Why Most Recruiting Company Benefits Stink
By: Don Catino, Principal
Ever since the recession of 2000, buyers of contract labor have been in a constant bid to drive down costs throughout the staffing supply chain. Managed Service Providers (MSPs) answered the call and began to dominate the landscape as the default labor procurement model for large and now increasingly midsized employers.
MSPs have helped client companies reduce the number of suppliers they use and mandated the chosen few survivors to offer large discounts in exchange for access to a greater number of opportunities. This was the beginning of the commoditization of contract labor: where speed, low price and automation were seen as the best virtues of a staffing provider.
Naturally, supplier ‘Mark-ups’ became a primary target and ultimately the standard metric when evaluating the perceived ‘value’ recruiting firms offered. The thinking went, the lower the mark-up the higher the value of the staffing agency. On the surface this makes total sense as mark-ups were seen as a way of comparing apples to apples and making sure everyone was getting a fair deal.
The issue?
Benefits are included in those mark-ups, which means staffing companies that offered better healthcare plans, retirement plans, more PTO than legally required, or any other kind of consultant perks – were all effectively penalized in the MSP value system. In response, staffing companies have been dramatically reducing benefits to the candidates they place in order to fit within the mark-up requirements of their clients’ MSP programs and still be profitable.
In fact, benefits have been diminished so much so that according to Glassdoor – employee benefit satisfaction at the 14 largest national staffing firms is 58% lower when compared to companies voted Best Places to Work.
This has been all fine and good until about … now. After years of booming demand for contract employees of all types, candidate scarcity has now turned the tides. Today’s contract employees have more work options than ever, and the rigid, stripped-down benefit offerings from typical staffing companies are no longer attractive to the best contract employees.
The end result is that fewer, highly qualified employees are accepting contract jobs when a mark-up is involved, or they are quitting prematurely for job opportunities with better benefits. (See also: Winning Consultants with Custom Benefits)
This leaves many buyers of contingent labor forced to rethink their MSP programs and their current vendors to explore new firms able to meet the demands of this freshly empowered contingent workforce.
A Win Win for Digital Prospectors’ Clients and Candidates
Digital Prospectors believes that all employees should love their jobs. Our work is about improving the lives of those we serve by connecting opportunity and talent in meaningful ways. In this case – providing contract employees with the benefits they want – in the way they want them, is our goal.
In the end, candidates working with Digital Prospectors get to accept their jobs with the compensation terms that suit them best. To our customers this means filling their jobs faster with higher acceptance rates and greatly increased cost savings due to lower unwanted attrition and improved work force morale.
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