Reply to: what's on your wish list

[Mordac]

Mordac - would it make you feel better if I did?
Seriously if I really did do that I wouldn't take the time to ask you any of this as frankly I probably wouldn't have the brains to. So no, I'm no such git. I do make a point of highlighting to agents that 'such gems' are a bit of a sad approach. If you'd like to let me know some of the others you get I'll take great delight in playing the role of an agent who comes up with this kind of bull and what 'the contractor' is thinking their end (rolling eyes, hand gestures maybe?). Thank you for asking as I'm glad I can clear that one up.

Makes sense on the margins front to be upfront. How many people would though? I'm not convinced they would (that's would not should). The line would probably be "That's between me and client", which if going by the earlier postings that an agent's customer is the CLIENT then this would be understandable.

What shouldn't be happening is rate cut for you in order to increase an agent's margin.

Fair play, I didn't read your subsequent posts. I did wonder where some agents learnt their "tactics" and when someone stepped forward to confess...sorry for the "git" thing though.
The best scam I ever heard of was a mate of mine went for an Oracle DBA contract with a big Swiss bank, advertised at about £80 an hour. He flew over, had the interview, and happened to be staying in the same hotel as the only other candidate. They had a few beers, swapped email addresses, and went on their way. A few days later, my mate got a call saying the client couldn't decide who to offer the role to, and the other guy had dropped to £70 so they were going to offer it to him unless my mate dropped as well. My mate told them to feck off. Some days later he got an email from the other candidate demanding to know why he kept undercutting him. It seems they both got the same phone call, and the other guy fell for it. The agency had been playing him off against a non-existent bidder, who'd dropped out at round 1! He'd dropped his rate to £55 and couldn't afford to drop any lower. He didn't take the contract either.
Can anyone beat that?

[oraclesmith]

As an aside, this whole client/agency customer realtionship thing is actually a red herring. There is no reason why the agency cannot represent the contractor as opposed to the client, and take money from the contractor for doing so. It is only the blind acceptnace of S134c that got us into that position - but that applies to a worker, not a service providing company. So establish a genuine B2B contract between agency and contractor and then sell the contractor's skills to the highest bidder. And it takes you right out of IR35 territory becuse the contractor is operating as a standalone business and not as a disguised employee.

But that is all too simple and the agencies are far too set in their marketplace to even think about such a change - until, that is the continuing cuts in margins take them below 10% and they can't make money any more...

Agencies are effectively working for the contractor anyway because they are taking their margin out of the contractors fee before the contractor gets it. The process could easily be switched so that the contractor gets their fee direct from the client and then has to pay the agency their margin.

Apart from inertia, I suspect the reason agencies don't like this is that the credit control burden would be on them. ie. they would need to chase contractors for fees which increases their business risk. They are in a cushy situation as there are a lot of other businesses which act at intermediaries (eg. retailers) where they have to run the risk of cash flow problems all the time. You're right in that there is no real business reason for them to change this process.

Agencies always start from the client end, which makes sense as they are not going to get much business by endlessly touting all the contractors round all the companies they know in case there is any work. The 'star' agent system doesn't work for contractors because they are not famous - ie. they do not generate enough upfront publicity for buyers to seek them out for gigs.

[oraclesmith]

The rate situation :-

1. Most times the contractor will find out the rate the client is paying for them anyhow. Some agents don't seem to realise this or maybe don't care.

2. Look at it from the clients point of view. If the client is paying a high rate and I am on a much lower one, I may be happy enough with the money I get, but the client's expectations are much higher than my actual fee, which puts me in a difficult position. eg. If somehow the agency is getting £700 a day when I am on £400 a day, the client will want a whole lot more for their money in terms of service than I am willing or able to provide for the fee I get. They are basically paying top dollar and will expect me to bend over backwards for that sort of money - whereas I am thinking that this is just a 'regular gig'.

3. It's probably best to be transparent about rates. ie. both client and contractor know what the client is paying and the contractor is getting. If not, then any unpleasant discoveries will inevitably lead to friction between client, agent and contractor. The agent will probably only get away with this once for each company or contractor because it's unlikely they will get used again. Some agencies go on the economic that a few lucrative rip-off's are worth doing because, like eateries at tourist hotspots, they're not bothered about repeat business. Unless the market grows up a bit, these cowboys will continue to do well on their 'high margin' business.

