As an executive, you’re constantly making critical decisions that shape your company’s future, and few are as impactful as those related to hiring. Bringing on a new team member, whether temporary or permanent, can significantly influence your team’s productivity and company culture — which is directly tied to your overall success. 

One common dilemma for leaders is determining whether to fill a position with a permanent employee or an interim hire. Should you aim for long-term commitment, or opt for a specialized agreement with a clear, short-term scope? 

There’s no one-size-fits-all answer, so let’s take a look at the factors that can help you make the best decision for your organization. 

What Do Both Contracts Entail? 

To start, interim leadership staffing involves project-based hiring of employees brought in on a short-term basis to address a specific need within the organization. These hires provide immediate, focused solutions for tackling a particular challenge you may be facing, like leading your company through a transition, managing a crisis, or even overseeing a short-term project that requires specific expertise. In fact, a McKinsey study found that 87% of companies worldwide have or anticipate a skills gap in the near future, which can be addressed by hiring specialized interim employees. 

These contracts usually last between three and 12 months, depending on the scope of the project and the urgency of the role. Also, their compensation is structured differently, such as fixed fees for the whole duration of the project, consultancy agreements, or day rates that are calculated according to the interim employee’s expertise, experience, and involvement. 

On the other hand, companies hire permanent employees with a long-term strategy in mind. These are the employees you see growing in and with your organization, contributing to both your day-to-day operations and future plans because they come with the promise of stability. 

Permanent hires typically receive contracts lasting more than a year, which include a stable salary, workplace benefits like health insurance, and other perks meant to foster their professional development and engagement over time. 

Interim vs. Permanent Employees 

As mentioned above, each type of employment has its advantages and disadvantages, and these are what you should weigh against each other to determine your company and team’s best option. 

Why Hire Interim Employees? 

Here’s why many executives lean toward this option: 

• They are Quick to Hire 

When your company faces an immediate need — such as a sudden project requirement or unexpected turnover — there often isn’t the luxury of time to conduct an extensive search. Interim roles tend to attract candidates who are accustomed to jumping into fast-paced environments and delivering results with little ramp-up time. This fast turnaround time of interim leadership staffing minimizes the disruption that might come from vacancies and keeps projects moving forward without costly delays. 

• It’s a More Flexible Arrangement  

Unlike permanent employees, interim professionals can be brought on board quickly and scaled back just as easily when their work is done. This makes them ideal for situations that require rapid changes in capacity such as a seasonal increase in workload or when you need someone to step in to temporarily fill a gap. 

A study by Upwork found that 59% of U.S. hiring managers plan to rely more on interim workers, driven by the need for flexible workforce solutions that arose from the COVID-19 pandemic. 

• They Offer Specialized Skills 

Interim hires bring a wealth of expertise that can be invaluable in situations where specific skills are needed—especially skills your current workforce may lack. For example, if your organization is undergoing a digital transformation, you might need to carry out an interim executive search for someone with in-depth knowledge of the latest technologies, but only for the duration of the project. An interim employee can parachute in with the expertise and experience to get everything up and running. 

• It’s Cost-Effective in the Short Run 

Upfront costs for interim hires might seem higher than hiring a permanent employee, but the overall financial benefits for short-term projects make them more cost-effective. This is because you only pay for the duration of their engagement, which could be as short as a few weeks or as long as several months. 

The Disadvantages of Interim Hiring 

• Potentially Higher Short-Term Costs 

The daily or monthly rate for an interim professional can be significantly higher than the salary of a permanent employee. These costs can add up if you’re not careful about keeping the engagement short. 

Interim professionals often charge premium rates because of their specialized expertise and the temporary nature of their roles, so many companies end up paying through the nose for these services when the project takes longer than expected or the scope expands. 

• Instability 

One of the biggest challenges with interim hires is their potential lack of long-term stability. They may leave once the project or contract ends, regardless of how much progress has been made. 

Additionally, interim hires aren’t as invested in the company’s long-term vision or goals as permanent employees. While they may deliver exceptional results during their contract, their departure can create a vacuum that will require you to restart the hiring process. 

• Limited Training and Development 

There’s little incentive to invest in these employees’ long-term growth or immerse them fully in company systems and processes since their tenure is short. This limits the contributions they can make outside of their specific project and also makes it hard for them to collaborate with other employees or align with your team’s goals. 

Why Choose Permanent Employees? 

Here are the trade-offs of long-term contracts that you should consider depending on your company’s goals and capacity. 

• Commitment 

Permanent employees are typically looking for a lasting relationship with the company, which fosters a sense of loyalty and stability. They are in it for the long haul, which means they are more likely to take ownership of their roles and responsibilities and immerse themselves in your company’s vision and objectives. 

• Full Integration Into the Company’s Culture 

Since these employees stay with the company for an extended period, they help strengthen and maintain the organizational culture over time. A permanent hire is more likely to build strong relationships with their colleagues and become part of the team’s fabric, leading to better collaboration, trust, and camaraderie within teams. 

• Consistency 

With permanent hires, you don’t have to worry about constantly replacing employees or managing the disruptions that come with high turnover. Having a stable, permanent workforce ensures better continuity in daily operations and project execution. 

This consistency is especially important where the employee requires a deep understanding of your company processes or products, like client-facing and executive roles. 

• Long-Term Development 

Last but not least, when you hire someone for a long-term role, there’s a clear incentive to invest in their professional development, whether through training programs, mentorship, or upskilling opportunities. This long-term focus on growth benefits both the employee and your company, as employees expand their skill sets and become more capable of taking on complex challenges. 

The Downsides of Permanent Hiring 

There is also another side to the coin with permanent employees: 

• Risk of Complacency 

While permanent employees bring long-term stability, there’s always the possibility that, over time, they may become less driven. Some employees lose their initial motivation or become comfortable in their positions. In fact, without continuous development or clear progression paths, even the most high-performing employee may fall into a routine of low-value tasks that stifle their personal growth and slow down the team’s overall momentum. 

• Longer Time to Hire 

Because the stakes are higher, and you’re looking for someone who aligns with both the role’s responsibilities and the company’s culture, the search for the perfect permanent hire can take considerable time. This extended timeline can be challenging, especially when you need to fill the position quickly or have a gap in times of high demand. 

• Higher Cost Over Time 

Salaries are just the starting point. Most permanent employment contracts come with benefits like health insurance, retirement contributions, paid time off, and bonuses — all of which add up. 

Takeaway: Find the Balance 

So, with all the pros and cons listed, how do you determine what your priorities are? These four questions sum it up: 

1. Is the position or skill set you need a long-term, essential part of your business operations, or is it a temporary requirement?   
2. Can you afford a long-term employee, or are you looking to address a short-term issue? 
3. Do you have the time to thoroughly vet multiple candidates, or do you need to fill the role quickly? 
4. Does the role require specialized, temporary expertise, or is it a key position for meeting your strategic goals? 

Thinking about these contrasting scenarios will give you a clearer understanding of your company’s specific needs. Remember, each situation is unique, so it requires a tailored solution.