Why Companies Should Use Contract-for-Hire IT Professionals

There’s no doubt that the technological landscape is rapidly changing. As a result of this constant evolution, companies need to devise agile talent strategies to keep up with the fast pace. It’s no small feat, but research from Nobel-winning psychologist Daniel Kahneman reveals many pitfalls in traditional hiring techniques.

In Kahneman's influential 2011 book, Thinking, Fast and Slow, he wrote that people “can be blind to the obvious, and we are also blind to our blindness.” That same notion can be applied to the hiring process. His insightful research on human behavior underlines the importance of contract-for-hire employees for your team. Using a blend of contingent professionals as a percentage of your overall IT workforce also boosts your company’s agility. In times of macroeconomic uncertainties and large technological shifts, that agility becomes even more essential.

In this blog, we’ll explore some of Kahneman’s key findings and how they pertain to business strategy. You can contact us online now to learn how we’ve implemented his research into our staffing solutions.

Mitigating Noise and Bias

Up until his death in 2024, one of Kahneman’s primary interests was how noise and bias have become all too commonplace in modern hiring practices. The main idea behind “noise” is that it’s the variability of error, whereas bias is the average of error. As you might expect, you don’t want your hiring process to have much of either.

There’s also the halo effect, a psychological concept and form of cognitive bias that refers to the way one aspect of a first impression can supersede all other characteristics we might observe in a person. 

For example, if you’re hiring someone and they mention in passing that they have the same favorite movie that you do, that could result in you subconsciously forming a positive opinion on that candidate. This may cloud your ability to judge whether they’re right for the role you’re interviewing them for, leading you to feel overconfident and make a rash decision.

So, what’s the workaround? Being aware of this bias certainly helps, and so does incorporating a contract-for-hire workforce. 

Think of contract-for-hire as a structured trial period, a try-before-you-buy approach that allows you to evaluate a candidate’s performance before making a substantial commitment.

Prospect Theory

Alongside his colleague Amos Tversky, Kahneman wrote a seminal paper that outlined what he named prospect theory. It’s a term that applies to numerous fields, but its underlying tenet is that people weigh gains and losses much differently. When presented with two equal options, potential gains vs. potential losses, most people generally opt for the former. In other words, certainty trumps risk.

This applies to hiring strategies in the sense that companies are naturally risk-averse. When businesses make a bad hire, that loss feels larger than the gains that come from a great hire.

Through contract-for-hire, however, companies reduce financial and reputational risk through flexible, reversible decisions. You can truly see if a candidate is up to the task before you bring them on as a full-time employee.

In a similar vein, Laszlo Bock, a former executive at Google, has written about the importance of work samples in his book Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead. Giving candidates a sample piece of work that you’d give them on a typical day in the role can be highly beneficial.

Bock cites research showing that sample work predicts 29% of overall job performance, which makes it the most reliable method compared to other assessment factors, such as unstructured job interviews and reference checks. 

To put it another way, contract-for-hire is a more comprehensive version of this. You’re able to sample a candidate’s work to see if they’re right for the role.

Improving Decision Quality

In Thinking, Fast and Slow, Kahneman wrote that “an organization is a factory that manufactures judgments and decisions. Every factory must have ways to ensure the quality of its products in the initial design, in fabrication, and in final inspections.”

Structured processes reduce errors in decision-making, so companies should do their best to incorporate systems to evaluate candidates as consistently and fairly as possible. This is also relevant for understanding the peak-end rule, a psychological model that Kahneman and his colleague Barbara Frederickson explored. It proposes that people’s opinions toward a certain experience are largely determined by two main factors:

In simpler terms: Never judge by first impressions. Fortunately, contract-for-hire offers a nice solution. By allowing for the evaluation of sustained, real-world performance, contract-for-hire means you’re able to assess a candidate’s abilities during a months-long contract, rather than a 30-minute interview. It reduces the aforementioned “halo effect” and increases the retention of proven talent.

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Kahneman’s various findings point toward the utility of contract-for-hire. It minimizes the bias, risk, and costs associated with traditional hiring practices while increasing agility and decision quality. 

Make contract-for-hire an integral part of your IT talent strategy with TriCom. Fill out our contact form to get started today. We’re happy to answer any questions you have about the benefits of a contingent workforce.