Posted on Wed, May 01, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
When you hear about contract-to-direct arrangements, you usually hear about how client companies use them to test drive candidates. These arrangements give companies the chance to see a potential new hire "in action" rather than just depending on the typical interview and hiring process to determine whether they are the right fit. They can evaluate a candidate's skills and work ethic before they make a direct hire commitment.
But a recent Society for Human Resource Management (SHRM) article shows that it's not just employers who are nervous about new employment relationships. Citing a study conducted by Development Dimensions International (DDI), SHRM reported that only 51% of new hires are confident in their decision to take a new job. A big reason for this uncertainty is that companies fail to paint a realistic picture of the job. Companies that provide "realistic job previews" had higher percentages of new hires who felt good about accepting the job offer.
Contract-to-direct arrangements are the ultimate realistic job previews. Candidates can try the job first and get a "behind-the-scenes" look at the company so they can determine if it is a cultural fit for them. And for those considering relocation, it allows them to try the geographic location as well before they sell their house and move their families.
Some may view contract-to-direct arrangements as just another hoop candidates have to jump through to get hired. But in reality, it is an audition for both the candidate AND the company to determine if they meet each other's needs before they make the direct hire commitment. By providing the contract-to-direct option to your clients and candidates, you can help both parties make a decision they can feel good about.
Posted on Tue, Apr 23, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
According to Forrest Gump, "Life is like a box of chocolates. You never know what you're gonna get." The same could be said of hiring. Despite companies best hiring efforts, they are often unpleasantly surprised by what they get.
Citing Careerbuilder stats, a recent article from the Staffing Stream titled "When Bad Hires Happen to Good Companies" states that seven out of 10 companies were affected by a bad hire in 2012. In addition, 41% estimated the cost of that bad hire to be over $25,500, while 24% put the cost at more than $50,000.
That's why many companies turn to recruiters like you to help prevent the dreaded bad hire. The Staffing Stream article recommends some steps to help you ensure that clients are happy with what they get:
- Know your client. Having clients complete a survey is a great way to get to know the client and their needs.
- Consider clients' culture. Being a "good hire" is more than just having the right skills set. Good hires must also be a good cultural fit.
- Look beyond local candidates. Many star candidates will relocate for the right opportunity.
- Follow up. Keep in touch with the client and the new hire throughout the first year to ensure both parties are happy.
We would add one more suggestion:
5. Offer contract staffing as a solution. According to the article, 75% of companies said their bad hire resulted from the need to hire someone quickly. Instead of rushing to select a direct hire, employers can instead bring contractors in to fill the gap until they find the right person. Or if they think the contractor could be that person, they can try them on a contract-to-direct basis instead of diving right into a direct hire commitment. During the contract period, they can evaluate the candidate's skills and extend the direct hire offer when they are satisfied that they have indeed found a star player. When that happens, you can get a conversion fee on top of the hourly rate you earn while the candidate is on contract. If the contractor doesn't meet expectations, they can simply end the contract and try someone else.
How about you? What are your suggestions for making sure a candidate is the right fit for a job order?
Posted on Thu, Mar 21, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
“There isn’t any money in the budget." "We are under a hiring freeze right now.”
How many times have you heard these objections? Or how about "We'd love to use you, but we just can't afford the placement fee right now?" In this economy you may hear “no” to a direct hire more than you like. But there is another option you could consider that helps the client and is easier on the budget: a contract-to-direct hire solution. This allows the client to get the skill set they need and “try-out” the candidate.
With this option your client will pay the placement fee over time rather than one lump sum. In a contract-to-direct hire situation, the placement fee can be part of the weekly invoice. Consequently, the fee is paid in small increments over time instead of one large, lump sum payout.
Using the contract-to-direct option has helped many recruiters we have worked with overcome placement fee objections. But if you are going to use this technique, you may want to use a contract staffing back-office to employ the candidates during their contract period. Otherwise, you will be responsible for payroll funding and processing, Workers' Compensation, Unemployment, invoicing and collections, etc. A contract staffing back-office can handle all those tasks for you so you can concentrate on closing your next placement!
Posted on Thu, Mar 07, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
If you are a recruiter, you are quite familiar with the phrase "cultural fit," but in most cases it's coming from a client who wants to make sure a new hire will fit in with the existing team. But cultural fit is an important requirement for job candidates, too, especially for Millennials.
A recent Recruiter.com article illustrates this through a story about a worker they call "John." At a time when many young college graduates were struggling to find work, a Fortune 500 company John had interned for created a full-time position just for him. He was getting great experience and making decent money. But he was only partially satisfied. Why? In short, because he had no friends at work. As the youngest employee, he had little in common with his co-workers, and even if he did, he never got the chance to discuss it with them because they were frequently traveling and worked through lunches.
It may seem silly to some to leave a good job at an established, successful company because the social experience is less than satisfying, but John did just that. His new employer offered co-workers in his age range and a more "lively atmosphere."
