Everyone who is anyone is offering their predictions for what the biggest trends in recruiting and hiring will be in 2013, so we figured we might as well throw our hat in the ring. Based on what we have read and discussions we have had with recruiters over the past year, here are our predictions for 2013:
- Employers will remain cautious about hiring. Although the fiscal cliff has been resolved, there is still a lot of economic uncertainty out there that is reining hiring in. CNNMoney has reported that there are still more "fiscal cliffs" to watch out for as Congress continues its partisan ways, and consumer confidence is down. And while some experts predict that hiring will be up, most agree that the growth won't be as strong as it could be.
- Obamacare will have a major impact on hiring. Perhaps one of the biggest economic question marks is the Patient Protection and Affordable Care Act (PPACA), better known as Obamacare. There is a lot of uncertainty among employers regarding how to comply - or if they even should. We are hearing that this is already causing an impact on hiring. Since employers with less than 50 employees don't have to comply, those near that threshold are simply choosing not to hire so they can avoid it all together. Others are considering reducing employees' hours to lower their costs under the law. As a recruiter, you will want to be sure to know the basics of the law and be able to help come up with creative ways to help your clients keep their costs down while still getting the work done.
- More workers will join "Gig Economy" - As we discussed in a previous blog post, there is a growing trend toward a "gig economy" where workers shun full-time traditional employment and instead work on a contract basis jumping from project to project. This is driven by a number of factors, including the need for more work-life balance and workers' distrust of employers born out of the layoffs of the recession. The emergence of technology, such as mobile phones and the Internet, has also allowed workers to work more remotely, which fits in well with the project-based work.
- Record-breaking contract staffing growth. Based on these first three trends, it's no surprise that the Bureau of Labor Statistics (BLS) is expecting contract staffing to reach a record high by the summer of 2013. Contract staffing provides a risk-free way for companies to remain productive without committing to a direct hire or taking on the benefits costs that come with them.
- Debates about skills shortages will continue. Is there a skills shortage? It depends on who you ask. Some say the skills shortage will be a major challenge, especially in the manufacturing and IT sectors. Others say the impact has been overestimated (see USAToday article "Study says shortage of skilled workers not that severe"). And still others, most notably Peter Cappelli of the Wharton School, claim that the real problem is employers that are too picky and not willing to train. Whether or not the so-called skills shortages have a real impact on hiring and recruiting in 2013 remains to be seen, but we are willing to bet that the discussion is far from over.
Please feel free to provide some of your own predictions in our comments section!
Photo by Mike Licht
There is a common misconception out there that contract staffing is hard. This misconception keeps many direct hire recruiters from enjoying the steady cash flow, flexibility, and other benefits of offering contract staffing to client companies. But as IT recruiter Bob Small recently told recruiters at the Top Echelon® Fall Conference, it doesn't have to be hard, and it doesn't take away from your direct hire business. It actually helps it.
Small, who is a Partner of the recruiting firm Carroll Technology Services, Inc., speaks from experience. When he started recruiting in 1988, he initially only took direct hire job orders. In fact, he turned down many contract staffing opportunities because they took him out of his comfort zone.
Finally, in 2009, he reluctantly took his first contract staffing job order. He admits that he was "scared," but his fears were quickly put to rest when he called our office. As the legal Employer of Record for contractors, we handle all of the administrative, legal, and financial details of the contract placement, including contracts with the employee and client company, employee paperwork, time sheet collection, payroll funding and processing, tax withholding, benefits administration, Workers’ Compensation coverage, invoicing, collection of accounts receivables, background checks, etc.
“In the beginning I didn’t know anything about rates and markups, but Top Echelon Contracting helped me with the pay rate and the bill rate through the quote system. They handled ALL the details and made it easier for me," Small said."When they communicated with my client - which is always a sensitive issue - they did a great job. Clients felt that the customer service and professionalism were great."
