How to Eliminate "Sticker Shock" for Your Clients

Even as the economy is starting to brighten up, client companies are still watching their budgets closely. So it's no surprise that many of them are balking at the recruiting fees that come with direct placements. As a result, some recruiters may be losing placements from client companies that are just not prepared for the large initial payout.

Other recruiters have found a creative way around this. They  offer to place candidates on a contract-to-direct hire basis  rather than direct. That way, a client company can pay the recruiting fee over the course of a contract assignment rather than in one lump sum.

The only difference for you is that you don't get the big, one-time fee. But  getting it a little bit at a time is better than not getting it at all, right? Plus, if the contract portion lasts longer than expected, you can actually earn more. You may find that you actually like having a steady stream of income rather than the traditional peaks and valleys that come with recruiting.

So if the only thing holding potential client companies back from using your candidates is your recruiting fee, contract-to-direct hire can offer a simple solution that doesn't cost you any extra time or money. 

Debbie Fledderjohann is the President of  Top Echelon Contracting, Inc.

Comment by Christopher Perez on May 10, 2012 at 7:55am: Good idea, Debbie. I am familiar with this approach but with an equitable twist that clients like-- the payments are capped at an agreed-upon amount that is equal to the fee in a traditional direct placement (i.e., some percentage of the candidate's expected annual salary).

On a practical note, how are benefits handled under this scenario? Many companies don't extend full bennies to contract staffers, only F/T people. This could be a stumbling block for getting buy-in from the candidate, I would think. However, since all of this would be negotiated up front, presumably the candidates would be fully aware of this agreement and would be part of the risk-sharing approach. As you said, there are some compromises but it's better than missing a placement altogether.

Comment by Russ Recruits on May 10, 2012 at 10:48am: We call this Temp to Perm & is popular with clients who have high turn-overs.

Either way the cost is the same, but you generate more paperwork for the client & yourself and increase the number of of potential missed payment dates = more chasing.

Chris - Good point - benefits over here usually kick in after 3 or 6 months probation. If its the same your side it would make no difference to the candidate. In the UK, it does not matter if you are full time or Part Time ( a Staffer?) - you have the same rights in regards to packadges, holiday and salary - just pro rata.

Comment by Christopher Perez on May 10, 2012 at 11:08am: Russ, among my clients here in the U.S., it's common for benefits to begin on the first of the month after an employee's start date. But it varies.

Good point about the administrative overhead of the temp-to-perm model. Yet another wrinkle to be considered. Once you accept that the perfect deal is not available, it becomes a business decision as to whether the next best alternative is acceptable.

Comment by Russ Recruits on May 10, 2012 at 11:26am: Chris - 1 month - jeese, i'm in the wrong country!

Comment by Debbie Fledderjohann on May 10, 2012 at 2:06pm: Christopher, you are correct, companies usually don't provide benefits. If the recruiter works with a contract staffing back-office, the contractors may be able to access benefits that way. For instance, contractors that recruiters run through Top Echelon Contracting's back-office are offered a full menu of benefits, including Anthem Blue Cross and Blue Shield health insurance. Also, a lot of the administrative hassle, such as invoicing, collections, etc., can be handled by a contract staffing back-office.

Comment by Christopher Perez on May 10, 2012 at 2:11pm: Thanks for the additional insights, Debbie. It sounds like more of a business model requiring a certain level of infrastructure (i.e., back office support), than an ad hoc creative way to help close a client, but I still see the usefulness. Sometimes it just takes the mention of a creative solution to get people to open their minds to what is possible. Thanks for the post. --Chris