If you saw someone standing on a corner giving away hard-earned hundred dollar bills, would you question their sanity? I certainly would!
Then why is it so many staffing firms give far more than hundred dollar bills away? Every week I hear corporate clients relating how they get their “additions to staff” (new hires) for free. That is right, FREE. “All you have to do is place a temp order or temp-to-hire order with a staffing firm and tell the (staffing) representative that you expect to convert the temp to your payroll for no fee.” This can be done (with no problem) after 60 or 90 days and sometimes as soon as 30 days. Most staffing firms will roll over and say: “OK.” There are even some firms who sell their temp service by claiming: “you can have our temps after 90 days, no fee, ever; all we want is an order.” Thus, we have our own industry to blame for this aberration.
One can’t blame a client corporation for negotiating additions to its staff with “free conversions.” After all, they are being presented (by our industry) with this option every day. Which one of us wouldn’t accept a $25,000 car from Hertz if all you had to do was rent it for 30-60-90 days? Yet we don’t see Hertz or any other reputable business giving away their assets after such a brief period of time. Nor would anyone dare ask them to do so for fear of being laughed at. I’ve been renting cars for years and not once has any rental car firm offered to give me a free day, never mind a free car, after 90 billable days. Yet far more (value) is given away every day by our industry. How is it that staffing firms have to agree to give away their (hard-earned) assets or risk never getting an order, or worse, lose the opportunity to continue doing business if that offer isn’t made?
To my dismay, the corporate clients get it, the staffing industry doesn’t! THE TEMPS ARE VALUABLE ASSETS! They make, create, and save revenue for our client companies. So if our clients believe our temporaries are of value, shouldn’t they be as valuable to us? If these temporaries are valuable to us, shouldn’t we be receiving fair value in return? Admittedly a lot of this became prevalent when the national temporary firms were attempting to secure “vendor on premise” accounts. These so called leaders of our industry have been the paragon of the “give away” concept. While they felt it necessary to do this to secure “all” of the corporations’ business, this concept was quickly embraced by the ‘independents’ so they could be like them. Well, last time I looked at the national firms’ annual reports, I can assure you, I don’t want to be like them!
It is no secret that the temporary industry makes a very modest profit over a ninety day billable period. In most cases, however, one does not make 1/3 of a standard fee. Do the math; if one makes six dollars an hour gross mark-up (not net) x 500 hrs (apx. 90 day period), one would have a gross mark-up of 3k. Deduct your taxes, commission, and overhead and what are you left with? $1,000? Yet if you placed the same level (25k) candidate at 25%, you would generate a fee of $6,250. Thus under the “give away” program you make $1,000 but give away $5,250. WOW, what a “lose/win” proposition!
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How mature is your hiring process? Answer these 5 questions and find out.
While the weak sisters of our industry will always attempt to sell on price (they have little else to offer), they make other firms stronger because those firms have to continually prove value and develop relationships or perish. Which type of firm are you?
It is time we demonstrate that the service we provide is valuable, the people we provide must be valuable (or our clients wouldn’t want them), so let’s derive fair value for value provided!