Leadership

Understanding and Overcoming the Challenges of Managing Independent Contractors 

by Tosho Trajanov

14 min read

The global workforce is experiencing a pivotal shift. A McKinsey survey reveals that 36% or 58 million Americans now work independently. This trend isn't confined to the U.S. The tech industry, in particular, is leaning into contractual hires.

In January 2021, only 6% of tech job listings were for contract roles. By October 2022, contract-based tech listings surged by almost 20%. Additionally, many engineers affected by the 2022 and 2023 tech layoffs opted for independent contracting, capitalizing on its flexibility and emerging opportunities.

However, while this trend continues to grow, many businesses harbor reservations about hiring independent contractors. These doubts range from quality assurance to compliance and communication challenges. 

In this article, we'll explore the most pressing concerns companies face when considering collaborating with independent contractors. More importantly, we'll offer tangible solutions to these challenges to help businesses capitalize on the benefits of this emerging workforce. 

Cultural Differences

Managing a team with contractors from different cultural backgrounds can be a bit tricky for some managers. Being on time is one area where misunderstandings can happen. Some managers might think being late is unprofessional. However, in some cultures, people might not be as strict about exact times and would place greater importance on doing things right and maintaining harmony rather than getting something done just for the sake of meeting a deadline.

How people make decisions can also be different. A manager might be used to making choices based on lots of data and planning. In contrast, some contractors might be more flexible, using the information they have on hand and what feels right at the moment.

Cultural differences can influence perceptions of continuous improvement. While some cultures might view feedback as a tool for growth, others might see it as criticism. This can make implementing continuous improvement strategies more challenging.

Lastly, holidays and celebrations are important to consider. Different cultures have their own special days and ways of celebrating.

Addressing Cultural Challenges 

Here are some solutions to effectively navigate cultural nuances in a global workforce. By adopting these strategies, tech leaders can fully embrace and foster cultural diversity, transforming it into a powerful catalyst for creativity, innovation, and enhanced quality in their projects and products.

  • Research and training: Research the cultural norms and expectations around punctuality and communication in the cultures you are interacting with. Investing time in learning these differences fosters respect, reduces misunderstandings, and improves overall team dynamics.
  • Collaborative decision-making: When possible, make decisions collaboratively. This ensures that everyone's viewpoint, shaped by their unique cultural background, is considered.
  • Respect for holidays: Be aware of and respect the significant holidays of the contractor's culture. This might mean adjusting deadlines or being understanding if they're unavailable during those times.
  • Communicate clearly: Communicate your expectations around punctuality clearly, and make sure to confirm your understanding of the other party's expectations. Be specific about the duration and due dates of projects or deliverables, and ensure that everyone is on the same page.
  • Learn basic etiquette: Familiarize yourself with basic greetings or phrases, or cultural practices, even if it's just a nod to the contractor's culture. This shows respect and can help build rapport.

Ensuring Operational Excellence 

With a team of independent contractors spanning various geographies, maintaining uniformity in quality and building trust can be a challenge. 

Given their independent status, contractors might have developed their own way of working, which may not align with the company's established processes. This can lead to inconsistency in output quality, making it harder for teams to predict and manage results.

There might be gaps in how knowledge is transferred and documented. When independent contractors complete their contracts, they might depart with valuable expertise that hasn't been ingrained into the organization.

There's also the challenge of using specific tools and software. Independent contractors might be accustomed to using different tools or software. Integrating or adapting to a company's preferred tools can lead to productivity slowdowns or data silos.

Attitudes toward quality control can also vary. What one culture sees as "good enough," another might see as requiring refinement. This can lead to inconsistencies in deliverables.

Beyond this, aligning contractors to the company's goals is crucial. Without proper alignment, the team might pursue objectives that deviate from the broader company vision, which can affect overall productivity and coherence.

