Download cehandbook_bulletin_inefficiency_and_greed.pdf

Contents : *' 1 0 6 4#% 6 / 2 . 1 ' ' 5 # 0 & $ 11w w w. C E H a n d b o o k . c o m 7..'6+0U 0'((+%+'0% #0& 4''& By James R. Ziegler Ph.D. Published by P.A.C.E. Professional Association of Contract Employees http://www.pacepros.com The Contract Employee s Handbook is online at http://www.cehandbook.com Copy right 1998- 2001 Ja mes R . Z ie gler. All R ights R es erved . 1 *' 1 0 6 4#% 6 / 2 . 1 ' ' 5 # 0 & $ 11- 2 w w w. C E H a n d b o o k . c o m Bu lle tin: I ne ffic i enc y A nd G ree d 7..'6+0U 0'((+%+'0% #0& 4''& What Do The Agencies Make The Ties That Bind Recruiting firms can easily hide what they make because they practice tying. Recruiting firms tie the job matching function to the employer of record function. The up side of this arrangement is that recruiting firms help you locate contract assignments. The down side is that in order to take an assignment you must become their employee. Even if you succeed in retaining your status as an independent contractor the recruiting firm still holds you captive by keeping you from signing a direct contract with the end user and by refusing to disclose what they are billing the client for your consulting services. In most industries tying is an illegal restraint of trade an anti-competitive practice. Unfortunately tying is still tolerated in the technical and professional contracting industry. Staffing firms can get away with tying because while the contractor is indeed a customer of the staffing firm the contractor is also the firm s employee. Laws against tying are written to protect customers and clients not employees. Tying Stifles Career Advancement Staffing agencies use tying to isolate contractors from the very information they need to assess their careers. For example staffing agencies invariably bar contractors from Copy right 1998- 2001 Ja mes R . Z ie gler. All R ights R es erved . *' 1 0 6 4#% 6 / 2 . 1 ' ' 5 # 0 & $ 11- 3 w w w. C E H a n d b o o k . c o m Bu lle tin: I ne ffic i enc y A nd G ree d active participation in contract negotiations with the client. Most contractors never see the contract that defines the very conditions under which they must work. Staffing agencies also use tying to keep contractors ignorant of their value on the open market. They don t want contractors to know how much they could be billing as independent contractors and they certainly don t want contractors to know how little they are being paid in comparison with their actual worth. Staffing agencies view contract employees as their competitors and they view contract details and billing rates as competitive information to be protected at all costs. Staffing agencies use tying as a strategic tool to protect their competitive information. If contract professionals are to regain their independence they must split the entirely separate functions of job matching and employer of record. They must break the ties (pun intended) that bind them to traditional recruiting firms. Only then will contractors be able to make reasoned decisions based on the quality of service and on price. They will be able to work with an agency based on value delivered rather than on who controls the information. What Is A Fair Margin It is easy to determine if a recruiting firm is charging a fair margin or if it is gouging both the client and the contractor. You begin by examining what stand-alone jobmatching services and stand-alone employers of record charge for their separate services. Competition and full disclosure ensure that the these stand-alone services are priced fairly. Copy right 1998- 2001 Ja mes R . Z ie gler. All R ights R es erved . *' 1 0 6 4#% 6 / 2 . 1 ' ' 5 # 0 & $ 11- 4 w w w. C E H a n d b o o k . c o m Bu lle tin: I ne ffic i enc y A nd G ree d A recruiting firm that matches you with a contract assignment and then forces you to become the recruiting firm s employee in order to take that assignment should surely charge no more than the combined charges for a stand-alone job-matching service and a stand-alone employer of record. In fact the recruiting firm should be able to charge less owing to economies of scale and elimination of duplicate costs. So let s review what stand-alone job-matching services and stand-alone employer of record services actually charge. If a so-called full service recruiting firm charges more than the combined charges of the separate stand-alone services it can only be attributable to inefficiency and greed. The Cost of Stand-alone Job-matching Services Savvy contractors develop and nurture a powerful professional network of colleagues clients and coworkers. They search the contractor-friendly job boards and corporate career pages for contracting opportunities and they contact prospective clients directly. Savvy contractors negotiate their own contract terms and billing rates and they do a better job of marketing their consulting services to prospective clients th

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