On that first contract placement, Small earned $13.15 for every hour the contractor worked, which calculated to $2,274.95 per month of consistent cash flow. That first placement lead to another and then another, and before Small knew it he had become a recognized industry expert in his niche for direct hire, contract staffing, and contract-to-direct hire. He is now able to meet ALL of his client's staffing needs, which is critical in today's business environment.
Small told the recruiters at the conference that if they are nervous about venturing into contract staffing, they need to just jump in. When recruiters use a contract staffing back-office, such as TEC, they don't need to have comprehensive knowledge of contract staffing, he said. Recruiting knowledge is the only prerequisite.
"It is so easy that my sixth-grade daughter could do it if she used Top Echelon Contracting,” Small said.
Like many recruiters who do contract staffing, Small is predominantly a direct hire recruiter who simply decided to add contracting to his business model. As a result, he has become an integral part of his clients' workforce planning, and he has created an additional stream of revenue. What benefits could you experience by adding contract staffing to your business model?
In a fantasy world, when you approach a new company for job orders, they would say "Where have you been? We have been waiting for you!" and give you a couple of solid job orders to fill.
In the real world, you are one of several recruiters trying to get the same job orders from the same companies. After meeting with "no less than 100 staffing agencies" over the past several years, Matt Lowney, EVP Talent & Operations for the Buntin Group, offers some tips to help recruiters differentiate themselves to potential clients in his recent Fordyce Letter article, "Staffing Agency Pitch: "We're Different." Employer: Yawn."
In the article, Lowney talks about the sales pitches he's heard from recruiters over and over again. If you think you are going to wow potential clients with your claim to be "different," your promise to "build relationships," or by bragging about your proprietary database, think again. Instead, Lowney offers the following suggestions:
- Talk about your recruiting process IN-DEPTH. Lowney says he "will absolutely select a staffing vendor based on the depth of their recruiting process."
- Explain what really makes you different. You need to be able to tell potential clients in 15 seconds why they would be "insane NOT to work with you as a staffing partner" without regurgitating the same elevator speech they've heard a million times, Lowney said. We would suggest that, in this uncertain economy, another way to differentiate yourself is to become a sole-source provider that can handle all of a company's staffing needs. Can you provide contractors in addition to direct-hires? Can you offer a contract-to-direct option? Better yet, do you know when to suggest contract staffing in response to a particular staffing challenge a client may have?
- Don't over-promise. If you don't think you can fill the position, say so. Lowney says he respects honesty, and your potential clients most likely will as well. They may come back to you with job orders you really can fill.
- Provide one point of contact. Lowney likes dealing with the same person every time he calls his staffing partner. If your firm has retention issues, take care of them because clients don't like having to "retrain" their reps every few months.
It's a new year, and the usual predictions abound about what will be hot in 2012. Based on what we've been reading and hearing, here are the recruiting trends we think recruiters should keep an eye on:
1. Social Media Recruiting Wars - The race is on to see which social network, if any, will unseat LinkedIn as the recruiter's social network of choice. When it was released last year, a lot of people had their money on Google+ due to it's ability to separate contacts into "Circles," allowing users to be selective about which contacts saw which updates. But there is now talk that good old Facebook could emerge as a useful recruiting tool, especially with professional networking apps like BranchOut and BeKnown that help users find jobs through their Facebook friends. As BranchOut GM of Enterprise told Fistful of Talent, 18.4 million Americans say they found their current job through Facebook, so it definitely seems like the potential is there.
2. Mobile Recruiting - MSNBC recently reported that 25 percent of people use their smartphones rather than their computers for most of their Web surfing, so you can bet a lot of job hunting is taking place on mobile devices. This will most certainly only increase in 2012, so you may want to look at how your Web site looks from various smartphones and how mobile-friendly your application process is. One possible way to make job ads more user friendly is by using QR codes, which are those small, square, maze-like images that you may see in magazines or on billboards. When someone scans one of these codes with their smartphone in one of your job ads, it could take them to additional information online. For more ideas on how to use these codes, you may want to check out the www.ere.net article "QR Codes: The Next Big Thing in Recruiting Technology?"
