Today’s guest blogger is Mark Arrow. Mark is the CEO/President of Headcount Management. Besides being an NPAworldwide vendor, speaker and staffing industry advocate, Headcount currently services multiple NPA clients. Headcount is a leader in back-office solutions designed specifically for staffing agencies.
Headcount makes doing staffing deals (also known as: contract, temp, contingent) simple for NPAworldwide members. Essentially, once candidates are placed, Headcount will professionally onboard, insure and payroll employees. Headcount also invoices clients (with your agency’s branding), accounts for all monies, provides detailed KPI’s and profit reports…and of course, profits. The Back Office, their newest initiative, is the industry’s easiest way for agencies to produce weekly payroll, invoices, and profit reporting via agency insurance and funding.
Since 2008, Headcount has helped staffing firms across all 50 states mitigate liability, reduce costs, and maintain full hiring compliance. Here are some testimonials.
Temp deals can put your staffing agency on the fast track for growth, and most importantly, profit. Many business owners assume that temporary staffing success starts with making the hire. However, true success on contract placements starts with knowing how to both execute and price the deal.
Key Terminology to Know When Placing Contractors
Whether you’re just launching the contract side of your business or are tired of struggling to turn a profit on the temp side of the house, Headcount Management can help. It’s important to know that contracts between employees and their employers can (and do) differ — but there are industry standards that every staffing agency should know. Here, we provide an overview of key terms used in nearly every temp deal.
Terms you will need to know when placing contractors include:
Agreement with Customer
This contract is signed by all parties. The CERT holder will need to be listed in the contract. This means whomever has the Workers Comp, General Liability insurances/coverages mandated by your customer. Headcount’s 3-Way Agreement (Agency, Customer, Insurance Holder) is a great way to avoid costly insurances while complying with deal standards. This agreement is updated regularly to keep you safe and well documented. It outlines services of 1) agency (ownership of customer relationship, talent acquisition, pre-hire services); and 2) Headcount (employee related, post-hire); and 3) customer. Headcount will supply.
Amount paid to the employee. Agency sets this number based on what is negotiated with the employee.
Hourly rate charged to your customer. Generally, this is the ONLY number your customer needs.
Overhead costs (pay amount, taxes, insurances, benefits, admin costs).
Also known as a Certificate of Insurance.
Also known as “temp,” “contract worker,” “contingent workforce,” “onsite worker.” The Agency identifies contractors.
Also known as “payor.” The customer:
- Signs agreement with agency (see 3-Way Agreement above)
- Signs SOW (statement of work, per employee)
- Approves weekly time sheets
- Pays bills
The range (as a percentage of pay) you want to earn per deal. This is often compared with permanent placement fees. Use our advanced calculator to help define projected revenue.
The amount of money your agency gets to keep after paying the temporary employees’ payroll, benefits, and other statutory expenses.
- Gross margin = bill rate – (pay rate + burdens)
- Industry average is 15-20%. Compare this number to what you charge for permanent, full-time deals.
Percentage added to the pay rate to incorporate items (pay rate and burdens). Industry range on average is 45-60%, with 50% being the norm. Use this basic calculator to help identify your markup.
Three Things You Will Need to Complete a Temporary Contract
The following information is necessary to complete any temp deal. Make sure to have this prepared beforehand:
- Viable Candidates
- Compliant Customer Agreement
- CERT (supplied by Headcount, if needed). The customer will ask for this as it indicates what levels of insurance are carried. Customers will want the contract to include the CERT holder.
Still Have Questions on How To Execute a Contract Deal?
Headcount Management can help. Schedule a call with an HCM professional today — we can help walk you through each step of the process toward temp placement profit. An NPAworldwide service, we’ll put you to the top of our schedules!
Be sure to download our list of client questions to ask with every temp deal — click here to access this free online resource!