Recruitment agency owners know their business is only as good as its people – recruiters and candidates alike. But how can staffing consultancies stop their best contractors being lured away by over 40,000 competitors?
Highly skilled contractors are particularly in danger of leaving their recruiters in 2024. This year presents new challenges for the temporary labour market:
- Autumn Budget announcements are increasing employer tax burdens, reducing recruitment budgets and further disincentivizing businesses from hiring contract workers
- Rocketing IR35 legal cases and complexities in interpreting off-payroll changes are worsening admin frustrations and work-related stress for interim managers and contractors
- Temporary worker availability has in November 2024 seen the sharpest rise recorded since December 2020, contract job vacancies are on the decline and demand for IT contractors has fallen to its lowest level since July 2022.
Contractors are more likely than ever before to be persuaded by a better working experience, higher pay and better quality of assignments elsewhere. How can recruiters keep hold of their best contractors in difficult times? Generate’s contractor management experts reveal why most recruiters struggle to retain their contractors over time, and the best ways to keep your top temporary talent.
The Real Reasons You & Your Consultant Team Struggle To Retain Contractors
- It’s Not Them, It’s You: You’re Forcing the Wrong Role on the Wrong Candidate
Temp and contract staffing agencies are operating with an average gross margin of 17.5% across all sectors, with some sectors having slightly higher values, and many recruitment consultants themselves are taking home over £100K annually. Interims, freelancers and sole traders are very aware of the incentives for a recruiter to both fill a poor quality role in order to earn commission, and to encourage candidates to take a lower day rate to push up their own margin and therefore commission.
After Covid-19 saw temporary workers face unprecedented financial difficulties, and during the current cost-of-living crisis, senior candidates are even more sensitive to the prospect of recruiters profiting from their own losses. Prioritising selfish gains may initially serve recruiters well, but the long-term cost of losing an excellent runner is far greater than any initial bump in commission.
- You’re Choosing Your Clients Over Your Candidates
Whilst employers are the paying clients, the best recruiters know that a happy candidate is vital to extensions and further vacancies that drive future revenue growth. Clients can make extensive demands of both consultants and their candidates, but it’s the recruiter’s job to advocate for the interests and support the needs of both parties throughout the hiring process.
Highly skilled contractors need and expect their recruiters to fight for:
- Flexibility – The number one benefit enjoyed by freelancers, interims and sole traders across the UK, flexibility is being quashed by employers in the current trend to force workers back into offices part- or full-time. Half of all permanent employees report their intentions to resign if made to return to the office five days per week, and the preference for autonomy is even stronger amongst temporary workers.
- Day Rates – Tax rises announced in the 2024 Autumn Budget are nudging employers towards cost-cutting, with training and hiring first in line for the chop. Candidates are increasingly required to justify and negotiate for the top end of their day rates to fit higher employer expectations and lower pay offers.
- Reasonable Adjustments – The number of female, ethnic minority and diverse groups represented in the temporary workforce is continually increasing. Diverse contractors are much more likely to require reasonable adjustments, such as hybrid working, flexible hours, access to specific equipment and dedicated support.
The best contractors know that the best recruiters are skilled negotiators and communicators who can secure not only the best assignments but the best working conditions and benefits. Highly skilled candidates have plenty of choice with many thousands of staffing agencies currently operating in the temporary market, and loyalty will only be earned if their vital needs are met.
- Your Candidates are Unhappy, Stressed or Neglected
A poor candidate experience is manifested by a poor recruiter relationship. If your candidates don’t receive the support they need, they won’t trust their recruiter and won’t reach out to their consultant for help with serious problems. The most common reasons behind a contractor’s poor recruitment experience are:
- Missed opportunities – Recruiters who don’t keep on top of their diaries and prioritise finding new candidates over supporting their existing talent pools won’t provide contractors with sufficient notice of upcoming opportunities, causing candidates to miss out on quality assignments.
- Communication – Failure to pass on vital information, notice details in contracts and submit legal documents in sufficient time elongates hiring and onboarding, increasing the likelihood of candidates withdrawing from the process.
- Late payment – Employers not submitting timesheets to schedule, and staffing consultants being unavailable to help, results in delayed payments and great financial stress for contractors trying to make ends meet.
- Tax frustrations – Half of all contractors believe they have been subjected to the wrong IR35 status determination, and have therefore missed out on thousands in take home pay annually, due to blanket classification by employers and umbrella companies.
