The Recruiter’s Contract Staffing Blog

Q—How is contracting flexible for candidates?

A—Below are just some of the ways that candidates can enjoy more flexibility by accepting a contract assignment.

1. Potential for higher earnings—Contractors are paid for every hour that they work, as opposed to a standard salary.  In addition, they also get paid for overtime.

2. Opportunity to travel—With each new contract assignment comes the chance to work at another company in another location, possibly in a different city, providing new experiences for the candidate.  In many cases, the contractor can also be paid expense money if they meet IRS guidelines.

Q: What do candidates think about contracting?  Don’t they generally shy away from contract assignments and prefer the stability of direct-hire placements?

A: They would, if the stability of direct-hire placements actually existed anymore.  You have to remember that the days of working 40 years with a single company and then retiring with a gold watch are gone.  Not only that, but the younger members of the workforce (those under 30) no longer desire to work for one company for the duration of their careers.  They consider such a situation to be somewhat stifling, generally unexciting, and possibly detrimental to their overall growth and development.  But the one thing they do need—just like hiring managers and everybody else—is flexibility, and working on a contract basis affords them that flexibility.

(This is the seventh and final blog in a series that examines the parts of the direct-hire placement process that differ from contract placement  and how contracting can be simpler, easier, and less stressful.)

As we’ve discussed during the past week, there are five aspects of direct-hire recruiting that you could probably do without—and we’re willing to bet there are probably more.  Of course, there is something that direct-hire placements provide that contracting placements do not, mainly a rather large check . . . as opposed to smaller amounts of money streaming in every month.

As the American population continues to age, healthcare professionals are in constant demand.  For that reason, it can be a virtual cash cow for recruiters who choose to concentrate on this niche.  In fact, healthcare accounted for 32 percent of Top Echelon Contracting’s placements in 2009!

Due to the nature of healthcare jobs, much more effort is needed in order to qualify and employ someone in this field. Without the proper qualification of healthcare workers, there could be severe consequences for client companies, employers, and patients.  So if you are running your own back-office, you will want to be sure that you have a Certificate of Insurance that includes medical professional liability insurance and that you require the following of all healthcare candidates:

A Certificate of Insurance is a document that proves that an employer is insured to take on the liability associated with contract employees.  When you place contract candidates, most clients will want to see a Certificate of Insurance to assure that all of the insurance policies are current and have acceptable dollar limits, so you’ll need to have one if you are running your own back-office.  If you outsource the back-office, your provider should be able to give you a copy.

A Certificate of Insurance can include the following types of coverage:

The IRS is on the prowl when it comes to employers misclassifying W-2 employees as 1099 Independent Contractors, and if you are a recruiter who runs your own back-office, you could be in the IRS’ sights!

A recent New York Times article warns that the IRS is cracking down on worker misclassification, and if you get caught in the crossfire, you could end up paying hefty fines and damaging your firm’s reputation. 

(This is the sixth in a series of blogs that examines the parts of the direct-hire placement process that differ from contract placement  and how contracting can be simpler, easier, and less stressful.)

5—The resistance movement

Direct-hire placement—Trying to get paid for making a permanent placement is often like trying to find a needle in a haystack . . . a really small needle.  As recruiters watch 30-day payments become 60 and 90 days, they must be wondering if one day they’ll have to wait six months until they see their check.  Plus, think about all of the valuable “recruiting” time that they’re spending on collections.

You work hard for the fees you collect from your clients, so why would you want to give a portion of them away to hire a back-office to handle your contract placements?  Well, consider all of the tasks and issues you will have to deal with if you DON’T use a back-office:

Company contract negotiations and generation
Compiling and managing employee paperwork and information
Immigration compliance (I-9 and E-Verify)
IRS compliance (1099 vs W-2)
EEO compliance
Payroll – including calculating and withholding taxes, processing court orders, setting up direct deposit, etc.
Background checks
Unemployment Claims
Workers’ Compensation Claims
Invoicing and collecting fess from clients
Tax deposits and filings
Providing and managing benefits – including COBRA, enrollments, bill reconciliation, etc.
Employee issues
Employment Verifications
Employee terminations
Certificate of Insurance coverage

(This is the fifth in a series of blogs that examines the parts of the direct-hire placement process that differ from contract placement  and how contracting can be simpler, easier, and less stressful.)