3. Continued crackdown on independent contractors - This is not a new trend, but we expect it to be a big one, nevertheless. Near the end of 2011, the IRS offered a forgiveness program for employers who voluntarily reclassified 1099 independent contractors as W-2 employees while at the same time vowing to be even more diligent about investigating worker misclassification. Meanwhile, Congress reintroduced The Employee Misclassification Prevention Act. It's clear this is an issue that's not going away. So if you have clients who are doing it wrong, you may want to urge them to make proper worker classification one of their New Year's resolutions and offer to help them by converting their independent contractors to W-2 employees employed by a contract staffing back-office, such as Top Echelon Contracting.
4. Continued growth of contract staffing - The growth contract staffing experienced last year is no surprise. Companies typically hire more contractors following a recession to test the hiring waters before they start hiring direct again. But what we are hearing is that there is more of a permanent shift where companies are maintaining a core of direct employees and supplementing it with a larger, more flexible outer ring of contractors. We explored this trend in more detail in our Fourth Quarter 2011 Contracting Corner newsletter and expect to see this trend continue in 2012 and beyond.
In a typical contract staffing situation, a company utilizes the services of a worker for a specific amount of time and outsources the employment of that worker to a third party. That third party is often referred to as the Employer of Record and serves as the W-2 employer for that worker. As the Employer of Record, the third party takes on the legal liability and the responsibility for the following employment tasks:
- Payroll processing and funding
- Tax deposits and filings
- Employment contracts and paperwork
- Maintaining Certificate of Insurance
- I-9 and E-Verify
- Unemployment insurance
- Workers' Compensation
- Background checks and drug screenings
- Benefits administration
- (health, dental, vision, life,
- Employee terminations
- Employee issues
So just who is the Employer of Record in a contract staffing situation? Well, it can be one of two parties. In some situations, the recruiting firm that placed the contractor is set up to handle all the "back-office" tasks listed above and is willing to take on the responsibilities associated with being the Employer of Record.
Many recruiters, however, find that taking on the employment tasks is tedious, complicated, and risky. Instead, those recruiters choose to pass the employment liability and responsibilities to a contract staffing back-office.
If you are interested in making contract placements, deciding whether you will become the Employer of Record or whether you will outsource it to a contract staffing back-office is the first, and perhaps biggest decision you will have to make. Before deciding to go it alone, make sure you are in a position to handle all the tasks and liability that come with employing contractors.
If you are disappointed by the production on your desk, Top Echelon's blog, the "Recruiter Training Center," may have just the pep talk you need.
Guest writer and respected industry trainer Barb Bruno provides some advice that can be summed up in her post's straight-forward title, "Recruiters, Don't Quit Before You WIN!" In the article, she talks about a successful firm that concentrates on contract placements and how they fill 100% of the temp job orders they write. How? They simply do not give up until each position is filled.
To duplicate their success, Bruno recommends having multiple candidates for each job order because many job orders go unfilled because the initial candidate was eliminated.
Whether your focus is on direct or contract placements, you may want to read Bruno's post for some instant inspiration!
When you refer a recruiter to Top Echelon Contracting (TEC) who has never made a contract placement with us, you can earn up to $100 when that recruiter makes his/her first contract placement with us!
You will receive $100 ($20 for each week worked by the contractor for up to five weeks), provided that the placement is:
- The referred recruiter’s first placement with TEC.
- A full-time (40 hours per week) position lasting at least five weeks.
- A W-2 contract placement.
What do you need to do?
All you have to do is simply tell other recruiters about TEC. When recruiters you refer complete the Online Set-Up forms for their first contract placement, they will be asked to provide your name, phone number, and email address. You will want to make sure they have your up-to-date information . . . and that they remember to provide it! We will then ask you to provide your W-9 information so we can issue your Recruiter Referral Reward check.
For more information, please visit www.topecheloncontracting.com/recruiter-referral or call us at (888) 627-3678.
Over the past two years, Top Echelon Contracting has noticed a 32% increase in traditionally direct-hire recruiters who made their first contract placements. We surveyed some of those recruiters to see what caused them to add contracting to their business models and will share some of their responses in this three-part series.
