Choosing between hiring a full-time employee or a consulting company for your project management needs is a pivotal decision for any company from large enterprise to small home-based operation. Both options come with their own sets of benefits and drawbacks and as with most business decisions, there’s no single clear deciding factor let alone a single correct decision. However, there are certain tried-and-true realities under either umbrella. Let's break down four major factors to consider: cost, expertise, scalability, and long-term impact.
Cost Analysis
Full-Time Employee:
- Pros: A full-time employee is integrated within your company, providing continuity and in-depth understanding of your company's culture and processes. You determine entirely who is hired into the position, which may give both you and them a more productive working relationship as you select the candidate who best fits your team’s culture.
- Cons: The cost of hiring a full-time employee goes beyond salary. Companies are legally required to provide benefits such as Social Security, Medicare, unemployment insurance, and workers' compensation insurance (Embroker). Additionally, for companies with 50 or more employees, health insurance under the Affordable Care Act (ACA) and family and medical leave under the Family Medical Leave Act (FMLA) are also mandatory (Justia) (Embroker). These costs can add significantly to the overall expenditure on a full-time employee. Furthermore, if this employee takes any PTO which they are entitled to, your team is forced to scramble to make up the difference and clients may notice a dip in services or a delay in projects.
Consulting Company:
- Pros: Consulting fees are often fully tax-deductible, providing a financial advantage. Moreover, consulting companies do not require you to pay for benefits, PTO, or other legally required costs associated with full-time employees (Embroker). You often have a fully staffed company at your disposal and can integrate a contractor that fits in with the culture of your team. Furthermore, you may not require a full 40-hours each week from your project manager. The consulting firm can offer you a project manager for the hours you need rather than hiring a full-time employee. Finally, the consulting firm will always work however many hours each week they are contracted to work. Service dips and project delays will not occur due to an employee taking PTO.
- Cons: The hourly or project-based rates of consulting companies can be higher compared to the annual salary of a full-time employee. The sticker-shock of a consulting firm’s contract cost can be daunting, but the cost is most often offset by the savings on benefits and taxes. Many companies actually save money this way.
Expertise
Full-Time Employee:
- Pros: Full-time employees can develop deep expertise in your company's specific needs and can provide consistent, ongoing project management. They can integrate themselves socially with their coworkers, establishing strong working relationships that provide immeasurable value to everybody involved and are readily accessible in the office.
- Cons: Finding the right candidate with the perfect blend of skills and experience can be challenging and time-consuming. Not every employee will be a good fit for the position they are initially hired for, and releasing an employee can be a legal challenge depending on the state and the laws surrounding employee protection.
Consulting Company:
- Pros: Consulting companies typically offer a team of experts with diverse skills and experience. This ensures that you have access to specialized knowledge and the latest industry practices. If the project manager assigned to your company isn’t a good fit with your team, the consulting firm may have other people readily available who are a better fit and will not incur increased costs or risky legalities.
- Cons: They might not be as familiar with your company’s internal culture and long-term goals as an in-house employee would be. They are highly unlikely to be physically present and must be reached virtually, which severs the human element of personal connection that office culture fosters.
Scalability
Full-Time Employee:
- Pros: Having an in-house project manager can ensure dedicated focus on your company’s projects. They learn your processes, they learn how your team functions and each individual’s personalities. They become more readily integrated into the culture of office life.
- Cons: Scaling up might require hiring additional staff, which involves more recruitment and onboarding costs. As previously mentioned, this growth carries the risk of a seemingly good hire not being a good fit and has the potential for disaster when it comes time to split ways with that employee. And, of course, once that employee is no longer with the company, the issue of a vacancy still lingers.
Consulting Company:
- Pros: Consulting firms can scale their services up or down based on your needs, providing flexibility and responsiveness to project demands. They often have multiple resources readily available and are able to scale quickly as your company requires based on incoming project work.
- Cons: Reliance on external consultants can sometimes lead to less control over project timelines and processes. Although this becomes less true with good communication and adaptability on the part of the consultant, the risk of a potential short-term relationship leaves something to be desired in the continuity of project management and consistency aspect.
Long-Term Impact
Full-Time Employee:
- Pros: Building an in-house team can lead to long-term stability and the development of a strong internal culture around project management. Once again, a long-term relationship with an employee that is loyal to the company provides value in this area. They can take the time to get to know the company’s culture as well as each team member’s unique wants and needs.
- Cons: High turnover rates can disrupt projects and lead to loss of valuable knowledge and experience. Project managers can flee to any other company offering higher pay or better benefits at the drop of a hat, leaving your company with a void to fill and nobody to fill it. This can deeply impact project timelines and client satisfaction.
Consulting Company:
- Pros: Consultants can bring in new perspectives and innovative solutions. They can help implement best practices and train your existing staff. The consultation firm is required to fill the required number of hours each week, even if they need to bring in a more senior member that is well versed in project management styles due to your dedicated resource being unavailable for any reason. This stability can be priceless and is likely to help prevent a lapse in project timelines which leads to great customer satisfaction.
- Cons: Over-reliance on consultants might hinder the development of internal capabilities and expertise. If your company hires out these services, the project management style will be developed by an external company rather than by a select group of in-house individuals who can share expertise and values amongst themselves.
Making the Decision
To make an informed decision, consider conducting a cost-benefit analysis that includes both direct and indirect costs. Assess your company’s specific needs, project complexity, and long-term goals. Sometimes, a hybrid approach of combining in-house employees with consulting services can provide the best of both worlds.
By weighing these factors carefully, large enterprises can determine whether hiring a full-time employee or engaging a consulting company is the right choice for their project management needs.