Upholding Operational Standards 

Managers can adopt the following solutions to maintain and enhance operational excellence:

  • Standardize tools and processes: Provide contractors with access to the company's preferred tools. Offering training sessions on these platforms will smooth out the transition and ensure everyone is on the same page.
  • Document knowledge: Encourage, or even mandate, contractors to document their processes, insights, and critical information. Tools like internal wikis or shared document platforms can help in capturing and retaining knowledge.
  • Give everyone a voice: Make sure everyone is given a voice when technical issues are being discussed. If there's an issue on the team and you're in a meeting, give the independent contractors the time to talk about it. If they come to you with a problem they've found, empower them to fix it. Give them dedicated time and space in their schedule to experiment, build out Proof of Concepts on things, as this is the best way for senior contractors to understand the problem and better respond to it. 
  • Support team discussions: Team alignment can be a major problem. So, to avoid technical disagreements, try to align things ahead of time. Have a discussion beforehand. Have senior engineers from the team speak about the problems they're identifying and champion what they think is the right technical direction to drive consensus and build trust with their peers. 
  • Ensure team goals align with company goals: Avoid falling into the "tunnel vision" trap, where immediate team-specific deliverables overshadow broader company objectives. It's essential to balance and align immediate team goals with the overarching directives of the company. For instance, while a platform team might focus on specific group needs, it should also consider what's most beneficial for the entire organization. By promoting expansive thinking and fostering robust communication across all levels, teams can ensure they are not only meeting their immediate objectives but also contributing meaningfully to the business's overarching success.

Compliance Challenges 

As companies collaborate with contractors from various regions, they are introduced to a myriad of distinct labor regulations, each carrying its own nuances. 

The intricacies don't end there; tax systems can vary greatly from one region to another, demanding meticulous attention to ensure adherence. Additionally, standards and expectations around confidentiality may differ. It's essential for companies to ensure their contracts are tailored to respect local regulations and, at the same time, safeguard their intellectual assets and proprietary information.

Tackling Compliance Issues 

To effectively deal with these complexities:

  • Stay informed: Regularly review and stay updated with international labor laws and tax regulations. This can be done by subscribing to legal updates or partnering with legal professionals specializing in international labor relations.
  • Customize contracts: Create tailored contracts for each region or country where the independent contractors are based. This ensures that the terms are aligned with local regulations, which reduces potential legal risks.
  • Consistent confidentiality clauses: While regulations may vary, maintaining a standardized confidentiality clause across all contracts is crucial. This protects company information while ensuring that contractors understand their responsibility in maintaining secrecy.
  • Engage local experts: Consult with local legal and tax experts before onboarding contractors from a new region. Their insights can help preemptively address potential compliance challenges.
  • Leverage platforms like Adeva: Adeva handles all the intricacies, from billing and payments to compliance and NDAs. By partnering with Adeva, your business can be assured of a smooth process so that you can focus on innovation and growth instead of administrative overheads.

Communication Barriers 

There are many communication challenges that might arise when working with independent contractors. Time zone differences can impede smooth scheduling, and cultural nuances might sometimes lead to misunderstandings. 

An over-reliance on written communication can be problematic, especially in tech roles, where a quick verbal discussion or screen-sharing session can sort out complex issues more efficiently than extensive email threads. The absence of non-verbal cues in these written exchanges can lead to further confusion.

Occasionally, teams might face discrepancies in technical jargon and standards. A term familiar to one member might be completely foreign to another, which can lead to potential misalignments in work.

On top of these, technical glitches, such as unstable internet connections, can disrupt the flow of dialogue. The use of multiple communication platforms can scatter conversations, making it hard to track discussions. In this digital environment, there's also a lurking risk of burnout from over-communication as teams strive to keep everyone updated.

The lack of face-to-face interactions can further compound feelings of detachment. Also, the inherent asynchronous nature of remote collaborations can cause delays in feedback. To steer clear of these pitfalls, managers must be adept at accommodating the diverse communication styles and preferences of their team members.

