When you are working in a permanent salaried position, contracting can seem like quite an attractive option. You see contractors join your organisation, they seem to have less responsibility, they do their hours and go home (without taking work with them!). What’s more, you suspect that they are being paid a bit more than you.
It only makes you more convinced when they tell you that they don’t pay PAYE and they are able to draw a proportion of their income through dividends which do not incur National Insurance. They even have more flexibility about their pension arrangements. In fact, it looks like you could be doing an easier job for more money.
That’s the attraction of contracting. But not everything looks as good as it may seem.
I’ve experienced contracting first-hand in my earlier career in IT. For me it had a huge number of attractions at that stage of my career. I had a premium skill in the software development space. I kept up to date with that skill and was able to command a premium for it too. It enabled me to do work I enjoyed and earn very good money. Better still, I was able, generally, to keep out of the whole management politics.
There was a time in my career where it really worked for me – but it was when I looked around me that I realised that, as a career fix, it was going to fail sooner or later.
Here are some of the reasons why I believe contracting isn’t the route to a sustainable long-term career. I’ll also share with you a path that definitely is.
Challenge 1: Developing leadership and management capability
As a contractor you are primarily selling your technical skills – and that may feel rewarding at first. The downside is that you’ll not usually be put in positions where you have management or leadership responsibility, so developing those valuable skills becomes a real challenge.
As you get older you will realise that sustaining a long-term career through just your technical proficiency will not work. You will find, as I found, that younger and possibly more energetic bright young things come in behind you with newer, fresher skills. To remain competitive, you need be at the edge of the skills challenge – and that can put you under a lot of pressure. Let me give you a real life example…
My world was IT and IT is a fashion business. Every two or three years there is a new fashion whether it’s a new language, or a new architecture or technology. To continue to be a premium resource you have to keep yourself at the front of those developments.
As a contractor it can be difficult to get the training and the experience you’ll need to do this. I managed it for about ten years, but I could see it was going to get more difficult and transitioning from one technology or one language to another, became more tiring and definitely more tiresome.
In the contracting world they hire you for what you can do, not for what you might learn to do. But remaining ‘current’ is a challenge for a contractor, so the natural place to move to is to become a manager and a leader.
As a manager or a leader, you are valued for your experience and your knowledge as much as for your skills. You can parley the fact that you have slightly out of date skills, for the experience and knowledge that you have got that you have built up over five, ten or fifteen years.
So, the longer you remain as a contractor, the more you risk not acquiring these skills. What seemed like a good career move at the outset could tend up actually limiting your options.
Challenge 2: The myth of contracting being a way to develop your own business
The second thing that people often see as attractive about being a contractor is that this is the first step to having their own business. Again, my experience is that this is a fix that fails.
As a contractor you typically find your work through agencies, and when you are working through an agent you are either working hard on a project or working hard to find your next one. You just don’t have the time to build a real business. Yes, you may be trading as a limited company, or you may be submitting a corporate profit statement to the HMRC or identified in government statistics as a small business owner, but don’t fool yourself that you are really running a business.
All those things that involve you actually building a business, not just trading your time for money, requires the opportunity to spend time on developing your business. You’ll also need to develop your product, find a market and build a team to help you.
What I knew, and what I have seen so many other contractors struggle with, is breaking out of that full-time ‘in a contract / looking for a contract’ mode. Because the rewards are slightly higher than a salaried position and because you are always living for the next contract, your limited capacity to set aside time and money to build your business means you are at risk of it never happening.
I spent three years trying to find a business partner to build my first business with. In the end I found somebody, we built a business together and I learnt a lot about the process. The business did not succeed but it equipped me to step out of that contractor world – and that’s when I really learnt about business.
Contracting is a way of increasing your income and moving away from employment, but it’s not a first step to building your business. That is a completely different ball game. The only way that it can work is if you use contracting as a faster way to build a pot of savings which sustains you when you commit to building your business.
Challenge 3: The forces of Ageism
The other reason that contracting fails as a career fix is you are still at the mercy of the forces of ageism. You may have a bit more flexibility than people in salaried employment, but I often see contractors who have got to the stage in their life where the actual opportunities dry up. The typical complaint is that you are over-qualified – which is a polite way of saying that you are too old.
Ageism makes them believe that you aren’t going to be flexible enough to work in the modern workplace. However strong your skills, they don’t see you as a culture fit to the younger team that you need to bring your skills into. They just believe that older people are not fit for the modern workforce. You and I know this isn’t the case of course – but that’s of little comfort if we aren’t the ones making the decisions.
Any one of the above challenges has the capacity to limit the potential of a contracting career. It’s likely that you won’t develop the leadership and management skills you need. It’s also highly likely that the pressure to deliver will limit the time to develop the skills you’ll need to remain current. To cap it all, if you do manage to stay in contracting for a period of time, you risk being considered too old anyway.
As a result of all of this, I’ve have seen people with very deep technical skills get to the stage where they cannot get contracting work anymore and they go off and they do something that meets none of their career ambitions. They sell insurance, or get involved in a multi-level marketing organisation, or they go off and get involved in some kind of low paid ‘hope for the best’ kind of employment.
It is incredibly sad to see these really experienced, really knowledgeable, gifted people settling for second and third best because their contracting career has been a fix that fails.
So, what are the alternatives?
The alternative is to be intentional about building a business. If you are a technically experienced, proficient, mature senior person then the freedom that the world of a portfolio executive brings is an attractive and achievable option.
As a Portfolio Executive, you’ll be able to work part-time for several mid-sized businesses in an executive role, helping them grow and deliver results. By having several clients simultaneously, you can afford for one to stop whilst searching for the next. You are building a real and sustainable business based around your proven capabilities, helping other businesses grow. In addition, the flexibility it affords allows you the time to keep up to date with developments in your specialist field.
To find out more, check out our Portfolio Executive programme. Not only will you discover a career fix that really does work, you’ll realise the rewards that can come with it.
Charles McLachlan is the founder of FuturePerfect and on a mission to transform the future of work and business. The Portfolio Executive programme is a new initiative to help executives build a sustainable and impactful second-half-career. Creating an alternative future takes imagination, design, organisation and many other thinking skills. Charles is happy to lend them to you.