4—Counter-offer considerations

Direct-hire placement—Ah, yes, counter-offers.  Even though recruiters coach candidates religiously about the dangers of accepting counter-offers, some accept them, anyway.  A candidate accepting a counter-offer is tantamount to a fall-off.  It feels like one, anyway, and the amount of money you receive for both is definitely the same.  The very nature of the perm world demands that counter-offers exist.  After all, if a company is going to take an excruciating amount of time making a decision to hire somebody, they’ll probably try to keep that somebody if they attempt to leave.  They have to protect their investment, after all.

(This is the fourth in a series of blogs that examines the parts of the direct-hire placement process that differ from contract placement  and how contracting can be simpler, easier, and less stressful.)

3—Go, speed placer, go!

Direct-hire placement—For some client companies, synchronized feet dragging could qualify as an Olympic sport.  During the last candidates’ market, the number of superstar candidates who took other offers because a company was moving too slowly was considerable, to say the least.  Even while recruiters were frantically trying to educate their clients about the importance of moving more quickly, candidates were still getting away (and taking the recruiters’ fees with them).  There’s nothing quite like taking a candidate through the entire process and then watching them bolt because your client wants “to think on it for a while longer.”

Ok, so you’ve decided to add contracting to your business model.  Now what?  How do you get job orders?

Luckily, you don’t have to be a marketing genius to position yourself as a contract recruiter.  It can be as simple as letting curent clients know that you are ready, willing, and able to make contract placements, and you can do this in the course of your regular conversations with them.  You may be surprised to learn that they have already considered hiring contractors but weren’t sure where to find the best candidates.  And if they haven’t considered contracting in the past, you might suggest it as a way for them to bypass hiring freezes or test out candidates before making the direct-hire commitment.

One of the best aspects of contract placements is that a contract candidate is often transitioned over to full-time employment. This happens quite often, and for that reason, we recommend that the recruiter should negotiate a Conversion Fee Agreement directly with the client company at the beginning of the contract placement.  If this is done, the recruiter’s conversion fee will be established in the event that the client would like to hire the candidate as a full-time employee.

This is the latest trend in the recruiting and staffing industry.  It allows client companies to coordinate all of their staffing needs through one source.  This encompasses direct placements, contract placements, temp-to-direct, temp-to-perm, etc.

(This is the third in a series of blogs that examines the parts of the direct-hire placement process that differ from contract placement  and how contracting can be simpler, easier, and less stressful.)

2—No more ‘perfect fit syndrome’

Direct-hire placement—How many times have you had a client reject a candidate, one who was a good fit for the position, due to what basically amounted to a technicality?  Probably more times than you can count.  When a client is looking to fill a position and fill it with a person who will earn a considerable salary, many times they won’t pull the trigger until they’ve found exactly what they want.  This lengthens the process even more and quite possibly adds to your stress level as a recruiter—unless you have “the patience of Job.”

(This is the second in a series of blogs that examines the parts of the direct-hire placement process that differ from contract placement  and how contracting can be simpler, easier, and less stressful.)

1—The HR factor

Direct-hire placement—Let’s face it, nobody is thrilled with the prospect of having to go through HR to get to the decision maker, but it’s often a necessary evil . . . if you’re dealing with a permanent placement.  This barrier can slow down the process considerably, and the process has hardly got off the ground yet!  It’s a sure bet that every recruiter that’s been in the business for a fairly long time has a litany of horror stories resulting from their encounters with HR.