5 Practical Steps and Tools For Effective Contractor Management

Chances are, you’re already hiring freelancers and contractors or eyeing it for your business’s future. This is evident from the fact that 85% of hiring managers embrace a flexible workforce to inject their projects with specialized expertise, keeping budgetary concerns at bay. 

While hiring contractors is a smart choice for your business, know that effective management of your hires is non-negotiable. 

In this guide, we’ll explore what makes an effective contractor management process, the tech stack that can support your company, and how Gloroots, a leading platform in this domain, can simplify this process.

What is contractor management?

Contractor management is the set of activities and processes - from onboarding to termination - you undertake to ensure contractors deliver top-notch work and experience a seamless employment relationship.

At its core, contractor management goes beyond the typical employer-employee relationship. It ensures clarity about everyone's obligations. For contractors, this means understanding their scope of work, deliverables, and timelines. For employers, it's about providing the necessary support for contractors to execute their tasks independently and ensuring timely payments.

For businesses, Effective contractor management leads to building a talent pool of reliable go-to contractors for future endeavors, ensuring project continuity and quality.

5 Steps for Effective Contractor Management

Effective contractor management involves the following 5 key steps:

Step 1: Assess, source, and select contractors

Begin by pinpointing your needs and carefully selecting contractors aligning with your objectives. Without the right contractor, costs may rise, and tasks might not match your requirements. Having a clear project scope simplifies contractor selection, minimizing risks.

Ensure proper classification of independent contractors to avoid misclassification risks, which can lead to legal consequences. Contractors typically exhibit autonomy in work hours, methods, and equipment usage, distinguishing them from employees.

Step 2: Solidify contractual agreements

Draft comprehensive contracts that explicitly state deliverables, responsibilities, timelines, and consequences of contract breaches. Consult legal experts to ensure contract clarity, trust, and transparency. 

Drafting employment contracts for contractors is different from creating contracts for permanent employees. Contractors, unlike permanent employees, are not protected by labor laws. Statutory requirements are little to none. 

However, these constraints vary with each country. For example, contractors in the US manage their own taxes, while taxes are deducted at the source for contractors in India. Contractors in the USA are not entitled to any social contributions. Meanwhile, contractors in France (depending on the industry) and Switzerland are entitled to employer contributions to social security. When you build a global workforce of contractors, staying compliant with regional labor laws can be challenging. 

In such cases, an EOR solution can help easily generate employment contracts and onboard contractors.

Read our blog on ‘How to extend your independent contractor agreement to a full-time opportunity.’ to learn more.

Step 3: Streamline contractor onboarding

Smoothly integrate contractors into your operations, reflecting your brand's culture and standards. A structured onboarding process, including IT setup and task orientation, sets a positive tone for the contractor's journey within your organization. 

Use a contractor management solution like Gloroots to track the status of asset delivery.

Check out our guide to contractor onboarding.

Step 4: Implement contractor performance management strategies

Clear communication channels, and regular feedback help you get the best out of your contractor. 

• Communication strategies

Clear communication is crucial in the contractor management process, especially with remote workers. Defining roles and expectations, maintaining an open dialogue, and addressing concerns promptly are key. 

• Performance evaluation and feedback

Tracking progress through performance metrics offers valuable insights, enabling timely corrective actions as needed. Reflecting on completed jobs helps fine-tune future approaches, such as modifying prequalification criteria or adjusting communication methods. 

Step 5: Compliance, payrolling, and relationship management

For a structured payroll, budget accurately to determine fixed and variable costs, set clear contractor rates, and offer benefits where possible. Align payment methods with contractors’ currencies and establish transparent schedules for clarity.

Regularly audit payments for accuracy, accounting purposes, and compliance, staying updated on changing labor laws for contract adjustments. 

Upholding compliance throughout contractor engagement is crucial. Manage onboarding, data access, and payments efficiently, ensuring accurate tracking, record-keeping, reporting, and tax compliance. Rely on local experts to minimize misclassification risks.

Streamline management using a unified and automated payroll platform- like Gloroots- for both employees and contractors to eliminate the hassle of navigating multiple systems and save valuable time from repetitive payroll tasks. 

Finally, prioritize amicable closures to maintain strong contractor relationships.

Learn more about this in our independent contractors checklist.

Why must businesses use a contractor management solution?

