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The following article appeared in the May/June 2009 issue of the Contracting Corner newsletter.

Every once in a while, a story comes along that perfectly illustrates the obstacles that recruiters face in today’s business environment. The story of Marty Martinez is such a story. Martinez, President of Diversity Personnel in Laguna Niguel, Ca., recently used contracting not only to overcome a client’s hiring freeze, but also to place a great candidate, generate steady revenue, and continue to cultivate client loyalty.

Martinez, who works in the Healthcare industry, was engaged in a direct-hire search for one of his firm’s best clients. “Senior-level management came to us for a specific position, a search that only a handful of people across the country have the skill set for,” said Martinez. “It was a long, challenging project, but we eventually identified a candidate they were looking for.”

Following an intense interview process, the client narrowed down the field to a few people, and Martinez’s candidate was considered the frontrunner. “This was a bit of a challenging candidate,” said Martinez. “She knew she had the skill set they were looking for, and she was coming from a higher-level position. We had to do a fair amount of selling.”

Corporate hiring freeze
What happened next was a rather remarkable series of events. The hiring manager told Martinez that they wanted to take the plunge on the candidate and make an offer of employment. Martinez planned to call the candidate the following day and deliver the good news.

However, before he could do that, the hiring manager called back with what was decidedly bad news.

“He said there was now a corporate-wide hiring freeze,” said Martinez. “Here I thought he was calling to discuss the terms of the offer.”

Let’s rewind the story just a bit—24 hours, in fact, to a crucial event that changed the entire direction of the story, and ultimately, produced a happy outcome.

Was it fate?
The very same day that the hiring manager told Martinez that the company wanted to make an offer, Martinez went to the mailbox to retrieve the firm’s mail. There was only one piece of mail in the box—the July/August 2008 issue of Contracting Corner. Not only did Martinez rarely go to the mailbox, it was the first issue of the newsletter that Martinez had ever seen. He took the newsletter back to his office and read through it. Then he re-read it two more times.

Okay, back to the second phone call with the hiring manager, the one in which he told Martinez that a corporate-wide hiring freeze had been implemented. Since Martinez had read Contracting Corner through three times, and since that particular issue had advocated using contracting as a way in which to overcome the objection tied to a hiring freeze, he knew exactly what to say.

“I said, ‘Why don’t why we bring her on as a contractor?’” said Martinez. “The hiring manager thought it was a great idea, but that he would have to talk to the Vice President of the company about it. I told him to go ahead, but to keep in mind that if they went ahead with it, they would have to run the contractor through our firm.”

While the hiring manager was discussing the situation with the VP, Martinez called FoxHire. He spoke with Contract Administrator Jen Grimes.

“I told Jen the situation, since I figured I was going to have to answer a lot of questions about contracting,” said Martinez. “She walked me through some scenarios, and we went through them a couple times. My philosophy is that repetition governs learning, and since this was a major client with a high placement rate and retention rate, there had to be no slip-ups on this one.”

The next piece of the puzzle fell into place the following day, when the hiring manager called back with good news. “He said we were good to go on the contract placement,” said Martinez. “He said, ‘Make it happen!’”

1099 independent contractor
This is where the story becomes even more interesting. Martinez called the candidate and apprised her of the situation, specifically that the company wanted to bring her on as a contractor and that FoxHire would be her W-2 employer. Martinez received pushback from the candidate.

“She said she didn’t want that on her resume,” said Martinez. “She wanted to work directly for the client as a 1099 independent contractor. The client wasn’t going to do that because she didn’t meet all of the IRS guidelines.”

Plus, the candidate couldn’t work as a 1099 contractor during the hiring freeze and then convert to the client’s payroll as a W-2 employee. If she was doing the same “job” on the contract that she would be doing as a direct hire, that would send a huge red flag to the IRS.

“We gave the candidate some information about the advantages of working as a W-2 employee through FoxHire,” said Martinez. “The fact that FoxHire would pay her weekly, handle all of the taxes, and offered a full benefits package was definitely a plus and helped to overcome the 1099 obstacle.”

Preferred vendor issues
However, the drama doesn’t end there. When Martinez eventually presented the situation to the Human Resources Director, that person mentioned the fact that the company had a primary staffing vendor on site, inferring that they could run the candidate through that preferred vendor as a contractor. That was yet another obstacle that Martinez had to overcome.

“I had to sell to everybody,” said Martinez. “I had to keep the contractor calm, then present the hourly bill rates and see if they (company officials) would sign off on them. Then in the interim, the company moved the billing over to Spain, which proved to be a concern because of all the contracts that had to be signed.”

Martinez praised the FoxHire staff for its help and assistance during the entire process. “Jen Grimes and the whole team were absolutely professional,” he said. “They were calm in the pocket and gave us all the information we needed. They over-communicated with the client and the candidate, which was good, since this was a new situation for everybody.”

Now for the happy ending to the story. The candidate worked on a contract basis as a W-2 employee through FoxHire for a period of five months, during which time Diversity Personnel generated consistent cash flow from the contract placement. Then the company hired the contractor on a contract-to-direct basis, meaning that Diversity Personnel also earned a conversion fee, 25% of the contractor’s first-year salary.

As a result of this contract placement, Martinez has added contract staffing to Diversity Personnel’s service level offerings. “Without a doubt, it rounds out your services,” he said. “It makes you more of a full-service firm, and of course, FoxHire can take care of the back-office responsibilities. It’s a huge philosophy of ours to help our clients solve their problems, whatever they might be.

“By suggesting contracting, you give the company a chance to try out the person without a full commitment, to see if they’ll work out. On the other hand, the candidate can take a look at the company culture and learn how the business works and a little about their products. It’s definitely a win-win-win situation, for the client, the candidate, and for us.”

According to Martinez, the next time a hiring manager tells him that there’s been a hiring freeze, he will definitely suggest bringing a candidate on board on a contract basis. After all, he was basically working without a net when he suggested it the first time. Now that he has the experience of a successful contract placement behind him, not to mention a contract-to-direct conversion fee, he has full confidence in himself—and FoxHire—to bring a contract placement to fruition.

“When everything is busy and you’re rocking and rolling and make placements, it’s easy to forget about contracting,” he said. “But in a downturn, when clients are hesitant about hiring, it becomes a viable option and gives you another product to offer. I see a lot of upside with contracting. I have nothing but good things to say about the whole process. Contracting helps you to reach your business goals of steady revenue and client loyalty.

“We don’t know what’s going to happen in the future, but contracting is an area that we’re moving into. It’s a great option to have, regardless of the economy.”

The amazing part of the story is the uncanny order in which things happened, especially the fact that Martinez retrieved the Contracting Corner newsletter the day before the hiring manager called back with news of a hiring freeze. If the newsletter had arrived a day later, or if Martinez had not been the one to retrieve the mail, then perhaps the ending to the story would not have been so happy.

“We’re big fans of contracting and big fans of FoxHire,” said Martinez. “It was a seamless and flawless process, from beginning to end, and we were able to maintain our reputation with a high-profile client. We’re also in the process of joining FoxHire Network, as well, so there’s a lot of upside to this whole thing.”

Make the call
Call FoxHire today at (330) 454-3508 and ask to speak with a Contract Administrator. In a matter of minutes, you can learn about the different options to help you grow your business. FoxHire also has a 15-minute training video, a free Contract Training Kit, and free marketing documents. All of this is available by visiting our website.

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