Contract Staffing Process – Ready to Go
Negotiation Process
The contract staffing process is divided into three parts:
Once you have matched a candidate with a client company all that is left to do is to work out hourly bill rates and pay rates. For the rates, you need to reach an agreement for regular and overtime hours worked by the candidate. Below are two common situations you may encounter in determining the client company bill rate.
The Client Company Sets the Bill Rate
The client company may dictate the exact rate they will pay for this position. When you are in this situation you probably cannot do too much about it. One strategy you might try is simply explaining to the client that if they set an absolute limit on the bill rate, they are really setting a limit on the quality of candidate you can provide them. For example, if they set a limit of $40 per hour, you can only give them candidates around the $28 per hour salary range or less. If you gave them a $35 per hour candidate there would not be much left after taxes. If they want lower level candidates, then find them cheaper people. Sometimes they do want more expensive people and they will realize that they are only hurting themselves by dictating the bill rate to you. If they will not budge, negotiate the candidate pay rate as low as possible.
The Bill Rate is Open (Within Reason)
The other situation, and the much more common one, is where the client company sets no limitson possible bill rates. This may seem preferable to the first situation, but it still presents some problems. You are completely in the dark as to what the client will consider reasonable. On one hand, you could keep your hourly income to a minimum and present them a rate lower than they are expecting. The client will gladly accept it and you will have taken money from your own pocket. On the other hand, if you go in with a rate higher than they expect, you could lose the placement and damage your reputation with the client.
The best solution is to get more information from the client. Find out what they consider reasonable.They may not even know what is reasonable, but if you get them to give you a number or a range of numbers then they cannot come back and say the bill rate you gave them was unreasonable. Let them know you are asking because you want them to be satisfied and provide them with the type of candidate they need. It may take a couple of phone calls, but it is well worth the time to avoid an upset client.
Conversion Fee Agreements
Every candidate you place on a contract assignment has the potential to convert to an employee of the client company. You should have a conversion fee agreement for each and every contract placement you make. It never hurts to have an agreement that is not used. However, if a conversion does happen and you do not have an agreement, you may have problems with the client.
In this case, you are better safe than sorry.
Every conversion fee agreement should include a fee schedule showing the cost to convert the candidate from a contract assignment to an employee of the client company. The goal of the schedule is to insure you will earn at least the same fee on a contract placement that converts to a direct-hire, as you would have if it were simply a direct placement. The schedule will protect you from the situation where a client brings a candidate you recruited in on contract for a month and then hires the candidate, leaving you with a fraction of your regular fee.