Improving Communication 

Here are a few ways to improve communication:

  • Flexible scheduling: With team members potentially spread across different time zones, it's essential to be considerate of everyone's hours. Using scheduling tools that display multiple time zones or tools that find mutual availabilities can be a lifesaver. This ensures that no team member is consistently burdened with meetings outside their regular working hours.
  • Promote team building: Just because a team is remote doesn't mean they can't have fun and get to know each other outside of work tasks. Engaging in online team-building activities, such as virtual games, shared movie nights, or collaborative projects, can help in building rapport and a sense of camaraderie among team members.
  • Embrace visual aids: Utilize diagrams, flowcharts, and shared boards like Lucidchart or Miro to visually communicate complex topics. We've put together a list of the best tools for running engineering teams, so make sure to take a look and equip your team with the resources they need to thrive.
  • Encourage 'no meeting' blocks: Schedule blocks of time where no meetings are allowed to let your team focus on work without the risk of burnout from over-communication.
  • Provide technical support: Ensure that all team members have access to stable internet connections and the required software. If possible, provide allowances for independent contractors to upgrade their setups.
  • Regular check-ins: Given the challenges of remote work, it's essential to be deliberate in setting up interactions. Regularly scheduled chats can provide a platform for insights, addressing concerns, and broadening perspectives. Through conversations, allow independent contractors to verify their understanding of issues. What they see as big challenges might be small, and what seems minor to them could be major.

Engagement and Motivation Challenges 

When it comes to the management and motivation of independent contractors, unique challenges arise. The very nature of their roles, which might involve irregular schedules, remote work, or task-specific contracts, can pose barriers to their full engagement in company culture and operations.

For example, independent contractors often miss out on daily face-to-face interactions that full-time employees experience. This absence can lead to feelings of isolation, as they may not be present for impromptu meetings, casual coffee breaks, or informal brainstorming sessions.

Independent contractors might feel they are viewed as outsiders, working on a per-project basis rather than being ingrained in the company's fabric. This feeling can deter them from voicing opinions or offering feedback.

Independent contractors may perceive limited opportunities for career advancement within a company, as they might not be privy to internal promotions or role transitions.

Full-time employees often have structured reward systems, including bonuses, promotions, or recognition events. Independent contractors, on the other hand, might not have access to these perks, which can dampen their motivation.

Ensuring Successful Engagement 

Ensure successful engagement by following these best practices:

  • Inclusive communication: Keep contractors informed with company communications, newsletters, updates, and role-relevant changes. Making sure they're in the loop promotes a sense of belonging and ensures they're updated on any crucial company news or shifts.
  • Cultural immersion: Invite contractors to company events and activities; share company vision, mission, and values. When contractors understand and feel a part of the company's broader goals, they're more likely to align their work effectively and take pride in their contributions.
  • Professional development opportunities: Offer training, workshops, and avenues for more responsibilities. Investing in their growth not only improves their skill set but also shows them that the company values their long-term development.
  • Provide regular feedback and recognition: Regular feedback and recognition play a pivotal role in maintaining team morale and motivation. It's often underestimated how much of an impact recognizing and valuing a team member's contributions can have on their drive. This is particularly true for contributions that may seem minor on the surface but, in reality, can significantly influence the broader team or organization. By highlighting these achievements to contractors, managers can substantially elevate their spirit.
  • Shield contractors from organizational dysfunction: Shielding contractors from organizational dysfunctions is paramount for their productivity and motivation. This involves ensuring contractors have dedicated time to focus on technical tasks without constant disruptions. While it's essential to involve them in crucial meetings where their insights are invaluable, it's equally vital to avoid overburdening them with meetings that stray from their main responsibilities. As managers, the role also entails shielding the team from unnecessary organizational stress. Reducing these pressures helps boost their motivation and productivity.
  • Promote work-life balance and encourage external interests: Promoting a work-life balance and nurturing external interests are essential components of a well-rounded employee experience. It's crucial to understand that relentless work without intermissions can diminish both productivity and passion. Encouraging employees to explore diverse interests outside of their professional realm not only provides them with a refreshing break but also revitalizes their mind and body.

