Temporary recruitment margins are under increasing pressure, but it is possible to negotiate higher rates without jeopardising client relationships, according to three recruitment company leaders.
The freeze on temp rates over the past couple of years provides a good platform to open a discussion with clients about an increase, Mind Recruitment managing director Lorne Lee toldShortlist.
"The reality is that the client only has so much in their budget, so all parties may need to show some degree of flexibility, including from the candidate if they really want the role," he said.
While the variables in temp arrangements make it difficult to approach fee negotiations in one standard way, perhaps the simplest method is to put out a policy stating the standard fee has just gone up for all new contract placements, Lee said.
Recruitment company leaders also have to remove consultants' ability to negotiate margins back down to a lower rate, as often happens, he said.
"If you honestly believe in your service, there is no reason why you can't put a premium on it... And at the end of the day, cost of service rises on an annual basis across everything else that we purchase in our lives, so why shouldn't an agency margin increase in line with, say, the cost of living?"
Dynamo Recruitment director Clarke Peters said positioning a recruitment company as an industry authority also enables its consultants to maintain better margins on their temp rates.
"If you impart market knowledge to your client all the time, when it comes to a rate review then it doesn't come across as a money grab; it comes from a sincere market intelligence standpoint," said Peters, who specialises in Microsoft dynamics recruitment.
"Getting into that position is about imparting advice when you have nothing to gain, and constantly talking to clients and candidates about what is happening in the market."
The difficulty arises when the temp pushes for more money, necessitating a balancing act to keep all parties happy, said Peters.
"You need to use that market intelligence to negotiate with candidates who look for a raise when their contract is up, because they can look to jeopardise contracts for a bit of extra money. When you have a degree of respect and authority on those kinds of issues, it makes dealing with the candidates and client much simpler."
No surprises on the rises
Establishing transparent rate rises at the start of the placement ensures all stakeholders are clear on what will happen throughout the life of the contract, said Devlin Alliance managing director Erin Devlin.
"We don't necessarily negotiate a higher percentage, but we have an annual review period and on a certain date those fees will increase – whether... that's a pay rise for candidate, or changes to award rates," said Devlin.
"We'll rarely give candidates pay rises [outside of that annual review], unless it's to fill a role particularly urgently – which may eat into our margin."
Making concessions on its annual review policy happens rarely, and only in the case of long-term, highly valued clients, Devlin said.
"We clearly brief the client on the fees associated with temp and temp-to-perm conversions and stick to them. At times, a client may want to come back and negotiate; however that only happens after we review the relationship and whether it will be a long-term source of business for us."
The company assess those situations on a case-by-case basis, but generally focuses on whether there is a history of repeat business and a client's existing margins before negotiations begin, she said.
Charging different fees for candidates with varying degrees of experience also gives the client an opportunity to work to a budget that suits them, Devlin added.