How Contractors Can Successfully Manage from the Outside

Wharton management professor Peter Cappelli ran into a former student who shared an intriguing story about A-Connect, a management consulting services and solutions firm. The alumnus, who worked at A-Connect, noticed an increasing number of managers being hired on contract. These weren’t consultants or people angling for full-time work, but contractors who were being handed over control of company employees to execute a project or tackle a problem.

Despite being outsiders with no personal connections or networks, these contractor-managers were doing a terrific job.

“There’s a view in the world of management research, and by extension practice, that the way to be effective in leadership is you need all this social capital, all these relationships. The idea of having a contractor-manager sounds bizarre because they don’t have any of those things,” said Cappelli, who is director of Wharton’s Center for Human Resources. “How does it work? Because it shouldn’t work, according to all these management theories, and yet it does work.”

His interest piqued, Cappelli conducted a survey-based study that found successful contractor-managers leverage their outsider status to get things done. The study, which was co-authored by Bocconi University management professor Tracy Anderson and forthcoming in MIT Sloan Management Review, challenges long-held assumptions about how to build influence in the workplace.

“We don’t know to what extent contract-management is a trend,” Cappelli said, noting that the pandemic-related rise in remote work likely will result in more independent contractors. “But we think the reason to pay attention to this is that it’s an evergreen question: What makes managers effective?”

Don’t Be a Jerk

Contractor-managers are hired typically for two reasons: They possess expertise not available inside the firm, or the firm needs to fill a short-term need without creating a permanent position. To be sure, contractor-managers have very specific disadvantages. Without history in the organization, they lack context about how it functions and how decisions are made. They may also struggle with lack of access to information needed to do their work, according to the study.

But the biggest drawback — lack of social capital — is a problem that the best contractor-managers know how to sidestep with diplomatic skill. First, they build credibility with employees by sharing, not hoarding, their subject-matter expertise. Second, they gain employees’ trust by emphasizing that they have no stake in the outcome except a job well done. They don’t care about office politics and will even provide opportunities for talented employees to shine.

“They don’t have anything to gain by taking credit from you,” Cappelli said. “You can trust them much more than you can trust your own boss by revealing problems. They’re not going to punish you for that, but do you trust your own manager not to do that?”

Of course, personality plays a big part in helping contractor-managers quickly build credibility with the employees they work with, Cappelli said. The best ones are open-minded, good listeners, and respectful of both boundaries and internal expertise. If they enter with a threatening or demeaning tone, they will destroy their chance at a good first impression. Cappelli’s advice: Leave the passive-aggressive behavior at the door.

“What you have to establish is that you’re not a selfish jerk, that you’re willing to listen to people, and that you have enough confidence to take advice,” he said. “One of the things the contractors said to us is that they saw their jobs as making individuals look good. They’re not trying to hog the credit.”

Understand the Boundaries

If contractor-managers don’t want any credit, and they aren’t interested in getting their foot in the door at a company, what’s really in it for them? Cappelli explained that most of them are retired or in the late stage of their careers, they have amassed a certain amount of knowledge, and they want the flexibility that comes with being an independent contractor.

“It’s an interesting self-selection,” he said. “They are people who aren’t necessarily young and hungry, not desperate for work. What they appreciate is the ability to have some choice over what they do and how they do it.”

For companies, there are advantages to taking on contractor-managers. Such engagements may be especially beneficial for fast-growing firms with fast-changing management needs, or in firms where politics can get in the way of progress, the authors noted. But they also warn of the limitations. Contractor-managers are not employees, they said, and the clients cannot tell them how to perform their tasks.

Companies should also be mindful that contracts are specific and binding, so the objectives contained in them should hold fast and not become moving targets, the authors noted.

“Understand the boundary is something that, for regular managers, they’re not necessarily so great at,” Cappelli said. “The idea of bringing in somebody like this is that you want them to tell you how to do it. If that’s not what your intention is, then you’ve got a real problem. There’s no point in having this contractor come in.”