3. The agency margin needs to reflect the opportunity of the contract to the contractor. ie. although the client is actually handing over the margin money, if there was no agent this margin would clearly go straight to the contractor. It is the contractor who is effectively 'paying' out of their potential earnings, for the work the agent does in being an intermediary.

For a sales example, lets consider the contractor is the 'wholesaler', who sells his/her services to the agency (the retailer) for a lower price than if he/she had to suffer the expense of going direct to the client (the purchaser). By expense I mean all the marketing effort and necessary to find and secure some 'sales'. The retailer (agent) is also needed by the customer (client) because they want to get their goods from one shop, not trawl round loads of wholesalers (contractors). The Internet however has provided a way for wholesalers to bypass retailers and go direct to customers at lower prices but more profit, thus hitting the retailers with reduced sales. The same may be true of agents in the future.

Eg. someone could provide a people4business type of website which instead has very low margins, puts the client and contractor directly together in a contract, and has a fee structure which encourages throughput because it is is open and straightforward. I had a similar idea for estate agencies a couple of years ago. Someone went ahead with it and built a lucrative and different sort of estate agency business. Instead of commission as a percent of a sale, the agencies would get paid per month for the marketing package chosen by the seller. The best properties would be cheaper to sell which means that you'd get know for good properties which means you'd get a lot of good sellers and keen buyers.

[malvolio]

As an aside, this whole client/agency customer realtionship thing is actually a red herring. There is no reason why the agency cannot represent the contractor as opposed to the client, and take money from the contractor for doing so. It is only the blind acceptnace of S134c that got us into that position - but that applies to a worker, not a service providing company. So establish a genuine B2B contract between agency and contractor and then sell the contractor's skills to the highest bidder. And it takes you right out of IR35 territory becuse the contractor is operating as a standalone business and not as a disguised employee.

But that is all too simple and the agencies are far too set in their marketplace to even think about such a change - until, that is the continuing cuts in margins take them below 10% and they can't make money any more...

[hotwired]

Does that mean you're the git responsible for such gems as "I just need a couple of references" and "I'm afraid the client wants to drop the rate" and a few choice others?

Mordac - would it make you feel better if I did?
Seriously if I really did do that I wouldn't take the time to ask you any of this as frankly I probably wouldn't have the brains to. So no, I'm no such git. I do make a point of highlighting to agents that 'such gems' are a bit of a sad approach. If you'd like to let me know some of the others you get I'll take great delight in playing the role of an agent who comes up with this kind of bull and what 'the contractor' is thinking their end (rolling eyes, hand gestures maybe?). Thank you for asking as I'm glad I can clear that one up.

Makes sense on the margins front to be upfront. How many people would though? I'm not convinced they would (that's would not should). The line would probably be "That's between me and client", which if going by the earlier postings that an agent's customer is the CLIENT then this would be understandable.

What shouldn't be happening is rate cut for you in order to increase an agent's margin.

[Pondlife]

Would you want to know what the agency margin is or is it irrelevant?

It's not irrelevant.

I get annoyed with the attitude of winging about the agents margin after you've accepted the contract and wanting an increase after all the terms/rates have been agreed. It was enough for you to accept the gig so get on with it. Obviously this doesn't apply to negotiating extensions.

The relevance of the margin is that it affects what the end client will be charged and therefore what their expectations are. They will have far higher expectations of flexibility and working time for a £1000 a day contractor Vs a £250 one.

Edit: Agree with DaveB that everything would be a lot cleaner if the agent was upfront about their margin in the 1st place.

[DaveB]

Oraclesmith, wise words and I couldn't agree more. So much time is spent perfecting 'acting skills' to get leads. And there is a reason why they are not living in Hollywood because (and there's no surprises here) you can see through it.

Thanks for your comments.

Okay here's another one for you. Where do you stand on the margins that an agency asks for?

Would you be happy if an agency was charging the client 25% if, the rate you were being paid was a good one say for example more than you were expecting to get?

Would you want to know what the agency margin is or is it irrelevant?

If the rate is good the margin is irrelevent, certainly at the start of the contract. If the agent then tries to up their cut by pushing a rate cut after the fact it does become an issue.

