Differences Between Hiring a Contractor or Consultant

In my session at Agile 2015, (Agile Hiring: It's a Team Sport) one participant asked me if I hire contractors the same way I hire employees. I do. I use the same approaches for reviewing resumes, phone screens, interviews and decisions. The one difference is the offer—instead of a yearly salary paid in some form of incremental approach, contractors get a dollar/hour over a timeboxed period.

One of the people in my session called contractors “consultants” and tweeted about it. She wanted to make sure the contractor had the same respect as a consultant.

That concern goes to why the hiring manager hires a contractor or a consultant.

If I need an extra pair of hands for a limited period of time, I hire a contractor. If I need guidance—which might include some hands-on work—I hire a consultant. You might like this perspective on how consultants work, from Choosing a Consulting Role: Principles and Dynamics of Matching Role to Situation, by Champion, Kiel and McLendon:


What's important to me is who has the responsibility for client growth.

I expect a consultant to help me (or my team or organization) grow in some way.

I expect a contractor to provide extra pair-of-hands services. I do not expect them to help me grow. I might get that, but I definitely don't expect it, especially when hiring a developer, tester, project manager, Scrum Master, or some other individual contributor position.

To me, that is a big difference between contractors and consultants. I don't expect contractors to contribute to anyone's growth. I do expect consultants to contribute to growth. That's why I expect to pay more for consultants than contractors.

If you are worried about your sphere of influence in the organization, consider how you work. (You “agile coaches” especially, think about this.) Is your client hiring you because you are a hands-on expert and that's all they want from you? Is your client open to other possibilities, where you could facilitate or coach or partner?

Consulting is different from contracting. You might call yourself a consultant and be a contractor. I rarely see consultants who call themselves contractors.

If you want to provide more value to your client, have the respect you deserve and be hired for different work, show the client how you will provide growth.

(To see specifics of how I hire contractors, see Hiring Geeks That Fit.)

13 thoughts on “Differences Between Hiring a Contractor or Consultant”

  1. I think my definition of the difference between contractors and consultants exactly coincides, but I describe it a bit differently: You hire a contractor and tell them what to do. You hire a consultant to tell you what to do.

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  6. Many organizations especially those starting their Agile journey say they need an Agile Coach but what they are really looking for are “Teacher”, “Modeler” or a “Facilitator”. They do not see any great value in a “Counselor”, “Coach” or a “Partner”. They expect you not to suggest a solution straightaway rather than you helping them to help them find a solution on their own. Is that your experience too ?

    1. Sorry there was a typo it should be “They expect you to suggest a solution straightaway”. Please ignore the “not” in that sentence.

      1. HI Gopinath, yes, my experience is also that many orgs don’t want to invest in education—whether they want agile or not. They want the coach to act as teacher, modeler and/or facilitator.

        INMNHO, Consultants who provide teaching as part of their coaching and don’t either charge for a workshop or structure the teaching shortchange themselves and their clients.

        I saw this many years ago when I took a consulting engagement as a part-time manager and project manager. I guided the current project to success. As part of my engagement, I had arranged for a workshop about project management and coaching for managers. I arranged up-front payment for both of those items. Somehow, the company never quite got around to making time for the workshop or intentional coaching. The fact that they had already paid me was irrelevant. They did not value the time they required to learn how to properly manage projects or the environment. I was quite disappointed. So were some of the people, but not the managers.

        Now, I see people who want me to define their agile approach for them. That is a lose-lose experience. I don’t take that work.

        1. Hi Johanna,
          Thanks for your response.
          Each and every square in your figure has some value depending on the context, though the ultimate Nirvana is “Partner”.
          I don’t see anything wrong in an organization new to Agile initially expecting someone to be a “Technical Advisor”,”Teacher”,“Modeler” or a “Facilitator”.
          But they need to make best use of the Consultant to educate themselves and start taking over responsibility for their process and outcomes.
          And over a reasonable period of time outgrow the need for a Consultant.
          That’s why whenever I take up an assignment I do my best to make myself dispensable as early as possible (in a positive manner of course 🙂 )

          1. Gopinath, the “work myself out of this job” mindset that you and I share is what I found frustrating from that engagement. I was not leaving them in a sustainably better place.

            You said it well: “… they need to make best use of the Consultant to educate themselves and start taking over responsibility for their process and outcomes.” Exactly.

  7. David Bertowski

    Legally, there is no difference. At the end of the day you’re still hiring a 1099 a.k.a an Independent Contractor.

    1. David, actually, if you hire through a company (yes, I realize we are hiring people, not companies), you do not need to generate a 1099. I incorporated my company to avoid this very problem. When people hire me, they hire me through my company, so they do not need to generate a 1099. Before I incorporated (it was only a few months into my consulting), they had the option of generating a 1099.

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