It's said you should always negotiate salary. However, I'm looking at some contract-to-hire type positions through a staffing agency. Typically, the agency "presents" me at a given hourly rate that we set before they even suggested a job to chase (in this case, I suggested a certain amount and they agreed without question). What's the etiquette here around negotiating?

  • Are you talking about the negotiation at the point of the switchover from contract to hire, or between the presentation of the hourly rate and starting the contract?
    – jcmeloni
    Feb 19 '13 at 19:31
  • @jcmeloni I was thinking of the latter Feb 19 '13 at 19:37
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    The answer to this is basically the same as : workplace.stackexchange.com/questions/183/… This is possibly a different question but the answer is basically the same. Feb 19 '13 at 19:45
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    Are you sure that the staffing agency is asking you to set a rate before looking at any particular job? That seems odd. It is very common, on the other hand, for a staffing agency to ask you for a ballpark of the type of rate you would generally be looking for so that they can avoid bothering you about positions that pay $x if you've said that you don't want to consider anything below $2x. This tends to save everyone time and frustration. Feb 19 '13 at 20:47
  • @JustinCave To be fair, I've only ever had them suggest 1-2 jobs before I landed one, they're pretty good at matching up candidates. But they do have a hourly rate that goes with each opening that they "present" me at. I'm not 100% certain how they determine that number, if it varies per candidate or per opening. Feb 19 '13 at 20:54

Recruiter here. The recruiting agency will typically want to find out your desired rate (or range) first, and then present you with the largest margin possible (margin is the difference between your pay rate and what the agency charges the hiring company). The agency almost always has a minimum amount of margin they will accept as there are costs associated with this scenario, particularly if you are W-2. The company may have a ceiling on rate as well.

You should make it clear that your rate is not fixed, in that if you have to drive further, pay for parking, etc you will want some adjustment. If you make that clear, the recruiter won't be able to come back and claim some sort of agreement had already been made. I would always be sure to leave some flexibility in your rate and if a job is presented to you that is outside your comfort zone, let the recruiter know right away that the rate is going up for that particular gig.

Since this is contract-to-hire, there is a slight wrinkle that is potentially to your advantage or could be to your disadvantage. Some companies will pay recruiters a placement fee (reduced usually) when they convert you to a full time employee, while some companies will offer nothing on conversion. Most that I have seen offer some placement fee if they hire within n days of start. The reasoning behind this is that a company could agree on a contract-to-hire scenario, make you a full time offer on day 1, and avoid paying any recruiter fees at all. So typically there will be some placement fee paid to the recruiter if you are hired within a certain amount of days of the contract start date.

The reason I mention this is that if there is no 'buyout' on conversion, the recruiter needs to make his/her money during your contract period, so he/she is going to certainly try hard to maximize the margin and may beat you up a bit more on your hourly rate. If there is a buyout, and the buyout is somewhat significant, the recruiter may be willing to pay you a higher rate to get you in the door, knowing that the buyout on conversion will make up for the lower margin they are collecting.

I would suggest asking the recruiter if there is a buyout paid, and when that would happen. I'm very transparent with my candidates in discussing fees and arrangements regarding fees like this so the candidate is aware of any motivations that I might have, and can make educated decisions.

  • You should make it clear that your rate is not fixed, in that if you have to drive further, pay for parking, etc you will want some adjustment. Can you please suggest how to do that ? I am in a similar situation as the OP and I have already started working for a few days. Thanks.
    – sid smith
    Jun 29 '14 at 22:05
  • Not sure what you can do since you already started working, but my comment's intent was to be sure to tell agencies that you have a desired rate but that rate may require some upward adjustment if the project is not ideal (location, hours, etc.). If you've already started work, you can try by saying that a detail of this job was unaccounted for and you are incurring some unexpected cost, and then ask if they are willing to absorb some of that. For example if you found out that parking wasn't free, that might be something the agency would help with.
    – fecak
    Jul 31 '14 at 22:26

This situation is different from a typical interview negotiation because there is a third party involved that is representing you.

I would recommend doing your negotiating up front with the agency, not re-negotiating on the agency on the contract rate itself, and then negotiating directly with the company you are working for once you are offered a permanent position.

In my case the process was that I specified a rate at which I was willing to work, and that was one of the criteria the agency used when screening contracts to present to me. They may offer you jobs that pay significantly more than your rate (and keep the difference), but they won't typically offer you jobs that pay less. At this point, I would not negotiate the contract rate itself, as you would then be going back on what you previously agreed to work for. You want the agency working for you and selling you to the client, not upset with you. Make sure they know what you're really willing to accept.

Once you are offered the permanent job, there is a significant opportunity for negotiation. This is where you want to have done your homework, as there you have a number of additional advantages working for you. The company already likes you enough to make an offer, they know you can perform, and the staffing agency is no longer taking a cut.

I wouldn't be too concerned that you need to get a higher contract rate to get a good offer. The company knows the contract is a trial period, and should be willing to pay you well if you've performed well during the contract.

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    Thanks! That's kind of what I figured, but I wanted to be sure since the conventional wisdom states that you always negotiate (as it makes you seem more business-savvy). Feb 19 '13 at 23:46

In this case, you're negotiating with the agency, not the people you'll be working for. While they may have a fixed rate set with the client, the difference between that rate and your pay is where they make their money. If you think a position is a particularly good fit for you, mention that you're interested but the pay seems low. In business, making less profit on a sale is better than making no profit so, especially if they're competing for the position, they may be willing to wiggle a bit.

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