Why Bother with Contract Staffing?
Contract staffing played a significant part in the recovery from the Great Recession. Even now that the economy has (for the most part) bounced back, it’s still a large part of many clients’ workforce strategies. This trend marks a departure from previous recessions, in which contract staffing tended to decline post-recovery as direct hiring climbed. Now, a fundamental shift that incorporates contract staffing as a permanent part of the workforce seems to have occurred. Consider these statistics:
- In 2015, 30% of the workforce is contingent (Source: Bureau of Labor Statistics via Jobenomics)
- 83% of surveyed organizations are increasing their contract/contingent workforce (Source: Workforce2020)
As a recruiter, it’s your role to recognize the trends and meet the needs of your clients. Simply put, the need is no longer direct hire only. If you turn away contract staffing requests from clients, you may inadvertently be sending them into the arms of your competitors.
But Isn’t it Difficult and Time-Consuming?
Nope! There is a misconception held by many recruiters that contract staffing is significantly harder than direct hire. In reality, it is much easier to add this component than you may think. You can add contract staffing to your business model with NO ramp-up time, NO upfront financial investment, and NO additional overhead by following these three EASY steps (including BONUS tips and tricks for getting contract job orders):
Step #1—Notify Clients and Get Job Orders
Chances are excellent that your clients already hire workers on a contract basis. Rather than only using contractors as a stop-gap measure following a recession or economic slow-down, employers are making contracting part of their long-term strategic plans, building blended workforce models that incorporate BOTH direct hires and contractors.
The great news is that you already have an established relationship with these companies, so you don’t have to spend a lot of time or energy getting new clients. These companies know you and they trust you enough to help them fill their direct-hire positions. If they use you for that, they’ll most likely consider you for their contract needs, as well. You may want to consider sending a marketing document to your clients to let them know that you can now offer contractors.
Bonus Tip #1: Your clients may not know that they need contractors until you ask the right questions. These include:
- Are you trying to steer away from a long-term hiring commitment? Contractors allow companies to get help they need, when they need it, without a long-term commitment. They can also help get around hiring freezes.
- Do you have a short-term project or deadline that needs completed? Companies can use contractors to get short-term work done, and lose the overhead of the additional headcount when the project is complete.
- Do you have 1099 independent contractors (ICs) who may be misclassified? Government crackdowns, lawsuits, and major media coverage directed at worker misclassification mean that companies are running a major risk with 1099 ICs. Offer to help your clients convert their 1099 ICs to W-2 employees and outsource the employment responsibilities to a contract staffing back-office.
- Do you need a trial run for a candidate before hiring them directly? Contract-to-direct placements are perfect for “try-before-you-buy” scenarios. If the client decides to hire the candidate directly at the end of the contract period, you will earn a conversion fee in addition to the hourly contract income. If they don’t like the candidate, they can try someone else.
Besides your current direct-hire clients, look for contract job orders from the following sources:
- Former Clients. Now is the time to shake the dust off old relationships. Let companies you have worked with previously know that you now offer contract and contract-to-direct services.
- Small to Medium-Sized Companies. This size makes it easier to get a conversation with the decision makers who can act quickly when it comes to hiring. Larger companies, oftentimes burdened with hiring formality, bureaucracy, and complicated vendor management systems, can be harder to break into if you’re not already a preferred vendor.
Bonus Tip #2: Connect with the decision makers who not only issue contract job orders, but also have a direct sense of urgency to fill them, such as project, department, and operations managers and vice presidents. HR may be the best source for direct-hire job orders, but they are not generally “in the know” about contract placements. Money for contractors typically comes from the project budget, not the capital budget.
Step #2—Notify Candidates
Recruiters often think that finding candidates will be difficult or they will need to spend a lot of time upfront building a stable of candidates. However, a growing number of candidates actually prefer contract work because of the advantages it provides. First and foremost, there’s more flexibility associated with a contract position, and it’s easier to balance work and personal life. And if they work more than 40 hours per week, they’re paid for overtime. That’s not the case for salaried employees. The fast-paced, project-based nature of contract positions also allow candidates to build a great resume fast. They can pick up a variety of skills and experience much more quickly than they could as a direct hire. According to Workforce, this is especially true of younger workers and recent college graduates.
Therefore, your database probably already contains the stable of candidates you need. Just like with your clients, all you need to do is reach out and let them know that you can provide them with contract opportunities. You may be surprised at the positive response you receive.
Step #3—Outsource Back-Office Tasks
A major reason some recruiters turn down contract staffing opportunities is because they don’t want to take on all of the tasks and liability that come with being the contractor’s legal employer. These tasks are complicated and time-consuming. And with the growing number of employment regulations on the federal, state, and even local level, it is becoming more and more difficult to remain compliant. Not to mention that managing the back-office takes you away from the revenue-producing activities that you enjoy (i.e., actual recruiting).
While avoiding the liability and administrative burden, you can also reduce the ramp-up time to virtually zero. If you work with national employer of record services, there is nothing to set up. You can start taking contract staffing job orders immediately rather than spending months and months ramping up.
The return you receive for your modest investment of time and energy can be substantial. So take a moment to consider how adding contracting to your business model could benefit you, both in the short-term and in the long run. You might be surprised not only at how easy it is to start, but also at how easy it is to succeed.