The illusion of selling time

I, and many of my colleagues, typically work in contract roles. Whether in private or government industries, we are usually paid for our services on an either daily or hourly rate.

There is an view amongst many employees that we work alongside, and unfortunately many in procurement also, that the rate we are paid is always too high. We could work for free and it is my belief that people would always harbour this illusion.

Firstly, there are the standard technical responses. A contractor is usually not paid when not working. This includes days sick, days looking after kids, doing errands, or simply taking a day off. Often superannuation is also a component of that “rate” that is argued to be “too high”.

That is enough of the usual response.

The more important illusion to be dealt with is simply the commodity basis of hiring a skilled contractor. You are hiring their knowledge and experience, not their time.

When you have a task to be performed, or a larger project to be delivered it requires a particular set of skills to complete it effectively. You require two things as a stakeholder in the completion. You require someone with those skills AND you need them to have the time available to complete the job.

I admit to finding it somewhat ironic when I hear complaints from employed staff and managers along the lines of:

“I am so overworked, I can’t find the time to do all of this work”

and then in the same breath:

“How can they keep bringing in these short term contractors?”

Bringing in new staff requires time to train them and familiarise them with not only the systems and processes that you use but probably more importantly the culture and social dynamics of the company or government department. In doing so you are also reducing the capacity of your more experienced staff who take time away from their contributions to goals to now develop the new team member. All worthwhile, however at a cost. Now you have 2 unproductive people for a time on your payroll. Again, this is of longer term benefit.

In the short term, however, you have work to get done and jobs that need skills that may not currently exist in your organisation. It may be, though, that you won’t need those “get things set up” skills once you have a new process or system in place. It’s a little bemusing that business cases for millions of dollars get passed to implement new IT systems and processes, however cuts are often made avoiding spending money on people to help you actually get value, and avoid reduced productivity, from those expensive capital investments. I’ve seen it so many times and I admit to just shaking my head. For anyone who has lived through the aftermath of a new global system implementation you will know how accurate this statement it.

It is this area where contractors are of greatest value. They can come in without political agenda (they know they will leave once the job is done so usually aren’t seeking political gains) and utilise their pre-existing skills to complete tasks. They will, of course, need some familiarisation time and support to know who is who in the zoo. It is typical though that you will find faster gains in the work that you do in bringing in experienced short term skills.

There is an old adage amongst Engineers.

There was once a retiring old engineer who had kept a machine running for years. He had trained the team he was leaving on how to manage that equipment and why it was important. A few weeks after he left the machine stopped working. The team could not get it to work again and called in the old engineer to help. It was costing the company thousands of dollars a day to not have that operating.

He agreed and came back to help. After an hour or so of inspection he placed a chalk mark on the machine.

“Hit it there with a hammer”.

Sure enough the machine was running again after that hammer stroke.

The old engineer submitted his invoice for $1,000.

The invoice was promptly rejected by the purchasing manager.

“I’m not paying $1000 for 1h work and a chalk mark! I want an itemised bill that explains this before I consider it!”.

The old engineer submitted a new invoice:

$1 for the time and chalk.

$999 for knowing what to do with it and where to put the mark.

The invoice was paid in full.

What you are not doing is paying for their time. What you are paying for is their ability to apply skills quickly and add value. You are paying to make faster use of opportunity or to more rapidly and effectively avoid or reduce loss. Remember this when deciding that the first cuts to make are your contractor budget! If you really have the existing capacity and skills in house already, why aren’t you making use of them now.

In the current market useful people are in high demand. You may want to rethink your procurement strategy to attract those people. They are offering up their skills and experience to assist you. They are not selling time.

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Nathan Jones

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