How to: effectively lead contractors and full time employees

As a team leader, it’s easy to assume that all people working together on a project should be treated and managed similarly. But the reality is that full-time employees (FTEs) and contractors have different motivations, expectations, and backgrounds.

Putting together the best talent to create an incredible workforce would appear to be a straightforward strategy for project success — but it only works if you realise that internal and external team members may need to be managed differently.

Here’s some great pointers from an article I read on Harvard Business Review for leaders managing a diverse mix of FTE’s and contractors:

Motivations and Opportunities

Understanding the differences between the motivations and opportunities of internal team members and project-based contractors is the first step. Both groups are likely to be intrinsically excited by the challenge of the work itself and want to do a good job. But the reality is that their external motivations are subtly different because of three ways that their work lives differ:

How they are paid: Because FTEs receive salary while contractors are either paid by the hour or on a fixed fee, their sense of urgency and time management may be unconsciously (or consciously) different. If contractors are paid on an hourly basis, they may have an incentive to put in more time than FTEs, who will receive the same paycheck whether they stay late or not; and if contractors have a fixed fee arrangement, they may be motivated to get the work done more quickly than FTEs, whose compensation will be the same no matter when the project is finished. So while they both want to meet deadlines, they may want to do so at a different pace.

It’s also worth noting that FTEs receive benefits as part of their compensation. These differences can result in resentment or confusion on the part of the contractors, who may long to enjoy some of these benefits, or may not be sure about which apply to them.

How they advance in their careers: As part of a larger organisation, full-time people who are part of successful project teams will often have multiple opportunities for internal advancement — to other interesting and challenging projects, to different departments in the company, or to higher levels of responsibility. For contractors, career advancement means finding new gigs where they can push their technical skills, deal with new or bigger problems, or move into new types of organizations. To achieve this, contractors want referrals and positive references along with “good press” on relevant social media channels.

How secure they feel about their jobs: While FTEs can volunteer for a project, or lobby their way into one, in other cases they may feel that they do not have a choice about whether to participate in the project, what role they play, or how long they stay involved. They may therefore envy the flexibility and freedom of the contractor who is not bound to the organisation, its politics, or its requirements for advancement. On the other hand, contractors operate with a certain amount of insecurity. They don’t have the same kind of organisational “home” and salary and are subject to the vagaries of the marketplace. These differences can lead to a sense that the grass is greener on the other side.

Understand your team members

Begin by getting these differences out on the table. Have explicit one-on-one or small group discussions with your own people and then with contractors about what they want to get out of the project personally, what they want to learn, how they see their participation fitting into their careers, and what success would look like for them at the end of the effort.

Naturally, don’t expect either group to fully share their aspirations, or to even know what they want. But at least open up the dialogue so that you get a sense of the differences and can provide some guidance on behaviors that might not be appropriate (like contractors selling follow-on services independently, or FTEs withholding critical information from contractors)—while still finding ways to help them achieve their goals.

Team-building and alignment

Leaders who create teams of people with different motivations, opportunities, and backgrounds need to focus particularly strongly on team building and alignment. (And that’s true more than ever in a virtual environment.) Contractors who are brought in just for a particular project, in addition to not knowing their new colleagues, are likely to be in the dark about the organisational, political, or strategic context of the project, and may even have different conceptions of what the project is supposed to accomplish and why. And neither group will fully understand the differences that will have been identified in your discussions with FTEs and contractors.

Given these gaps in understanding, you can’t just assemble the team, make some introductions, identify who is from the company and who is from the outside, and then launch in to work together. Instead, deliberately work to ensure that the whole team is on the same page about the project’s goals, its organizational context, the players involved, what’s been done before, what the possible barriers are, and so on.

Ground rules

As you bring the team together and launch the work, create and enforce explicit agreements and ground rules of behaviour for both contractors and internal project team members. For example, what information will be shared and with whom, how often, and in what formats? When will the team meet and with what agendas? What tools and facilities are provided to everyone? Who gets facetime with the senior executives or clients? Will team members and contractors present themselves as part of the same organization or as people coming from different places?

In answering these questions, consider two simple guidelines. First, follow the risk. When you deploy either an FTE or a contractor on a project, that person is your agent in the field; they should be given as much information, tools and access as possible to be effective. But if certain information or tools are sufficiently proprietary or delicate enough that they can’t be shared outside of FTEs, it may make sense to withhold information or wall off part of the project. Still, if the technical expertise of the contractor is essential to success, then the risk of poor quality from having a less-skilled internal person do the work might outweigh the exposure to proprietary information or tools.

The second guideline is to avoid making a two-class system, even if different rules do apply to each group. This can undermine team performance and create tension and resentment. If you do need to limit exposure to executives to internal people, make sure that they give due credit to their contractor colleagues. Similarly, if the team is co-located at a company site, give contractors access to cafeterias, gyms, and employee parking lots if possible. The marginal cost of providing these benefits is minimal and is more than made up for in team development.

In the event that you do need to exclude contractors from company meetings or special trips, or treat them differently because of labor laws, make it clear to them why you need to do this. Finally, work with all of your team members to help them better understand the advantages, disadvantages, and tradeoffs of being a contractor or full-time employee — and that both are necessary for achieving the kind of project success that everyone desires.

Some really helpful nuggets in there I think, I hope it gave you something to think about if you currently employ a mix of FTE’s and contractors.


Every Wednesday I book out an hour to hold a FREE agency leaders surgery. If you have something on your mind, a challenge you’re wrestling with or just want an alternative point of view, I’d be very happy to lend an ear and maybe help you start to unpick the issues. You can help yourself to my calendar, here. Speaking to a diverse group of agency leaders helps me stay current and contextualise the issues I’m seeing with my clients. So please see this conversation as a genuine collaboration where we both hope to learn something new.


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If you have something on your mind, a challenge you’re wrestling with or just want an alternative point of view, I’d be very happy to lend an ear and maybe help you start to unpick the issues.