Down the line it's a usefull negotiating tool for us when it comes to getting a rate hike.

I'd see it as evidence of good faith on the part of the agent if they are up front about their margin.

[Mordac]

I train agents to do their job.

Does that mean you're the git responsible for such gems as "I just need a couple of references" and "I'm afraid the client wants to drop the rate" and a few choice others?

[hotwired]

Oraclesmith, wise words and I couldn't agree more. So much time is spent perfecting 'acting skills' to get leads. And there is a reason why they are not living in Hollywood because (and there's no surprises here) you can see through it.

Thanks for your comments.

Okay here's another one for you. Where do you stand on the margins that an agency asks for?

Would you be happy if an agency was charging the client 25% if, the rate you were being paid was a good one say for example more than you were expecting to get?

Would you want to know what the agency margin is or is it irrelevant?

[oraclesmith]

Point 6 - in what situations would you be happy to offer info about leads to an agent? Obviously you would prefer not to be called by an agent you don't know and pressed for leads.

The problem is that some agencies don't simply ask for leads. If I had genuine leads that I didn't want to pursue myself, then I would have no problem with letting others know. These problem agencies just use underhand techniques to fish for names and positions of people I have dealt with in the companies on my CV, on the pretext of needing to know more about me before forwarding my details. They then hand these names to other more junior staff who then phone them all up begging for work.

I know this because I used to get phoned all the time by these people when I was a permie manager and because of the various job titles I used to use I knew where the info was coming from. The real problem is that 99% of the time there is either no requirement for contractors or we already had a preferred agency, so this means that the calls are just time consuming phone-spam. I used to tell them I no longer have any authority to recruit people and I'd give them the name of the IT Director, so they would get his PA instead !

I think most contractors would give trustworthy agencies leads if they knew the agency would act professionally with the info and would reciprocate by providing first pick of good contract opportunities to the contractors that they has built a relationship with.

[hotwired]

I'm a she

Good morning and thank you for all of your response. I really appreciate it. I've had the pleasure of a weekend not working and so apologise for the delay in responding to you. Hope you've also had a good weekend.

Let me assure you, I am not an estate agent never have been and in all honesty never will be. I am a training professional and to be fair could make a lot of money in training estate agents because I'm good at training people to do their jobs; and not funnily enough to rip people off. And you would be surprised(?) at how effective it is; hence why I wanted to speak with you and understand your position more.

You've given me some more food for thought..

Points 1-5 absolute common sense.
Point 3 - on the legality side my hands are up , I don't train this as I am not a legal trainer. I've done some investigating this morning and am only getting wooly answers, there seems to be a difference of opinion. I'm looking into it more and have taken into consideration your references.


Point 6 - in what situations would you be happy to offer info about leads to an agent? Obviously you would prefer not to be called by an agent you don't know and pressed for leads.

Everything else makes sense. I've taken on board the 'who is the customer' and I absolutely agree with the 'be professional and everyone gets what they want' side of things.

Again, many thanks for your input and if you think there is more to be said, I would definately want to know about it.

Hotwired (of the female variety!)

[thunderlizard]

He's probably gone back into estate agency already.

[oraclesmith]

Hey hotwired...how about some thanks for all this ?

[thunderlizard]

OracleSmith is right. You've got it back to front. Contractors aren't agents' customers. Contractors carry out a service for the agency, send invoices to the agency, and receive payment from them. That means the agent is the contractor's customer.
So:
(1) The agency shouldn't be the ones writing the supply contract. That's the supplier's job pretty much anywhere else.
(2) Obviously it's OK for the agency to have a budget in mind, but they shouldn't get annoyed when the contractor tells them the price and they want to pay a bit less.

[oraclesmith]

My slant is they are my customers, you are one of their customers.
To make sure your customer is happy you ask them what they want and deliver on it. They want to know how best to do their job to earn more money. I want to deliver that. They'll earn more money if they deliver more for their customers. You.

and finally....

20. Be under no impression that contractors think they are your customers. They are not. Your firm is paid by the client so your loyalties are to the client and your firm. Any contractor that doesn't understand that is a fool. However, contractors are your means to a happy, long and profitable relationship with your clients so just be professional and everyone gets what they want.