Making it cheaper to recruit permanent staff

How can I de-risk my hiring?

Having worked in the ‘people’ sector for many years I have seen multiple models for companies to recruit staff.

These include: day rate contractors, fixed price consultancies, apprenticeship programmes and in house recruitment and external permanent hires.

I have not seen anyone making a play that makes this cheaper so I have done it myself. I will explain further down in the article.

Photo by Charles 🇵🇭 on Unsplash
First here is a table of each of the above styles of staffing:
CostsBenefitsDisadvantages
Day rate
contractor
Fee plus agency margin (approx 15%)Focused on one deliverableKnowledge handover
Consultancy
[fixed price
deliverable]
Total fee
[capped and on delivered work]
What you pay
for you will get, or at least it
won’t cost more
Work must be
well defined in
advance. 
The people you hire may have a sales target to
meet.
Consultants will have days off for training.
Consultants
may be swapped
during project.
ApprenticeLow costsKeen to learn,
no baggage,
open to trying
new ideas
May make
‘obvious’
mistakes, will
need training by the experienced members of the team
Permanent
[in house]
Salary plus cost of internal
recruitment
manager
Your in house
recruiter knows your culture
Possible they
have a limited
network.
May also use
agency which increases costs
Permanent
[agency]
Salary plus
agency fee
(approx 25%)
Agency will help you screen.
Usually a fee
refund available if it goes wrong
Quite a high fee to pay and
agencies do not really understand your business so you still do
the screening.
Potential to
miss out on
good people

There are compromises to be made

Really? Must we?

I agree wholeheartedly that each of the above had specific reasons for choosing and businesses should hire accordingly. However, let’s look at combining two of these strategies…

Hire a day rate contractor for three months, and then go perm.

Why would I  do that?

Combining the benefits of these two methods also removes the disadvantages.

Once you have worked with someone for three months you (and they) know if you are a fit. You can plan training and long term progression to keep work interesting. You know you can rely upon them and what their quality of work is like.

Can I do that?

No. Consultancies, Contract agencies and Apprenticeship scheme contracts are usually designed to effect a ‘buy out clause’ when you convert to perm. This is justifiable based on the effort those businesses have made upfront to recruit and train that individual.

So what was the point of this article?

When we developed 6prog we realised that with platform recruitment there would be no benefit in us ‘protecting’ the freelancer population who wish to work with us. Indeed we actively hope that companies will use our services to hire permanent staff because, guess what, when those managers progress they need help to come in and our flexible model is there to help.

I’ll break down the costs:

 Day ratecontractorConsultancy
[fixed
prive deliverable]
ApprenticePermanent
[in house]
Permanent
[agency]
6prog
Day Unit Cost
(annual 220
days)
500/day 950/day 250/day7500075000500 for 3 months then 75,000 salary (9 months)
Additional Costsplus 15%N/aTraining from
colleagues
estimate
20000
Estimate in
house
costs 5000 allocated 
(assume 10 hires/yr) Use of external agency [rare]
20000
18750Plus 3% (for first 3 months)
TOTAL
(year 1
costs)
126,500209,00075,000£100,00093,75028,325 + 56,250 = 84,575

Note that through the article I have not included any currency or made allowances for tax. Clearly these vary country to country. However, I hope I’ve shown that through combining hires initially as contract and then converting to perm you could be realising benefits previously confined to one or other strategy AND it might save you a few pounds, euros, dollars etc in the process!

ABOUT

6prog was started by friends from Brighton, UK and Los Angeles, USA. We had all experienced recruiting, being recruited and working as a recruitment partner and felt that these tasks would benefit from a single solution. We discussed various propositions with a large number of people in our own networks and summarised the following characteristics with this multi billion dollar industry.

• Recruiters spend too much time doing paperwork when they should be networking.
• Freelancers spend time chasing updates which can just be messaged directly.
• Clients want multiple levels of recruitment expertise but would rather not have multiple suppliers.
• Project Managers don’t have the time to read through multiple online profiles (the reverse job board service? “no thanks”).
• Everyone wants clearer communication.
• Everyone wants fair payment and fair charges.

So we designed a workflow that allows members to deliver their function most effectively. Recruiters can be anyone with a book of contacts (it’s more valuable to a PM if you can recruit from people via experience or word of mouth). Project Managers and Freelancers can talk to one another. It’s fine – it really is! Recruiters are paid a fixed fee agreed per opportunity. Also margins should not exist (too many reasons to list!) and therefore the software is funded by the low transaction fee. 

Importantly, our ethos is membership driven. All members are charged in the same way at the same fee. Finally we decided to get a team together in order to build a modern solution for project managers, freelancers and recruiters. We launched in April 2017. 6prog is pushing it’s platform to do even more than it already does today. Become a member and help us on our shared journey to revolutionise how projects, recruiting and on boarding get better.

How can 6prog help what you need to do?
make your valuable network valuable

6prog Partners | GroupMap

6prog helps freelancers to find clients and clients to onboard freelancers. If you need a recruiter to help, just ask.

Today we are talking with Paul Skrgatic about GroupMap

Hi Paul – what is GroupMap?

Hi Andy, GroupMap is an effective way to plan, brainstorm, discuss and decide.

Ok great -who uses it?

You’ve probably encountered the usual issues of group decision-making in your meetingsworkshops or classrooms… People who dominate the conversation, quiet folks whose ideas never get heard, and of course all those post-it notes you have to write up.

GroupMap solves this by capturing individual thinking first, then revealing the group perspective, all in real-time. Now that’s true collaborative decision making.

Is there a discount for 6prog members?

Yes a free 14 day trial.

How much does it cost for participants to join?

Nothing, zippo, nada, zilch. It’s always free for participants to join a map.

 

What is going on at the moment for you Paul?

I’m currently helping Figura clients to deliver change for Projects in the Transport and Tourism sectors within Edinburgh. With the move to the gig economy we are finding that a lot of entrepreneurs need help to get new projects started and also keep the momentum up. We use GroupMap to help collaborate on project requirements engaging all parts of our client’s organisation. Also available via 6prog.
Get in touch if we can help you with your change or project challenges. paul@figura.associates

links

https://www.6prog.com/account/partners

https://www.6prog.com/home/about

https://www.6prog.com/account/demorequest

ABOUT

6prog was started by friends from Brighton, UK and Los Angeles, USA. We had all experienced recruiting, being recruited and working as a recruitment partner and felt that these tasks would benefit from a single solution. We discussed various propositions with a large number of people in our own networks and summarised the following characteristics with this multi billion dollar industry.

• Recruiters spend too much time doing paperwork when they should be networking.
• Freelancers spend time chasing updates which can just be messaged directly.
• Clients want multiple levels of recruitment expertise but would rather not have multiple suppliers.
• Project Managers don’t have the time to read through multiple online profiles (the reverse job board service? “no thanks”).
• Everyone wants clearer communication.
• Everyone wants fair payment and fair charges.

So we designed a workflow that allows members to deliver their function most effectively. Recruiters can be anyone with a book of contacts (it’s more valuable to a PM if you can recruit from people via experience or word of mouth). Project Managers and Freelancers can talk to one another. It’s fine – it really is! Recruiters are paid a fixed fee agreed per opportunity. Also margins should not exist (too many reasons to list!) and therefore the software is funded by the low transaction fee. 

Importantly, our ethos is membership driven. All members are charged in the same way at the same fee. Finally we decided to get a team together in order to build a modern solution for project managers, freelancers and recruiters. We launched in April 2017. 6prog is pushing it’s platform to do even more than it already does today. Become a member and help us on our shared journey to revolutionise how projects, recruiting and on boarding get better.