Candidate Negotiations
Successful negotiation with your clients and candidates can create a win-win-win situation in the contract staffing process. When discussing hourly pay rates with a candidate, remember to treat him/her fairly. A satisfied candidate will turn to you for additional contract placements and can serve as an excellent source of referrals for future placements.
As a benchmark to begin your negotiations, divide the annual salary for a comparable direct position by 2,080 hours (approximately one year) to get an hourly rate. Then, adjust the hourly rate based on the facts surrounding the particular placement.
When negotiating pay rates with contract candidates do not raise expectations too high in your initial discussions. Early promises of high hourly rates are very difficult to back down from later. A better strategy is to initially offer less than you feel you can afford to pay. Then, if you get the bill rate you expect, you can give the candidate an additional dollar or two. The candidate will appreciate your negotiating efforts.
The following factors can affect an hourly rate:
1. Short-term contracts generally require higher pay rates to attract an interested contract candidate.
2. Long-term contracts are more like direct positions. The longer the contract the closer the pay rate is to a comparable direct position’s salary.
3. Whether or not benefits are being offered to the contractor.
4. Contract assignments that may convert to direct positions at a client are less risky to candidates. The more likely the position is to convert to direct, the closer the pay rate should be to a comparable direct position’s pay rate.
5. All the factors which affect direct-hire salaries also apply to candidate pay rates, such as:
- whether the candidate is presently employed or unemployed.
- if unemployed, how long the candidate has been unemployed
- how valuable and rare are the candidate’s skills
- proximity of the position to the candidate’s home
- the reputation of the client company
- the opportunity to develop new skills in the contract position
You must get a commitment on the pay rate from the candidate, even if it is only a range of acceptable pay rates. Let the candidate know you will try for the high end of the range, but whatever pay rate s/he receives will depend on your negotiations with the client company. Be the good guy but never mislead or over-estimate the pay rate to the candidate because you do not know until the client agrees to a bill rate. Always get a bottom line pay rate figure from the candidate.
