steps to reduce co-employment exposure is sound business logic. The implementation of fixed contract tenure limits is a widely accepted practice to reduce co-employment liability.  However, this is also an example of where business process appears to be superseding business logic.  It is also seen as a best practice, and has not been unilaterally implemented at all firms.

The market for highly skilled candidates is extremely competitive.  The evolution of sophisticated software has increased the complexity of implementing and configuring these applications, and placed an increased premium on candidates with specific product knowledge and industry specific experience.  These factors have stretched project implementation schedules, and created a void in the market for certain skill sets. 

Hiring managers are left with a choice.  Find the best candidates in the market and pay a premium, or hire highly talented workers and invest the time and expense to bring them up to speed.  They are also faced with launching a multi-year project plan knowing that they will most likely lose their top consultants well before they go live; yet they have restricted budgets to hire full-time. From the candidate perspective, they know that they are being hired for a fixed period of time, so their focus is to earn the highest hourly wage possible, while picking up new skills and experience to be used on their next contract assignment.  With the changes in employment law, the advent of mandatory healthcare and the void in the market for highly skilled workers, conditions favor the contractor despite the lack of “tenure.”

The current state of the contract employment market has rendered tenure polices as more of an obstacle than a tool to reduce risk.  Consulting firms hire and onboard contractors as their own W2 candidates, and are clearly designated as the “employer of record.”  These candidates are pay-rolled and offered benefits once eligibility requirements are met, and the firm assumes responsibility for all payroll taxes and unemployment.  It is also standard practice to have Master Services Agreements in place between the consulting firm and the corporation that clearly delineates that the burden of employment falls to the firm.  In some cases, there are also Vendor Managed Services on premise to further separate corporations from any co-employment risk.
Ultimately, the true burden of tenure policies falls to corporations who are in constant need for highly talented candidates, yet release contractors from projects despite the business impact to comply with policy; and the consulting firms that are the “employer” of record and liable for unemployment and healthcare benefits once those limits are reached.

At least we can rest easy knowing that we have reduced corporate co-employment risk….