Consultant versus Contractor

I recently read a LinkedIn post of an article by QA writer Johanna Rothman, “Differences Between Hiring a Contractor or Consultant.”

People commented that they didn’t get the distinction, or didn’t agree with it. Commenters either said there is no such distinction, or they objected to it as an unfair “class distinction.” This was weird to me, because nothing could be more “standard procedure” than companies using this common parlance. So now I’m writing about it too.

My impression was that Rothman did a good job objectively describing how companies apply the terminology. Company infrastructure depends on the org chart, pay scales, rank, judgments of qualifications, and other classification distinctions. Consulting versus Contracting is just another typical classification used every day at most companies. Perhaps terminology can be off-putting, but “consultant” and “contractor” are central factors in nonperm hiring.

Both the consultant and the contractor are hired on a temporary contract basis. For example, a company might hire a “contractor” to complete 100 tasks in a timebox, and no extra advice is welcome—because a “consultant” already developed a plan that describes which 100 tasks need doing, and helped hire the contractor to do the tasks. The company does not expect the consultant to do any of the tasks.

Other companies prefer a hybrid contractor/consultant to complete 100 tasks, to advise on the best way to do it and if the 100 tasks make sense. They value advice and are open to change. The plan is a work in progress when they hire for a hybrid role. But they still don’t hire what they would term, “a consultant.” They may not need a consultant because they have in-house brilliant strategic thinkers to lead the process.

In either case, companies view the consultant as more strategic, and the contractor as more tactical. Companies decide how much to pay based on whether they perceive the role as consultant, contractor, or hybrid. Strategic consultants get a higher pay scale than a tactical hybrid or a task-based contractor. That’s true regardless of the contractor’s abilities and knowledge.

If you contract for twenty or thirty years, build up massive knowledge, and your advice causes a large company to increase profits by 10 percent in a year, you’ll gradually be perceived as more of a consultant than a contractor, given the received terminology of the day. All you need is a handful of high-level success stories, a few executive recommendations and endorsements, and the vision to backup that label on your business card.

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