But before you start taking contract staffing job orders, you have an important decision to make: are you going to run your own back-office, which entails becoming the employer of your contractors and handling all the employment tasks, or are you going to outsource that responsibility to a contract staffing back-office?
Thanks for providing such a great site.
I have a question regarding the validity of buyout clauses in temporary employment contracts. I own a small contingency staffing business in CA. I’m wondering whether a staffing firm can legally defend a buyout clause in their W2 offer letters or 1099 independent contractor contracts to prevent a candidate simply approaching a different supplier for the same client and engaging with them for their services in the same role?
We’ve had issues where the candidates once placed, negotiated a better deal with a competing agency, and simply switched to their employ instead. This is done with the blessing of clients who don’t seem to care that we were the ones who recruited the consultant in the first place. In general, client contracts are biased to favor the client, in that there is no restriction about receiving the same candidate from a different vendor.
If so, is there a specific form the buyout clause needs to take, i.e. specific wording that it should include, preclude?
Does it seem like your clients are dragging their feet when it comes to hiring? It’s not your imagination. According to The New York Times, it is taking companies an average of 23 business days to fill vacancies compared with just 15 days in 2009, and the duration of the interview process at major companies like Starbucks, General Mills, and Southwest Airlines has nearly doubled since 2010.
Many employers blame it on a lack of skilled labor. While that may be true in some sectors, it appears that the real problem is that many companies don’t really want to hire in this uncertain economy, so if they have to hire, they will only settle for the “perfect candidate.”
While the contractors expect to be paid weekly or at least every other week, it can take up to 90 days for a client to pay you for that contractor’s services. That means you may pay your contractors several times before you see even one dollar from the client. You could have several thousand dollars outstanding at any one time for just one contractor. This is compounded by the number of contract placements you have.
Fortunately, there are several options when it comes to handling the payroll funding aspect of your contract staffing business:
If you’re looking for office temps you can place in any environment and know they’ll fit in, who won’t quit on you the instant they get offered a full time job, and who want the flexibility you’re offering, hold a casting call.
Chicago’s Addison Group, discovered a few years ago that performers make great office workers, and today, the staffing firm has over 100 theatrical workers in its database. As much as 35% of Addison’s contract admin placements are actors, actresses, directors, writers, and others who work behind the scenes.
What they have in common, and what makes them so desirable, says Ed Kavanagh, president of Addison’s administrative division, is their ability to fit into so many different environments.
“Typically, actors are very comfortable in different roles,” Kavanagh says. Many have improv experience, which requires them to respond to situations and people with no prior planning. “Actors, actresses really do a good job reading people and they fit in very well. They are very adaptable.”
Temping also fits their lifestyle. It gives them the flexibility to make it to tryouts and casting calls, while still having a source of income. Should they land a role, they can they can cut back on their temp work.
This morning employment numbers from the U.S.Department of Labor said temp agencies added 24,400 jobs during the month, more than any other single sector, surpassing even the typically strong healthcare industry, which added only 9,500 new jobs.
February’s report came in well above the 150,000 jobs that most surveys showed economists were expecting. Unemployment ticked up to 6.7% from January’s 6.6%.
Bullhorn is out today with a survey of staffing and recruiting firms that is so full of useful and enlightening information it’s hard to know where to begin.
Here’s just a sample of what the 20 page report covers:
- 77% of the 1,337 firms met or exceeded their revenue goals in 2013;
- Revenue per recruiter at the smallest firms averaged $266,000; at the largest firms it was almost twice that;
- Owners, CEOs, and partners of retained firms earned, on average, $230,000 last year. Those heading contingent firms averaged $149,000. Recruiters at retained search firms averaged $84,000. At contingent firms, they averaged $96,000;
Staffing firms added jobs at an average of 16,875 a month last year, the fastest pace since 2010, a turnaround year from the recession that began in 2007. Temp growth was slower in January, with 8,100 new jobs. However, too much shouldn’t read into the month, as January’s temp hiring is rarely useful to predict the rest of the year.
Even with the rapid growth in the use of temp labor, bill rates during the year were largely flat, according to a report from IQNavigator. The firm’s U.S. IQNdex 2013 Retrospective report said rates increased less than 1% during the year.
From its humble beginnings as an occasional accommodation to clients of temporary services, the temp-to-perm conversion has become a major source of revenue to the placement industry. Its popularity can be directly traced to permanent placement (“full-time”) services entering the temporary field. They don’t look at the conversion as the loss of an employee, but the gain of a placement fee. It’s a way to keep a qualified candidate “on ice” while giving the client the opportunity to “try before you buy.”
Unfortunately, three problems exist in enforcing conversion fees: Confusion, collusion and conspiracies. Understanding them will enable you to collect when the conversion occurs.
One of the first questions recruiters have when they consider adding contract staffing to their business model is, “Which companies should I target?”
The first and easiest answer to this question is to target your existing client base. Gone are the days when contract staffing was limited mainly to the information technology sector (although that is still a hugely popular area for contract placements). Contractors are now utilized by nearly every industry for positions up to and including C-suite executives. Chances are at least some of your clients have utilized contractors or are considering using them.