4 Elements of a Fair and Viable RecruiterFreelancer Business Model
After a recent spate of contacts by recruiters via LinkedIn and exchanges on Twitter (which included Bill Dollins referring to recruiters on LinkedIn as the new travel agents), I started thinking about my past experience with recruiters as a freelancer and how it might actually work, fairly, for both parties.
I rely heavily on network and reputation for most of my business but, I’ll be honest, that makes for a hell of a roller coaster ride — one month, all-nighters; next month, crickets. Sales and business development are not my favorite parts of freelancing, so it would be great to have an on-demand sales team.
So, based on my experience, here are four key elements of a fair and profitable recruiting arrangement between recruiters and freelancers:
1. Do Not Limit Future Options
Allow for a market arrangement in which, if you provide good service, I will continue to do business with you. Do not attempt to limit future opportunities by restricting who I can work with in the future — otherwise known as a non-compete clause.
From the recruiters’ perspective, they want to ensure that you don’t get access to their client and then bypass them to contract directly. I get it. But from a freelancer’s perspective, you simply cannot afford to put those limits in place.
Example: I have an established relationship with a City. The City had a contract with a recruiting agency and asked that I go through them for a particular project. The recruiting agency contract included a non-compete by which I couldn’t contract with the City directly — now or ever. Absolutely not. My relationship with them is completely outside that agency.
We ended up diluting it so I wouldn’t work through another recruiting agency with the City for a limited period of time. Fair enough — but the negotiations were painful and I wouldn’t do it again. Recruiting agencies need to understand that, as a very small business (of one), competition is tough enough without these limitations. Simply provide a good service that I will continue to use.
2. Fair Markup
Pay a fair rate for services based on market value and take a fair cut for finding the work.
Recognize that, as a small business, I also have overhead and must charge accordingly. In return, understanding that I am not spending time/effort/resources securing the work, I will lower my rate accordingly.
Further, if a significant amount of work is available, there is room for negotiation.
However — offering me forty while you bill one-fifty is egregious.
I’m not kidding when I say that some of my best friends are recruiters — okay, one — and his mantra is: “If you’re getting the rate you want, then why care how much the agency is billing for you?” Fair… mostly.
But forty ain’t that number. And that example is typical.
3. Let 1099 Shine
Provide a 1099 tax arrangement.
In the recruiting world there is a key distinction regarding your relationship with the agency: 1099 vs W2. Simply put:
- 1099 → you’re responsible for your own taxes (the freelancer model)
- W2 → you’re an employee
Freelancers want 1099; otherwise… well, you’re not a freelancer.
I don’t think I need to go into why you wouldn’t want to be an employee as a freelancer — it’s why we’re freelancers in the first place, right?
4. No Branding
Allow me to maintain my identity as a business.
Do not try to take credit for my skills, reputation, or experience.
This may seem innocuous but it can bite you before you realize it.
Example: A recruiting agency takes your résumé/CV/statement of qualifications and pastes it into their letterhead before submitting it to their clients.
They have branded you, and the more it circulates, the more your own identity is diluted.
I really believe that a recruiting model that includes these elements is viable. If you advertise as fair to freelancers, freelancers just might want to work with you and spread the word. While you won’t make the killer markups, you may very well win some loyal and very talented customers.
Somebody, do this, please!