Although skilled contractors are senior experts in their field and very familiar with the hiring process, they still require the same level of support from their staffing agencies. The nature of contracting itself means that the challenges facing candidates – financial stability, frequent upheaval, transitioning to work overseas – are often personal as well as professional, making the recruiter relationship a vital factor in a positive candidate experience.
- Your Candidates are Going Permanent to Solve their Problems
For some, the freedoms and benefits of contracting are being rapidly outpaced by new challenges that are encouraging them to transition to permanent employment. Fewer job opportunities are on the horizon for the coming year. More than 1 in 3 employers (36%) recently reported that they were only planning to recruit permanent employees in 2025 as opposed to both permanent and temporary workers, with just around half that amount (17%) planning to hire only contractors rather than permanent employees. Financial instability and tax burden battles are frustrating and disheartening more than ever before, with 1 in 5 temporary specialists saying that IT contracting is at its ‘worst state ever’.
In the coming months, the temporary workforce will have to navigate major obstacles and make many tough choices to balance their preferred current lifestyle and future security. The right recruiter can prove the difference in enabling skilled experts to remain in the contracting market and finding the right assignments that will see them through a difficult year ahead.
How to Retain Your Contractors
Whilst recruiters cannot change legislation or the jobs market as a whole, consultants can invest in several tactics to significantly improve the candidate and employment experience for their contractors. Here’s how leading staffing agencies are retaining their best contractors:
- Listening
Recruiters are excellent salespeople, but can get so involved in selling a role to a candidate that they forget placements are matches, not just pitches.
The best way to retain any candidate, but especially a highly skilled contractor, is to listen. Put candidates at the heart of the recruitment process, not commission. When asked about their preferences, situation, needs and goals, what a candidate doesn’t say is just as important as their actual response. Pay attention to non-verbal cues and delays in communication to dig deeper:
- Are your contractors worrying in silence about finer details of the assignment that you haven’t gone over with enough information?
- Have they mentioned in passing something which seemed a small point at the time, but which could actually impact on their success in the role?
- Is their suitability for the assignment measured not only in terms of their knowledge, experience and availability, but their personal situation and their motivations for taking the role?
Ask the right questions to build a relationship based on trust and honesty, where recruiters can identify contractors’ worries before they are verbalised, and where contractors feel comfortable opening up about these challenges when they are identified.
- Actually Doing Admin
Because recruitment consultants are people-people, desk work is usually left until the last minute in favour of meeting clients face-to-face and smashing the phones. Staffing agency MDs and team leads know only the rarest recruitment CRMs are fully up to date on the daily, consistently tagged for foolproof searching, and harnessed as the single source of truth for all client and candidate communications. Recruiters don’t relish admin, but they need to get better at it, or risk losing candidates along with paper trails. These simple tips from top recruiters will make a big difference:
- Calendars – Block out time at the beginning and end of every day to dedicate to compliance, finance and other paperwork to minimise any delays in hiring and onboarding due to waiting on written approvals and signed documents.
- Project Management Software – Ideally use your CRM’s built-in tool, but if this doesn’t exist or provide a good user experience, find a better one. The ideal project management tool allows managers to allocate tasks to their teams, monitors their progress, sends chasing emails and reminders automatically and keeps track of everything they need to do on a daily basis.
- Process – Make a habit out of admin to reduce the effort involved. Create and stick to a diary process that involves adding candidate schedules and opportunities to the calendar as soon as they’re known. Recruiters can set themselves reminders for several weeks before an individual contractor is due to finish an assignment, ensuring they check in with the candidate well before they’re planning their next role, and well before a competitor has time to poach them.
- Work with the Best Partners
Recruitment is about partnerships between candidates, clients and consultants, but also with the right suppliers. A successful assignment is only as strong as the candidate experience supporting it, and recruitment partners provide the foundation for the hiring and onboarding process that will retain the best contractors.
The right partner can forever solve contractors’ top two frustrations: financial worries and lack of support when things go wrong. Generate’s payroll and contractor management services are delivered by experts: contractors always reach humans, not an automated message.
Delivering last-minute payments, answering urgent queries, providing compliant services for overseas employment challenges – whatever the problem, we find a solution. Keep your contractors happy with our 100% guaranteed on-time payments and expert advice.
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