by Frank Sands, VP of Sales at nextSource
Strategic negotiations based on current market information are critical to realizing savings through controlled temporary and permanent labor costs. PeopleTicker gives you a competitive advantage with insight into dynamic market rates and conditions.
While this can save your company millions over the course of the year, the monetary portion of the negotiation process is only one of many factors at play when planning your negotiations for existing or new hires.
Internal goals at odds: In most companies there are internal competing goals when it comes to the engagement or continuation of the services of a contingent worker. Any can significantly affect Bill Rate negotiations or renegotiations.
A typical scenario: A well-planned negotiation process takes into consideration all of the following, as well as the goals of all interested parties.
PeopleTicker helps you define expectations for:
Renegotiating your embedded base: Your company's embedded base of contingent workers is defined as those contingent workers who are currently on assignment. This may include people who have been on assignment for extended periods and may have been engaged when market rates were substantially different.
This is an area that is very often overlooked by companies due to the difficulty in tracking fluctuations in market rates. In fact, the longer these individuals are on assignment, the more likely it is that they have been granted increases to their Pay Rates and Bill Rates -- which may be in direct contrast to the realities of the existing market.
The successful renegotiation of your embedded base of contingent workers will typically result in real dollar savings to your company, without loss of the workers.
Discussing market rates with staffing agencies: During most renegotiation efforts, the goal is to reduce the agency's Markup rather than reducing the contingent worker's Pay Rate. A competitive Markup, consistent with the services provided, will bring value to your company and incentivize Staffing Agencies. You should expect higher Markups from agencies that focus on difficult, niche openings or that provide paid holidays and vacations, health benefits, training, bonuses etc.
It is important to understand the Markup components that agencies are using. Many times agencies are willing to reduce Markups without impacting the level of their services in exchange for higher placement volume.
Negotiating new placements: Since you are not affecting existing Pay and Bill arrangements, the negotiation of new placements may be easier than renegotiating the embedded base of contingent workers. However, the bottom line impact may be just as significant. The PeopleTicker Rate Card an invaluable guide during negotiations. Keep in mind, PeopleTicker is providing you with even more accurate market rate information than even the Staffing agencies have access to.
It is also important for all negotiations to be conducted by designated individuals who have access to PeopleTicker and have had appropriate training in the negotiation of Bill Rates for contingent workers. The danger in non-centralized negotiations is that Hiring Managers and Staffing agencies tend to rely on past history to dictate pricing for the next placement. Once a Manager engages a contingent worker at a rate of $75/hr, the precedent has been set with that agency and similar placements tend to follow the same pricing. This can result in enormous costs to your organization.
Savings opportunities: In order to help control this activity and to insure the maximum opportunity for savings, we recommend the review and negotiation of every new placement even though a Rate Card may already be in place. Why? Savings opportunities in the overall Bill Rate are available whenever a new worker is contracted.
For example, the type of contingent worker being placed can greatly affect the final Bill Rate. Without understanding whether or not the contingent worker being placed is a W-2 employee of the agency or a subcontractor (IC/1099) to the agency, the agreed upon Markups may result in additional cost to the user.