The next couple of months will be critical to how you position your business in 2023. With continuing turmoil in the labor and financial markets, use your time wisely going into the next quarter. Be alert to new trends in the marketplace that will likely have a strong influence on your business. Being aware of these trends will position you to take advantage of them and improve your profitability. Contract assignments are becoming more common and the “gig” economy is expanding. With potential delays in direct hires due to concerns about the upcoming election, many clients may consider a “try before you buy” option with temp and contract placements. This can minimize the risk of recruiting and training the wrong candidate and serves to spread out hiring costs over a longer time period. You can earn a conversion fee if the contract person ultimately goes direct.
Finding a short-term solution for your clients will enable them to continue their operations until you can find the perfect fit. Ask all your candidates if they would consider a contract assignment. More experienced applicants that have retired from a full-time career often are interested in returning to the marketplace for a contract assignment. Baby Boomers are an excellent source of labor for contract assignments. You can provide them the ability to stay active in the workforce while earning an additional income. A lot of people are attracted to the life-style flexibility and work-life balance offered by contract assignments.
With increased focus on the “gig” economy, positions that have historically been considered full time employee-only positions are now becoming contract assignments. And for some specific assignments or short-term projects, it can be beneficial for your clients to consider outsourcing these as contract assignments especially if you could save them money.
And there is the “try before you buy” option. Both your candidate and your client company can get to know each other to make sure it is a good fit. Recruiting and training talent could cost a company between 6-9 months of an employee’s salary. The average position takes 40 to 50 days to fill. That leaves the current staff picking up the slack and possibly racking up a lot of overtime costs. Worse yet, the work may not be getting done. A “try before you buy” arrangement would also save your client the cost of offering their benefits package including costly healthcare insurance, to someone that may not be the perfect fit. According to the Department of Labor, it is common to pay 30% of an employee’s annual salary if the relationship does not work out.
Knowing that finding the perfect fit may take time, you can put a contractor in place and continue your search. Another advantage of offering contract placement is that the hiring costs could be spread out over a longer period. Fill this need with a contract placement and your client is happy, the work is being done, and you will have an additional revenue stream while giving yourself time to do what you do best – recruit the perfect candidate!
Trends in labor market demographics are in favor of contract placements: A typical 55-year-old spends on average 10 years at a job – if not longer; whereas a 25-year-old spends an average of 3 years on a job! Job-hopping has become the accepted norm! An NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract. 20% of all-American workers are hired to work on a specific project or for a fixed period. 65% of contract workers are male and 62% are under the age of 45. Within the next 10 years contractors could represent up to one half of the American workforce. A study by Intuit, predicts “contingent workers will exceed 40% of the US workforce by 2020.” And 80% of large corporations plan to substantially increase their use of a “flexible” workforce.
If your client does not have a direct hire placement fee in their budget, you can offer a contract-to-hire option. Be sure to negotiate a conversion fee that takes effect after 30, 60, or 90 days that would pay you your full direct-hire fee minus what profit you have already made. This is not how much you have invoiced because you have had to incur the cost of the employee’s pay, the taxes, insurance, and any other expenses; rather it would be your fee minus what profit you have earned up until the point of conversion.
Use your time wisely and be prepared to take advantage of these market trends. Partner with a back-office provider to help with your contract, temp, or temp to hire placements. It should not cost anything to get set up. There should be no obligation. There should be no minimums on payrate or length of service. You should be able to use them only when you need them.
Be aware of what is going on in the marketplace and POSITION FOR NEW TRENDS.