Don't you just love the feeling of closing a direct hire placement? That big placement fee reminds you that all the work you put into your placements is worth it. Maybe you even splurge and celebrate with a fillet mignon dinner.
But what happens when the big placement fee runs out? Do you worry about when the next one will come? Do you start cutting back and eating macaroni and cheese?
Recruiters often wonder what advantage there is to adding contract staffing to their business models. The biggest advantage is the consistent cash flow it provides. This can help you bridge the periods between direct placements. You may even be able to enjoy filet mignon everyday.
How is this possible? Well, contractors generate income for you every hour they work and even more when they work overtime. When the inevitable direct hire dry spells hit, you have your contract staffing income to sustain you. No more worrying about whether you will be able to pay your bills. No more taking job orders that you know in your gut are bad business. Contract staffing allows you to be more choosy and focus your efforts on better opportunities.
It can even help make your firm recession-proof. Recruiters often find that their contract placements cover all their overhead costs. That means direct hire placement fees are pure profit. This make a huge difference during a recession. We hope we don't see another one for a long time, but we all know there will be one eventually. Contract staffing can help you not only survive but thrive in all economic conditions.
You will also likely see a boost in your overall sales. Companies like working with one recruiter who can solve all their staffing problems, so offering contract staffing can increase client loyalty. That loyalty often leads to more contract AND direct placements, not to mention referrals. Your contract staffing services can also attract new clients who may throw your their direct hire business as well.
With this major advantage, you would think ALL recruiters would be doing contract staffing, right? But some are still holding out. Why? Well, a number of them have bought into the myth that contract staffing is significantly more difficult than direct hire. It really isn't, though. When you outsource the employment of your contractors to a contract staffing back-office service, that service hanleds all the employment liability and tasks, including background checks and drug screenings, payroll processing and funding, tax witholdings and filings, Workers' Compensation, unemployment, employee paperwork, and benefits administration, including ACA (Affordable Care Act or Obamacare) compliance. When you place your contractors through a back-office service, your tasks remain largely the same as with a direct hire placement: you match the candidate to the job order and negotiate the fees.