With more and more companies looking at ways to improve and save on their contingent labour I often wonder how this has affected agency’s attitudes towards margin. I have seen many agencies forced to reduce their margins when working with higher volume clients. I have also seen agencies refuse to work with clients because they are being forced into using a smaller margin. When does it stop making sense for you to be with a client? How many refuse to walk away and how many people keep their margins higher because they believe they draw the best talent? When giving your response I would also be interested in knowing which country you are in.

 

Thank you

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Chuck,

This is always a great debate and not one easily answered. Our firm [Scottsdale and Bethesda] works in a very narrow niche and thus tries to keep our margins as high as possible. We do retained search at one level and contingency at another. For high volume clients, we have even offered "special deals" on a quick hire for a fixed price -- particularly when the position is a multiple person hire, i.e. there may be six to eight of a similar position at a manager level but given our candidate base we can fill it fast for them. We still make money at that rate.

For new clients we never go below a certain floor and will occasionally choose to not work with a client that wants a low rate that is not feasible economically. Also, we have stopped working with clients that use resume aggrigator services like "Bonus Jobs" as this really gives away our database and brings no compensation to the firm. I have noticed that for those clients using such services that the position salmost never get filled.

Hope this helps.
Contract staffing (in a vast number of scenarios) particularly at large companies has become much a commodity play to the extent that it frankly draws junior and often unspecialized recruiters. They know as well as you that finding contractors is fairly administrative as these folks are naturally active applicants on the job boards etc. This is what makes them generally easy to find and thus the competition you face of bargain basement fee pressure. Rather than doing it to stay in the game why not look at a different field to play on. i.e. specialized contract placement at smaller and medium sized companies or more senior level permanent staff where companies pay you a premium for the recruiter with solid credibility and rapport to engage folks passive A-level talent that is working and otherwise wouldn’t apply? Our clients several times/mth have consistently seen the cost benefit of paying 25% fees for A-level players. Also a heck of lot more rewarding when you are working directly with hiring managers and really feel where you are on the same team. Unless you aim to be Manpower or are working for a shop like that I would stay a mile away from the 4-5/hr high-volume client stuff. As Jerry said that is a death spiral that should only be attractive to Manpower like firms or to a recruiter that is not thinking strategically about how best to spend their time.

James, you are correct- Contract recruiting can often seem like throwing spaghetti at a wall- eventually something will stick, right? This is largely due to to the MSPs of the world that seem to be rate driven rather than talent driven. You are fortunate enough to have the clients that you have, we could use some of them!
James Zinman said:
Contract staffing (in a vast number of scenarios) particularly at large companies has become much a commodity play to the extent that it frankly draws junior and often unspecialized recruiters. They know as well as you that finding contractors is fairly administrative as these folks are naturally active applicants on the job boards etc. This is what makes them generally easy to find and thus the competition you face of bargain basement fee pressure. Rather than doing it to stay in the game why not look at a different field to play on. i.e. specialized contract placement at smaller and medium sized companies or more senior level permanent staff where companies pay you a premium for the recruiter with solid credibility and rapport to engage folks passive A-level talent that is working and otherwise wouldn’t apply? Our clients several times/mth have consistently seen the cost benefit of paying 25% fees for A-level players. Also a heck of lot more rewarding when you are working directly with hiring managers and really feel where you are on the same team. Unless you aim to be Manpower or are working for a shop like that I would stay a mile away from the 4-5/hr high-volume client stuff. As Jerry said that is a death spiral that should only be attractive to Manpower like firms or to a recruiter that is not thinking strategically about how best to spend their time.
Cool, someone agreed with me :)



Rebecca Griffin said:

James, you are correct- Contract recruiting can often seem like throwing spaghetti at a wall- eventually something will stick, right? This is largely due to to the MSPs of the world that seem to be rate driven rather than talent driven. You are fortunate enough to have the clients that you have, we could use some of them!
James Zinman said:
Contract staffing (in a vast number of scenarios) particularly at large companies has become much a commodity play to the extent that it frankly draws junior and often unspecialized recruiters. They know as well as you that finding contractors is fairly administrative as these folks are naturally active applicants on the job boards etc. This is what makes them generally easy to find and thus the competition you face of bargain basement fee pressure. Rather than doing it to stay in the game why not look at a different field to play on. i.e. specialized contract placement at smaller and medium sized companies or more senior level permanent staff where companies pay you a premium for the recruiter with solid credibility and rapport to engage folks passive A-level talent that is working and otherwise wouldn’t apply? Our clients several times/mth have consistently seen the cost benefit of paying 25% fees for A-level players. Also a heck of lot more rewarding when you are working directly with hiring managers and really feel where you are on the same team. Unless you aim to be Manpower or are working for a shop like that I would stay a mile away from the 4-5/hr high-volume client stuff. As Jerry said that is a death spiral that should only be attractive to Manpower like firms or to a recruiter that is not thinking strategically about how best to spend their time.
This is not to say that we just blankly submit anyone, which many of our competitors will do. We work very hard to find the best candidate for the position.

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