In my last blog, I talked about the benefits of using staffing agencies to help in your search for the ideal team member. For this installment, I want to share a few ideas on negotiating agency fees.
As I mentioned in my earlier blog, I was in search of three new team members at the same time. It was difficult, but I found that working with a number of agencies expanded my reach significantly, put me in front of more qualified candidates, and all four agencies were open to negotiating their standard contract terms.
There are typically four areas you can negotiate: The placement fee, the minimum number of hours they must work under contract (in addition to or in lieu of the placement fee), the agency’s hourly mark-up rate and the number of days on the replacement guarantee.
In most contracts, there is a placement fee. Often this can be negotiated down and it can be waived if the employee works a minimum number of hours.
On a temp to perm contract, there is also a minimum number of hours an employee must work under contract before they can come onto your payroll without a placement fee. I’ve been successful at negotiating 500 and 600 hours when the standard minimum was 700 or 800 hours.
In terms of the agency’s hourly mark-up rate, which is in addition to the position’s hourly rate, I have often seen this rate upwards of 40% to 50%. I have negotiated this down to 15% to 20% in many cases.
The last area on the contract that I look at is the replacement guarantee. This is the length of time an agency will replace the candidate if it turns out they are not a good fit for the role. Most agency contracts I’ve seen offer a standard 30-day replacement guarantee. Although we usually know before the 30-day mark when a candidate does not have the right skill set for a position, I prefer a 90-day guarantee, just in case the unexpected happens a little further down the road.
You may be wondering what negotiating tactics I used. There was really no silver-tongue negotiating magic happening here. The key for me in negotiating the terms I wanted was directly related to the rapport and relationships I had built with my agency contacts.
So, you may be wondering how my search for the three candidates went. Well luckily, one of our existing team members was interested in one of the positions so we were able to promote from within. For the other two positions, my search continued. As I mentioned in my previous blog, I first started my search with one agency, then two, then increased it to four agencies. Interestingly enough, the two new agencies presented our top two candidates, which we offered the positions to after a variety of interviews and assessments. I’m happy to report, they accepted and we haven’t had to use our replacement guarantee!
What I took away from this recent round of searches is that you should never limit your access to qualified candidates and never settle for the standard contract terms. If you expand your relationships and negotiate your contracts, you can set yourself up for success to meet more skilled candidates and save yourself valuable time and money.
If you missed my previous blog on Staffing Agencies – When Time Isn’t on Your Side, click here.
Director of Member Services
American Academy of Estate Planning Attorneys, Inc.
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