The directory is everyone who works for you, employees and contractors alike, with their department, pay basis, and whether they are currently active.
Adding someone
Add them directly, or import from your accounting software if your people are already set up there. Importing avoids typing the same records twice and keeps names and pay consistent between the two.
Each person carries a department, and a rate recorded as either an annual salary or an hourly figure.
Employee or contractor
The distinction is recorded because it changes almost everything downstream — tax treatment, what you owe, what you are liable for, and how the cost lands in your accounts.
It is also the classification most often got wrong in small businesses, usually in good faith. If somebody works only for you, on your schedule, with your equipment, the label on the paperwork may not be the one that matters if it is ever examined. That is a question for your accountant rather than for software, but it is worth asking before it is asked of you.
Why pay rates matter here
A rate in the directory is what makes labour cost per job answerable. Without it, jobs can be costed for materials and not for time, which reliably makes every job look more profitable than it was — see job costs.
Keeping departed people marked inactive rather than deleting them preserves the history on jobs they worked, which is what stops last year's margins from changing when this year's staff list does.