Risk Management 

When working with independent contractors, several challenges can emerge. One frequent hurdle is creating clear contracts. Without these, confusion about roles, outcomes, and pay can occur, leading to potential disagreements or even legal issues. Intellectual property is another area of concern; unclear contracts can create uncertainty about who owns the work, especially in tech and creative fields. 

Confidentiality is essential, as contractors often collaborate with multiple clients, which increases the risk of unintentionally sharing a company's confidential data. Consistency in work quality might be hard to maintain with independent contractors, which requires extra attention. Data security is paramount; if contractors access company data from less secure environments, it may jeopardize data integrity. Also, relying too heavily on a few contractors can be risky if they suddenly can't work. Insurance coverage becomes vital, especially if a contractor's actions lead to financial or other types of losses.

Mitigating Risks 

Addressing the challenges with independent contractors requires proactive measures. Here are some solutions:

  • Robust contracts: Collaborate with legal counsel to draft comprehensive contracts. Ensure they detail responsibilities, deliverables, timelines, and compensation to prevent any ambiguities.
  • Intellectual property clauses: Clearly define in the contract who retains the rights to the work produced. Especially in tech and creative roles, stipulate the ownership of designs, codes, content, and other outputs.
  • Confidentiality agreements: Have contractors sign non-disclosure agreements (NDAs) that specify what information they can't share. This protects sensitive company information and sets clear boundaries.
  • Quality assurance protocols: Implement a standardized review and feedback process to ensure consistent quality from all contractors. This can include periodic check-ins, peer reviews, or dedicated QA sessions.
  • Data security protocols: Offer independent contractors secure platforms or virtual private networks (VPNs) for accessing and transferring company data. Regularly update and train them on best cybersecurity practices.
  • Secure partner: Partnering with a company that understands the intricacies of hiring and managing contractors can be a game-changer. Adeva, for instance, offers more than just a talent pool. They ensure that businesses can tap into top-tier tech talent while also handling various logistical aspects like compliance, billing, and communication, making the entire process streamlined and risk-averse.

Conclusion

Effectively managing independent contractors has never been more crucial. As the workforce evolves, tech leaders find themselves at the forefront of a transformative shift in how work gets done. Embracing this change not only means understanding the challenges but also crafting innovative solutions. 

By adopting the right strategies and partnering with trusted entities, businesses can harness the full potential of the independent contractor model. As we navigate this ever-changing landscape, the ability to adapt and innovate will define the companies that thrive in the future. Tech leaders, it's time to lean into this change and shape the future of work with confidence and foresight.

FAQs

Q: What is a contractor in tech?
A contractor in tech is a professional hired for a specific project or a defined period, rather than as a permanent employee. They provide specialized technical expertise, often working remotely, and operate under a contract that outlines deliverables, timelines, and payment terms, without the typical benefits given to full-time employees.
Q: Why do tech companies hire so many contractors?
Tech companies hire contractors for flexibility, cost-effectiveness, and access to specialized skills on-demand. Contractors allow companies to quickly scale teams, manage project-specific needs, and mitigate long-term employment commitments, especially in the ever-evolving tech landscape where rapid adaptation is crucial.
Q: What are the challenges of independent contract work?
Some of the challenges businesses face when working with independent contractors include ensuring quality, navigating diverse labor laws, managing communication barriers, fostering engagement, and maintaining operational consistency across different contractors.
Tosho Trajanov
Tosho Trajanov
Co-founder

Tosho is a co-founder at Adeva, with over a decade of experience in the tech industry. He has partnered with diverse organizations, from nimble startups to Fortune 500 companies, to drive technological advancements and champion the effectiveness of cross-cultural, distributed teams.

Expertise
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