Earn a Fee Multiple Times on the Same Candidate
We have previously discussed in this blog ways contract staffing can increase your recruiter revenue, but there is one additional way that is often overlooked. And that way is tied to the way in which you earn a fee.
Contract staffing can provide you with recurring recruiter revenue. Direct placements are great because you can get a large recruiting fee in one lump sum. However, you generally only earn that fee once per candidate. With contracting, you can earn your placement fee many times over by placing that candidate multiple times.
For example, one recruiter we work with placed the same programmer analyst in six separate contract assignments over 10 years. When the contractor neared the end of an assignment, the recruiter contacted the candidate to find out what new skills and experience he had picked up.
Armed with that information, the recruiter then looked for that candidate’s next contract assignment. Over the course of a decade, the recruiter earned a total of $140,515 on that one candidate. If he had placed that individual in a direct position, he would have only made $20,000 to $25,000.
Think of candidates as your firm’s inventory. Obviously, you want to get as much value out of your inventory as possible. A stable of highly skilled, star candidates could be a virtual gold mine if you “rent out” your inventory (contract staffing) rather than “selling” it (direct hire), when possible.
Recruiters often pass up the opportunity to capitalize on this asset because they assume it is easier to place candidates directly. In reality, placing a candidate on contract assignment after contract assignment can be EASIER than placing many new candidates directly.
With contract candidates, you don’t need to conduct an extensive pre-screening every time you re-assign them. You just need to touch base with them like the recruiter in the above example did to make sure you are aware of all their latest skills and experience. Since you already have an established relationship with the contractor, the majority of your “due diligence” will already be completed.
To further simplify the process, be sure to outsource the employment of your contractors to a contract staffing back-office like Top Echelon Contracting. They will handle all of the financial, administrative, and legal details of your contract placements, including contracts with clients, payroll processing and funding, withholding state and federal taxes, benefits administration, invoicing and collections, etc.
Outsourcing these tasks makes the process of placing contractors nearly the same as direct hire placements. You get the job order, find the candidate, and negotiate rates just as you would in a direct placement. The back-office handles the rest.
Finding candidates willing to be recurring contractors may also be easier than you think.
A growing number of candidates prefer contract assignments. They love the variety contracting offers. Along the way, they pick up additional skills that help them build an impressive resume. They also enjoy the opportunity to travel and experience living in different locations. If you are using a contract staffing back- office provider, those contractors may also be offered quality benefits (medical, dental, vision, life, 401k) without a gap in coverage if they are working back-to-back assignments.
Sure, direct hire placements are great, and you do not need to completely abandon them. But if one of your star candidates prefers to work on contract, don’t pass up the opportunity to place them multiple times. Many of your clients could benefit from a skilled, experienced worker to complete short-term projects or help them meet critical deadlines.
By making the most of your “inventory,” you can greatly increase your recruiter income.