Contracts define how we do business with our clients and service providers. They are not just something to be done once, filed away, and then forgotten, but should be reviewed annually prior to the commencement of the new year. Be familiar with your contracts and have an orderly process in place to review the crucial details. This article is written to suggest some factors to consider in your contract administration.
Know the Details
This sounds obvious, but many contracts are implemented with little regard for the fine details, details which can come back to haunt you! The expiry date should be marked on your calendar in bold letters so you can be prepared to take the necessary action before renewal time. Know if your contract will auto-renew and be prepared to re-negotiate key terms if needed.
Review Your Business Model
If you are working on more executive or leadership roles that are highly specialized and confidential make sure your current agreement allows you to move into a more valued strategic partnership role. This is the time to add provisions for a Retained Search fee model on your VP, C-suite, and niche searches. If your agreement does not already include contract placements with conversion fees in addition to your direct hire searches, consider adding this service.
Negotiate Rates
Rates specified in contracts with your clients often need to be re-negotiated to reflect changes in the market, inflation, or other factors. Review your contracts well in advance of expiry to see if rate adjustments are warranted. You will then have time to negotiate the new rates without crowding the expiry date.
Do you need to raise your rates or add rates for special services? Are your costs for workers’ comp or unemployment rates increasing? If so, include these factors in your annual contract review and re-negotiate rates accordingly.
Agreements With Service Providers
The need to review contracts applies not only to your clients, but to agreements you have in place with your service providers as well. Compare prices with competing companies. for example: phone rates, medical insurance and benefits packages, utilities, office machines and website maintenance, and rent, to name a few. Ask yourself if you are happy with the provider and their services, or do you need to make a change?
Special Language
Make sure you have any special language included in your agreements, for example: ability to pass on any additional charges if your cost increases on background checks, pre-employment drug screens, and other third party services.
Guarantee and Replacement Policy
You should review your overall guarantee and replacement policy annually. Ask yourself if your experience to date is positive. If not, consider re-negotiating your contracts to reflect a more cost-effective policy.
Payment Clause Details
Check your payment clause and verify your clients are paying you on time. If not, add a late fee clause into the contract negotiations. If your receivables are allowed to drag out too far you are losing the time value of money! Consider giving your clients options, i.e., offer lower rates for early payment.
Fee Schedule for Additional Services
Ask your clients if they would like any additional services such as in-house interview training, monthly reports on related job markets, current salary updates, review of new employee onboarding, and employee handbooks, to name a few. Develop a fee schedule for providing these services. Your time is your most valuable commodity. Don’t give it away!
Communicate the Proposed Changes in Advance
Communicate any changes you make to your agreement well in advance. Your clients are probably reviewing your agreement with them as well. If you change your rates, communicate the exact reason why – don’t just announce you are raising your rates.
Client Appreciation
Let your clients know you appreciate their business. Ask your clients, are they happy? What more can you do to help them? You are their partner and labor expert! Give your clients a Business Recap for the previous year – how many placements have you filled, average time to fill positions, are you working with multiple departments, roles and other KPI’s (Key Performance Indicators). A contract is the foundation of a good working relationship.
If you found this article helpful and interesting and would like to discuss any of these ideas, please feel free to give me a call or contact me at judy@jcsrllc.com, or visit my website at https://www.jcsrllc.com for more information on partnering with the best service providers.
