Last year, in the spring issue of Employment Marketplace, I wrote an article titled, "The Importance of 'You 2.0.'" In that article, I discussed how crucial it is for any recruiter and/or recruiting firm owner to make sure that the services and solutions they offer to their clients are upgraded on a consistent basis—just like their software is updated.
Well, a lot has changed in both the economy overall and the recruiting industry in particular since this time one year ago. So what does that mean? You guessed it, another upgrade. It's time for you to unveil to your clients . . . "You—version 3.0."
3.0 and your business model
As I discussed in my previous article, there are two things that your clients are primarily concerned about: how you can meet their needs and how you can solve their problems.
Let's say that you've already made the jump from 1.0 to 2.0 with your business model. For our purposes, that includes adding contracting to your direct-hire efforts. (If you haven't added contracting yet, don't worry. You can do so at any time, and it's a lot easier than you might think!). So if you've already upgraded to version 2.0, you're ready to make the jump to 3.0, which entails relying on contracting just as much as direct hire. As you know, some recruiters prefer to focus the majority of their attention on their direct-hire business, supplementing their efforts with contract placements.
Under ideal economic conditions, that type of approach is perfectly reasonable. However, the recruiting industry is not working under ideal economic conditions at the moment. That's why making a subtle shift and bringing contracting more to the forefront might be a prudent decision. Some of the most successful recruiters with blended business models swear by this approach. That is, they emphasized direct hire more during good times, and then they shift gears, emphasizing contracting more when the economy is experiencing a downturn.
By doing this, they're better able to meet their clients' needs and also solve their hiring problems, and as we mentioned above, that's all they really care about.
3.0 in a longer recession
As any veteran recruiter will tell you, it's not necessarily the depth of a recession that's the problem; it's the length that can kill you. And this is true not only for recruiters, but also for companies. When a recruiter emphasizes contracting during a recession, they're positioning themselves for success . . . or survival. That's because hiring managers are more likely to use contractors than they are to hire candidates on a full-time basis.
And why are they more likely to do so? It all boils down to one thing: cost. Hiring candidates on a W-2 contract basis is more cost-effective. Right now, companies are doing everything they can to be more productive while cutting costs at the same time. W-2 contractors afford them the luxury to do so. Companies accomplish this because someone else (usually, a contracting back-office) hires the actual worker. When that happens, the following cost savings occur:
- Unemployment insurance rates remain low because when the contract assignment ends, then the burden of unemployment falls to the back-office and not the company. Not only that, but hiring contractors for short-term assignments can help the company avoid future layoffs. Using retirees, which is becoming more popular, is a great way to fill these types of assignments.
- Benefits costs such as health, dental, vision, and life insurance are provided by the back-office provider and not the client. (Top Echelon Contracting is just such a back-office. We've been providing these types of services since our inception 17 years ago.)
- The contractors do not have access to the company's pension or retirement plan. At a time when companies are eliminating their contributions to 401(k)s and eliminating pensions, this is a huge consideration.
- Human resources and payroll costs are reduced. This includes the actual time for processing paperwork and the overhead time required for administrative issues.
- Workers' compensation premiums and experience ratings remain lower because the back-office service provider will provide the coverage.
- Most contractors are paid on an hourly basis. In other words, the company will only pay for the hours that the contractor actually works, thus maximizing the return they receive on their investment.
Here's an added bonus. While you're meeting your clients' needs and solving their problems with contract staffing, you're also building loyalty with them. That means when the recession ends and the recovery begins, the hiring managers at your client companies will remember you and what you provided for them during the downturn.
A lot of companies—and a lot of recruiting firms—have already gone out of business in 2009. In other words, they've become obsolete. Or, to use more software parlance, they've been deleted from the marketplace. Sadly, more companies and more recruiters will follow suit in the months ahead. The key, of course, is to make sure that you're not one of them.
One way in which to do that is to unveil "You 3.0." Assess your current business model. Is it version 1.0? Then you might consider adding contract staffing. Is it version 2.0? Then it might be time to start promoting the contracting side of your business a bit more than you have in the past.
Clients will want to work with you because of you, because of who you are and what you can do to meet their needs and solve their problems. It's all about them!
So in 2009, make sure that every aspect of your firm receives an upgrade.