Recruiting Agreements - Permanent? Contract? or Both?

I am a recruiter that recruits full-time permanent positions only, and a client asked me if I would consider doing both permanent AND contract work. It seems that "contract" recruiting is the way of the future, but I am not sure how to get in the game when it comes to markups, or how the agreement would be written in terms of recruiting both permanent and contract workers.

I hope I am making sense. Anyone have any insight?? Any help would be great.

Thanks............

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Permalink Reply by Jason Babyak on September 22, 2008 at 7:19pm

Michael,

Being an office of one I have always focused on permanent placements but was also approached on several occassions regarding contract positions. The first obstacle for me was that I am an office of one and can not act as an employer of record for the candidates so I had to turn to a 'back office' to do this. Basically I would find the candidate and if there was interest to hire we would agree on a bill rate and pay rate and from there I would turn it over to my back office and it was nice because they have a contract/fee agreement in place all ready so this is not anything I had to worry about. Once there is an established pay rate and mark up/bill rate you will know what your profit/hour is. As for a markup, some companies will have a set mark up they will pay, if not try something and see if they agree. I have seen as low as 19% and heard of some as high as 40%. I try to target 20% to 25%

Then everytime the client company pays the back office, I get a check. If your firm is large enough to act as the employer of record, all the better, it was not an option for me.

I don't think contract is the way of the future but it will definitely open up new avenues for you which is never a bad thing. The checks are not as large as the perm placements but still nice if you can get multiple contractors working at one time and great if they keep going long term.

One additional note I put in a posting here on RBC over the weekend, make sure you have a 'conversion fee' in your contract to protect you in the event that the company hires the candidate full time before you have profited the same (or more) than you would have via the permanent placement. For example, using easy numbers if your profit works out to be $5/hr then you are getting around $200 for a 40 hour week and $800 per month. After 3 months you have made $2400 and then they hire your candidate full time you only got $2400 for a permanent placement. Not a good deal so you need to have a clause in there that talks about a minimum profit to you if the candidate is hired full time and if your profit is less than that when the candidate is hired they pay this conversion fee to make you whole. Thankfully a lot of the contract candidates want to stay contract and are not interested in perm but still best to be protected.

Probably a bit confusing but I can explain more if you want