3 Easy Steps for Using Contract Staffing to Make More Money

  By Debbie Fledderjohann  |    Sunday August 7, 2017

Category: Expert Advice, Recruiting


t’s undeniable: contract staffing is here to stay. With the progression of the blended workforce model, it’s becoming clear that contract workers are an integral part of the modern business world. If you don’t already offer contract staffing as an option to your clients, there has never been a better time to start. After all, you don’t want to miss the mark with contract staffing and knowing how much recruiters make.

You may be surprised to find that you already have the resources you need to get started with contract staffing. Just follow these three easy steps:

1. Put Yourself on the Map. First, focus on making “contract staffing provider” part of your brand. After all, nobody will come to you for contracting if they don’t know your firm handles it.

•    Website. Add a paragraph or a full page to your website describing the new services you offer. Use keywords so those using search engines can find you easily. Make sure to direct separate messages to clients and candidates. While they both benefit from contracting, their needs differ and it’s your job to make the advantages clear to them.

•   Social Media. Add a line to your email signature, your LinkedIn and Twitter profiles, your Facebook and Google+ “About” sections, etc. If you are actively involved in industry groups or conversations on social media sites, post an announcement. If you have a business blog, write a post about your new offerings and continue to post regularly about them. Anywhere that you have a business presence is an opportunity to advertise your contract staffing services.

•   Marketing. Get your business cards, fee schedules, and other printed or electronic marketing materials updated. You never know when a chance encounter might lead to a recruiting prospect, so be prepared!


2. Communicate with your Direct Hire Client Base. Many direct hire recruiters new to contract staffing are apprehensive about building a contracting client base from scratch. What they don’t realize is that their existing client base is ripe with contract opportunities; statistically, 78% of your contracting business will come from current clients. You may find you only need to inform them of your new services to receive your first job orders (sending a marketing message can be very helpful for this purpose). Remember, there are three main reasons client companies utilize contractors:

•    Contract staffing is flexible. If the client has a special project, they can bring in a contractor with a specific skill set to hit the ground running. As a business’ workload fluctuates, so can its workers (think IT upgrades, accountants during tax season, etc.). Clients can also “try out” a prospective direct-hire employee with no long-term commitment through a contract-to-direct hire arrangement.

•    Contract staffing eliminates liability. All the risks of bringing on a W-2 employee (workers’ compensation, discrimination, compliance, tax and HR issues) are taken on by the employer of record, NOT by the client. This solution also erases the risk of misclassification-related consequences if the client was considering bringing the person on as a 1099 independent contractor.

•    Contract staffing is cost effective. The client pays one flat hourly bill rate and incurs none of the overhead costs associated with direct hire employees, including benefits, unemployment, etc. (an estimated 35 – 45% on top of salary). They also don’t have to waste valuable time tracking legal and administrative issues like Health Care Reform; they simply pay the invoices.


3. Start a Dialogue with your Candidates. Will you need to source brand new candidates to find all of your contract workers? Probably not. Any candidate can benefit from a contract arrangement.  Again, the key here is ample communication. In every conversation you have with a current or potential candidate, ask him if he is willing to work on contract. Make sure to mention the top four candidate advantages of contract arrangements:

•    Contracting is flexible. The lifestyle lends itself more readily to the work-life balance that people need. Contractors tend to have more flexibility in hours and location and they can schedule time off around their assignments. More and more candidates are choosing to work long-term as contractors because of this advantage.

•    Contracting is lucrative. In fact, it can be more financially rewarding than direct hire employment. Unlike salaried employees, contractors are paid for every hour worked and can typically earn overtime on any hours over forty in a week.

•    Contracting leads to job satisfaction. A contractor can spend time in a company without committing to long-term employment, then leave at the end of a contract without having to explain why he “job hopped.” Even better, the skills and experience he adds with each contract assignment only increase his marketability for future placements. This leaves more room for career exploration and growth.

•    Contracting through a back-office grants access to a contract employee benefits package. Many full-service back-offices offer health insurance at group rates, in addition to dental, vision, life insurance, and 401(k) options. Since all qualified individuals are now required to have health insurance under Health Care Reform, this is a major incentive for many workers.


Front-Office (Recruiter) and Back-Office Tasks

Contract staffing can seem intimidating at first glance, but from the recruiter’s perspective, the front-office tasks are essentially the same as they are in direct hire recruiting: get the job order, locate the candidate(s), and facilitate the placement. At that point, either your firm or a third-party service will become the employer of record. This entity will handle the back-office tasks of employing the candidate on a W-2 basis while he works for the client company on the contract assignment.

Don’t get hung up on the administrative, legal, and financial tasks of the back-office. If you outsource your contract placements to a reputable back-office solutions provider, they will handle these details and complexities. Then, you’re left with only the front-office tasks you know and enjoy—recruiting!


What If You Are Unsure About Outsourcing?

If you decide to set up your own in-house back-office, be aware that the complex ramp-up and ongoing tasks are costly in terms of both time and resources. Among other requirements, you must:

•    Purchase adequate liability insurance.

•    Register for applicable state and federal taxes, state unemployment insurance(s), and Workers’ Compensation insurance.

•    Write and process contracts with your clients and employees.

•    Handle employee onboarding, including background checks and I-9 verification.

•    Collect timesheets and fund and process payroll regularly.

•    Issue invoices and handle collection efforts in the event of nonpayment.

•    Administer benefits and handle Health Care Reform issues.

•    Additionally, you are obligated to comply with all applicable employment laws and regulations, not to mention dealing with the various human resource-related tasks that crop up when you have employees.


The Bottom Line: Get the Word Out!

Successfully ramping up contract staffing services can be easy and profitable. It just comes down to getting the word out to existing clients and candidates. Remember, you’ve already done the work of finding them, getting to know their needs and wants, and earning their trust. With just a little extra effort, you can reap twice the reward!

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