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Everyone Can Win When Negotiating Rates

November 1, 1999
Related Topics: Contingent Staffing, Featured Article
Managing temporary-help expenses involves negotiating a pricing agreement that creates a win-win situation for three parties: the organization, the temporary-staffing company and the temporary workers.

It’s important to keep in mind that the agreement you negotiate with the temporary-staffing service will have a direct impact on what they pay temporary workers assigned to your company. Though it’s important to negotiate a fair deal for your organization, if you negotiate rates that are below market average, you’ll likely end up with second-choice candidates who are lacking the skills, commitment and quality you need.

One way to determine if the rates you’re being quoted are competitive is to compare pricing between services. Keep in mind, however, that rates will vary depending on the volume of temporary workers you use (higher volume creates more negotiating power) and the skill set you require.

For instance, highly specialized skills in the technical area are in great demand, command high rates and leave little room for negotiation. Although some companies prefer to negotiate based on the markup the temporary-staffing company adds to the pay rate, temporary-staffing services discourage this practice because they believe it undermines their ability to control pay-rate decisions, and treats the service as a commodity versus a professional resource.

The best approach to managing temporary-help expenses is to establish your buying criteria, conduct research to identify services that meet your requirements, and compare rates between those services. Also, be prepared to incur periodic rate increases. These may occur quarterly or annually—sometimes sooner if the skills you need are in very high demand.

The American Staffing Association reports that hourly wages for temporary employees have increased more than 5 percent in the past six months. You can be sure those increases were passed along to client companies and were reflected in higher bill rates.

Workforce, November 1999, Vol. 78, No. 11, pp. 63-64.

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