There are a couple of take-aways from this. First, don't underestimate the importance of a cultural fit to the employee. This is especially vital if you are placing Millennials. They want to have fun at work. They want to make a difference. They are not going to be happy sitting chained to a desk from 9-5. They need to be acknowledged and rewarded. And they need to feel a connection with their co-workers. If you place them in an environment that does not fulfill those needs, they likely won't stick around long.
The second take-away is that you have the ability to ensure a cultural fit for BOTH the client and the candidate. You can allow them to try each other out through a contract-to-direct arrangement. This allows the client to evaluate whether the candidate's work ethic and values match that of the company. And it gives the candidate the opportunity to see if this is somewhere they would really enjoy working. Contract-to-direct provides an advantage to recruiters as well. On top of the money you make for each hour the candidate works while on contract, you can earn a nice conversion fee. Who says you can't please everyone?
Posted on Thu, Feb 28, 2013
By Debbie Fledderjohann, Top Echelon Contracting President
In our last blog post, we discussed how the housing market is making it difficult for recruiters to find candidates willing to relocate. But even when selling a house is not a factor, relocating is a huge commitment for workers - one they are often very reluctant to make.
Contract-to-direct arrangements can make those decisions easier, said Larry Baker, President of Computer Careers.
"This gives them the opportunity to see if it will really be a good fit for them and a place where they want to relocate their family," Baker said. "They have a feeling three or four months into the assignment if this is definitely going to work before they make the commitment to move their family."
This scenario benefits companies, as well. They don't have to go through all the time and expense of hiring a direct employee only to have the worker decide they don't like the location. And contract-to-direct arrangements allow companies to try-before-they-buy as well - they can evaluate the candidate's work before committing to a direct hire. The best part is that when it works out and both the candidate and client decide to make the direct-hire commitment, you can get a conversion fee. That is on top of the rate you earn each hour the contractor works during the contract assignment.
Relocations don't have to be a deal breaker for your placements. By creatively utilizing contract staffing and contract-to-direct options, you can ease relocation reluctance and provide your clients with the candidates they need.
Posted on Tue, Nov 20, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
You think you've found the perfect candidate for your client's tough job order. He passed the phone interview and the following three in-person interviews with flying colors. He aced all of the skills and assessment tests. He has all of the qualifications and seems to be a perfect cultural fit. But while your client deliberates over whether this is really the BEST they can do, your candidate takes another job.
A slow hiring process wears candidates down and ultimately costs you time and money as you start the search process over and over again. Dragging out a search can also deter candidates before they even apply. According to www.ere.net citing a Randstad survey, candidates start to think there is something wrong with a job posting if it remains unfilled after 72 days.
Mark Bull, the UK CEO of Randstad, told ERE that the best applicants can often be found early in the process and that employers should have the courage to act quickly.
"If they don't, they have to be prepared to see that job seeker walk into the arms of a competitor who is willing to move faster," he said.
You can help make that decision easier for your client by offering to provide that candidate on a contract-to-direct basis. This gives the client the opportunity to "try-before-they-buy" risk-free. And in the meantime, you prevent losing a quality candidate . . . and the placement fee.
Posted on Thu, Jul 26, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
If it seems like clients are dragging their feet when it comes to the final hiring decision, it's not your imagination.
The Chicago Tribune reported on a recent Manpower survey that showed that 34% of employers are having trouble filling open positions. One of the most popular reasons employers gave for not being able to fill positions is a lack of applicants. They also stated that the applicants they do find lack the necessary technical skills.
Some of the jobs they are having the hardest time filling include:
- Skilled trade workers
- Engineers
- Technicians
- IT Staff
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Rather than settling for a less-than-perfect candidate, 56% of the respondents said they are making due with their current workforces, regardless of what impact it may have on their customer service or employee morale.
A recent poll by our sister company, Top Echelon Network, shows how this is affecting recruiters. The poll asked members of the network "What's your biggest problem with clients right now?" The most popular answer, chosen by 37.8% of the respondents, was "Taking too long to extend an offer." The second most popular response was "Lack of timely feedback, selected by 26.1% of the recruiters.
Given the uncertainty of the economy and the potential costs that come with hiring the wrong person, you can't really blame employers for being a little picky. But at the same time, they could be stifling their own growth by being overly cautious.
“If company officials don’t provide timely feedback and they take too long to extend an offer of employment to qualified candidates, they increase the chances that those talented candidates will take other offers, decide they don’t want to make a move after all, or lose interest in the company altogether,” said Mark Demaree, President of Top Echelon Network. “And these are some of the things that are happening.”
You can help prevent your clients from missing out on great candidates by allowing them to bring candidates on through contract-to-direct arrangments. That way, they can "try before they buy" by evaluating the candidate's skills, work ethic, and cultural fit on the job - without making a long-term commitment.
It may be tempting for your clients to play it safe in this economy. But by doing so, they could be missing out on great talent. By offering candidates on a contract-to-direct basis, you can help them get the best fit for their company without the risk of immediately hiring direct.