In a recent blog post, we reported on an article by The Kansas City Star that discussed the trend of hiring workers on a contract basis to complete projects, a practice the article referred to as "adhocracy." As many of the recruiters we work with can attest, this trend is very real. And for some, it lead to their first contract placements.
The reason many companies turn to contracting to complete projects is because those projects require specialized skills the company may not already have on staff. They may be unwilling to hire a full-time person with those skills because they will only need them for a short time, so contracting provides a great solution.
Gary Silver of The Shay Group experienced this when one of his direct-hire clients asked if he could provide a contractor with some unique skills they needed to complete a project.
"We were able to find a very strong contractor in a few days, and Top Echelon Contracting handled the paperwork and made it painless," Silver said. "In this instance, a six-week contract assignment turned into six months."
John Clark of Ambs Chemical Search was also able to make a placement because he was willing to try contracting.
"One of our clients had a 12-month project and they asked if we could help with it," Clark said. What they wanted was a contractor, and Clark was able to provide one
While a company may only intend to hire your candidate for the length of the project, they may be so impressed with their work that they decide to hire them direct. And, of course, that can result in a nice conversion fee for you!
That's what happened to Al Born of Electronic Search, Inc., when he placed a candidate with one of his clients for a particular project. Born had made contract placements before, but not recently. Let's just say he was glad he got back into contracting when he received his conversion fee.
"The client wanted to make sure their project was secure before hiring the person on a permanent basis," he said.
In closing, it's no secret that the past couple of years have been hard for clients and recruiters alike, but even during hard times, companies have projects that need to be completed, which means there is contract placement income to be earned by recruiters who are willing to venture outside their direct-hire comfort zones.
"Certainly headcount issues and economic uncertainty had a lot to do with this placement, but projects still needed hands." Silver said. "Contracting accounted for the bulk of our recruiting income in 2010."
Recruiters specializing in executive search should brace themselves for big changes, according to a recent Human Resources Executive Online article.
Citing a recent report by the Association of Executive Search Consultants, the article predicts that executive search firms will become more specialized, focusing on specific industries or functions. In fact, 21 percent of firms surveyed that currently consider themselves to be "generalists" plan to become more specialized within the next five years.
Executive search firms should also prepare for clients who expect their recruiters to do more than just find talent. In fact, 69 percent of the respondents to the report said their clients have been asking for additional services. The most popular services clients want include assessments and management audits, executive coaching, human capital strategy, board advisory and governance, succession planning, and onboarding.
From our experience, there is one more service clients are likely to start requesting from executive search firms: contracting. As more executives head toward retirement age, many companies find themselves scrambling for replacements. Rather than hastily filling such important roles, companies instead hire workers on a contract basis to either take over temporarily or work on a contract-to-hire basis so the company can assess their talents rather than committing to a direct-hire right away.
Adding contracting to your business model is not difficult. All you need to do is find a contracting back-office, such as Top Echelon Contracting, to handle the employment of the contract workers. Then simply let your clients know that you can provide contract candidates. If you specialize in executive search, contracting is an easy way to add value for your clients and bring more business to your firm.
Need a little inspiration going into a new year when job orders are still scarce and the economy is anything but certain? Look no further than the Top Echelon Network's recent profile of recruiter Bob Small of Carroll Technology Services, Inc.
While many recruiters have continued to struggle this past year, Small calls 2010 "a good year." In fact, he ranked 15th in overall production among Top Echelon Network members. Part of the reason for his success was his willingness to look beyond direct-hire job orders.
"I’ve had more contractors out there, which has been good,” said Small, who uses Top Echelon Contracting as his contracting back-office. “I haven’t done much contracting in the past, but it’s been working out for me.”
Recruiters like Small who are willing to do contracting not only are able to fill the void left by scarce direct-hire job orders, but they also add a steady revenue stream to their business because they are paid for every hour their contractors work. If you are having trouble making ends meet as the economy continues to sputter, you may want to take a cue from Small and see if accepting some contracting job orders may help boost your income.