Contractor management solution helps you properly classify contractors and employees, adhere to regional compliance standards, and fulfill legal obligations. 

Mismanaging contractors can lead to severe repercussions, including:

• Legal repercussions, from fines to potential lawsuits due to misclassifications
• Misunderstandings, missed opportunities, dissatisfied contractors
• Tarnished reputation
• Disrupted operations
• Compromised project outcomes
• Security lapses 

Benefits of contractor management

As businesses scale their contractor workforce, managing them becomes complex, expensive, and admin-heavy for the HR department. Many employers are still stuck with the traditional manual methods, like using spreadsheets, juggling documents, invoices, and individual follow-ups, even though they’re cumbersome and prone to errors. 

Benefits of using a contractor management solution include:

• Helps scale contractor talent pool 
• Minimize legal and tax issues
• Maintain legal compliance
• Enhanced project outcomes
• Positive contractor relationships 

Opting for a contractor management platform is the simplest way to streamline this process.

While investing in contractor management software can seem pricey, it's an asset you won't regret adding to your budget.

A seamless contractor management software trumps the chaos of manually piecing things on the go. It takes the hassle out of managing contractors, enabling them to deliver top-notch campaigns whilst empowering you to stay on top of their progress, making sure everything runs smoothly over a centralized platform. 

Businesses using a contractor management solution, easily and quickly develop good  all the freelancers' details—contracts, schedules, and tasks—neatly organized in one place. Instead of juggling multiple spreadsheets or emails, you've got everything at your fingertips. Need to onboard a new freelancer? Easy! Just a few clicks, and they're in, with access to project specifics and guidelines. Plus, you get reminders for deadlines and automatic payment processing rather than the burden of fragmented multitasking. 

Selecting the right contractor management software

Top-tier contractor management software integrates future-focused tech, automating various steps for efficient onboarding and management, presenting a comprehensive, secure, and hassle-free solution.

The ideal contractor management software must offer these 5 key features:

1. Automate onboarding

A robust software should simplify and expedite the onboarding process for new contractors. It might include features like easy registration, document submission, and qualification checks, ensuring a smooth transition into your business ecosystem.

2. Automate contract generation

This feature significantly reduces administrative workload by generating contracts automatically based on predefined templates and parameters. It ensures accuracy and consistency and saves time in drafting individual agreements.

3. Payroll capabilities

Efficient payment systems that help with invoice generation, payment tracking, and integration with payment gateways–will ensure timely and secure transactions. The platform must seamlessly facilitate multi-currency payments. 

4. Compliance

Compliance with legal and industry standards is paramount. The platform should:

• Generate compliant employment contracts  
• Provide access to compliance experts who can help comply with local labor laws
• Help pay contractors adhering to local tax laws
• Possess data compliance certifications
• Generate invoices

5. Comprehensive dashboard

Opt for a user-friendly dashboard that eliminates filing cabinets and spreadsheets. Your contractor management solution must offer an overview of all your projects, deadlines, contract statuses, payment schedules, etc., accessible from anywhere with internet access. 

Gloroots’ platform addresses these pain points adeptly and allows you to hire contractors in 140+ countries, offering not one but all of the above features and more.

Interested in seeing our platform firsthand? Click here to book a demo.

Here’s how Gloroots' contractor management platform can contribute

Gloroots, an all-in-one, fully automated platform, is the ideal contractor management platform. Here’s how Gloroots can revolutionize how you manage your contractors:

• Our SaaS-based EOR and in-house experts make global contractor hiring seamless for you. 

• Whether you want to expand into a new country to build a large pool of contractors or you want to streamline your workflows, we have your back. 

• With our powerful platform and thorough knowledge of local regulations, we confidently hire foreign talent without any hassles, ensuring 100% compliance.

• With just a few clicks, you can add new employees, generate contracts, resume paused onboarding processes, or remove employees currently being onboarded. 

• Experience the power of a streamlined dashboard that gives you a comprehensive view of every contractor’s progress and an automated payroll that performs multi-currency payments at affordable prices. 

• Gloroots is the most cost-effective way to scale, whether handling ten contractors or hundreds.

Check out how Gloroots helped companies like Sketchnote and PriceLabs set up their global contractor management process here.

Why spend time on tedious administrative tasks when Gloroots can simplify your process?

Connect with us so that you can save your valuable time and focus on what matters most – growing your business.