Posted on Tue, Jun 19, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
The unemployment rate may be slowly going down, but there is one number that seems to keep going up: the number of Americans who have been out of work for six months or longer.
The number of long-unemployed individuals increased from 5.1 million to 5.4 million last month, according to CNNMoney.com As the number continues to climb, some economists worry it will result in a permanent jump in the unemployment rate.
Economists are split on the reasons for this epidemic. Some believe it's simply due to low demand and will get better with time. But others feel it is more of a "structural" problem due to a gap between the skills required in today's available jobs and the skills the unemployed candidates possess.
Whatever the reason, the longer these individuals stay unemployed, the less desirable they will be to employers and the harder it will be for them to find a job. "Unemployed discrimination" is still alive and well despite some lawmakers' attempts to stop it.
The reason employers are reluctant to hire someone who has been out of work a long time is because they believe the person must not be a very good worker. But due to the recession, many people found themselves unemployed through no fault of their own. Some of them really are star candidates. The key is getting employers to give them a chance. So how can they do that?
You can help them by offering these candidates to clients on a contract-to-direct basis. This allows your clients to "try-before-they-buy." If the candidate doesn't meet expectations, the client can end the assignment and try someone else. But if the candidate proves to be a good find, the company can then extend a direct-hire offer (and pay you a conversion fee!)
The plight of the long-term unemployed is not a simple problem with a simple answer. But you may be able to help in a small way by convincing your clients to give some of these workers a chance.
Posted on Thu, Mar 22, 2012
By Debbie Fledderjohann, Top Echelon Contracting President
Do your clients know how to hire for attitude?
According to Mark Murphy, author of Hiring for Attitude, employers' inability to successfully assess candidates' attitudes during the hiring process is the reason why so many fail so quickly. In a recent Forbes interview, he said that of the 200,000 new hires his research company recently tracked, 46% failed within the first 18 months. Attitudinal reasons, such as lack of coachability, low levels of emotional intelligence, motivation, and temperament, accounted for 89% of those bad hires.
Attitude is harder to assess than skills because candidates can easily be tested for skills. But if a candidate doesn't possess all the necessary skills, they may be able to gain them through training. But training can't change a candidate's attitude.
So how can employers find candidates with the right attitudes? Murphy recommends asking better interview questions and getting referrals from their star employees. But the only way to truly know if a candidate's attitude meshes with the company culture is to see them in action. Your clients can do that by initially bringing workers in on a contract-to-direct basis. That way they can assess a candidate's attitude for a certain amount of time before making the risky, and often costly, direct-hire commitment.
There are some things that the traditional job interview just cannot tell an employer. By allowing your clients try-before-they-buy, you can help them reduce their bad hires and become their valued partner as a result.
Posted on Tue, Dec 06, 2011
By Debbie Fledderjohann, Top Echelon Contracting President
With unemployment remaining steady around nine percent, the perception is that companies simply aren't hiring. But there are in fact many companies that say they are interested in hiring, but can't find workers with the right skills.
How can that be when, according to the Bureau of Labor Statistics, there are 4.7 unemployed people for every vacant job? In a previous blog post, we talked about how employers are asking recruiters for more candidates even after the recruiter presents a great prospect because, with the unemployment rate so high, they don't just want "great;" they want the "perfect candidate." But some experts are saying that this quest for perfection stymies the hiring process way before the interview process.
Specifically, hiring managers are over-emphasizing skills, certifications, and experience in specific roles in their requirements for open positions, according to Lou Adler, CEO and founder of talent-management consulting firm the Adler Group.
"So if you're focused completely on specific skills and experience, you'll end up with average people and exclude the high-potentials who have a broad mix of skills," he said in the Human Resources Executive Online article "A Shortage of Talent? Really?" . "A better approach would be to define the work before you define the person you're looking for, and then look for people who have done comparable work in comparable industries."
But the problem is that employers don't want to take the time to train those types of people, Peter Cappelli said in his Wall Street Journal article titled "Why Companies Aren't Getting the Employee They Need," They want someone who can perform the job immediately without any training. He said these employers are creating a Catch-22 where in order to get a job, candidates must already be doing essentially the same job.
So what's the solution? Cappelli said that employers need to give up on finding the "perfect candidate" and instead find someone who could do the job with just a little bit of training. He advocates for extended probationary periods during which the company could pay a little less until the worker is up to speed.
This is similar to the advice we have provided in previous articles about employers' "perfect candidate" mindset. You may be able to get your clients to give great candidates a chance by allowing them to "try-before-they-buy" with contract-to-direct arrangements. In this scenario, the worker you place with them is employed by a contracting back-office, such as Top Echelon Contracting, during the trial period. During that time, the company saves money because they don't pay for the employer share of taxes, employee benefits contributions, unemployment or Workers' Comp premiums, etc.
Better yet, if the candidate is not working out, your client won't feel like they have to keep investing time to develop them like they would if the worker was an employee. They can end the contract assignment and try someone else. By giving candidates who have potential a chance, your clients may find themselves with a talent surplus rather than a talent shortage!
