What Is Contract-to-Hire?
Learn what contract-to-hire means (temporary position with potential permanent conversion), typical contract lengths (3-6 months), benefits for employers and workers, conversion rates, and success strategies for temp-to-hire roles.
What Is Contract-to-Hire?
Contract-to-hire (also called temp-to-hire) is employment starting temporarily—typically 3-6 months—with potential permanent conversion if both parties agree after the trial period.
This reduces hiring risk for employers through extended evaluation before permanent offers. Workers gain opportunities to prove themselves, learn company culture, and secure permanent positions.
Quick Answer
Contract-to-hire means starting as a temporary employee (usually 3-6 months) with potential conversion to permanent status. About 50-70% convert to permanent employees if performance meets expectations.
How Does Contract-to-Hire Work?
Typical Timeline
- Weeks 1-4: Onboarding, training, initial assessment
- Months 2-3: Full productivity, skill demonstration, culture fit evaluation
- Month 3-6: Conversion decision, permanent offer or contract extension/end
Employment Status
Workers are typically employed by:
- Staffing agency: Agency pays wages, provides benefits, handles HR
- Direct hire: Company employs directly on temporary basis
Pay often includes higher hourly rate (no benefits) through agency OR lower hourly rate with limited benefits as direct temp.
Conversion Process
Near contract end, employer decides to convert to permanent (make job offer with salary/benefits negotiation), extend contract (continue evaluation), or end engagement (conclude assignment).
Benefits of Contract-to-Hire
For Employers
- Reduced risk: Evaluate performance for months before permanent commitment
- Lower costs: Avoid benefits during trial; agency handles payroll/HR
- Faster hiring: Quick starts without lengthy interviews
- Flexibility: Easy exit if not the right fit
For Workers
- Foot in door: Access companies without traditional hiring barriers
- Prove yourself: Demonstrate value through work vs interviews
- Learn the role: Understand job/culture before committing
- Conversion potential: 50-70% convert to permanent positions
Contract-to-Hire vs Other Employment
| Type | Duration | Benefits | Job Security | Path to Permanent |
|---|---|---|---|---|
| Contract-to-hire | 3-6 months | Limited/none | Low | High (50-70%) |
| Permanent | Indefinite | Full | Moderate | N/A |
| Contract | Fixed term | Rare | Very low | None |
| Temp | Variable | Rare | Very low | Possible |
How to Succeed in Contract-to-Hire Roles
- Perform excellently: Exceed expectations, deliver quality consistently
- Be proactive: Take initiative, suggest improvements
- Build relationships: Network with team, demonstrate culture fit
- Communicate clearly: Ask questions, provide updates
- Be reliable: Excellent attendance, meet deadlines
- Express interest: Make clear you want permanent conversion
Common Industries Using Contract-to-Hire
- IT and technology: Software developers, data analysts, system administrators
- Finance and accounting: Analysts, bookkeepers, accountants
- Administrative: Office managers, executive assistants, coordinators
- Healthcare: Medical coders, administrative staff
- Marketing: Content creators, social media managers, coordinators
Organizations often combine contract-to-hire with temporary staffing to fill coverage gaps during unpaid leave periods or manage the employee life cycle more flexibly.
Sources
- U.S. Bureau of Labor Statistics – Contingent Workers
- Society for Human Resource Management – Hiring Practices
Further Reading
Frequently Asked Questions
What is contract-to-hire?
Contract-to-hire is temporary employment (typically 3-6 months) with potential conversion to permanent status based on performance and mutual agreement.
What percentage of contract-to-hire convert to permanent?
Approximately 50-70% of contract-to-hire workers convert to permanent employees if performance meets expectations and both parties agree.
Do contract-to-hire employees get benefits?
Benefits vary. Agency-employed temps typically receive no benefits but higher hourly rates. Direct-hire temps may receive limited benefits. Full benefits usually begin upon permanent conversion.
Can you negotiate salary in contract-to-hire?
Yes, negotiate hourly rate at contract start and negotiate salary/benefits when converting to permanent. Demonstrate value during contract to strengthen negotiating position.
