June 23, 2009

Answers to Questions on Today's Eblast:

1. How do I properly calculate my own gross margin production?

Gross Margin (or Gross Profit) is calculated by taking the Bill Rate of the candidate less the pay rate, less the fridge factor (or burden). Staffing firms subtract the burden (which is usually 13% to 15% of the pay rate) to cover costs such as FICA, Medicare, Unemployment, Liability and other administrative costs.

So, a caculation looks like this:

Assume Bill Rate is $50/hr and pay rate is $30/hr and burden is 15%.

$50 - ($30 + 30x15%)
$50 - ($30 + 4.5)
$50 - 34.5
= 15.5

So, $15.5 is your gross margin (or gross profit)

That $15.5 then goes into your "bucket" or commission structure tier to add to the total amount that will be assigned to your personal production. At the end of the month, you add up all the GM and that number is used to calculate your commission.

2. I'm really only familiar with 1 or 2 staffing firms - what else is out there?

There are many different types of staffing firms from ones that specialize in one staffing discipline to ones that have divisions that focus on many different staffing disciplines. You can imagine that a staffing firm's culture will very likely be cultivated and perhaps influenced by the corresponding culture of the vertical. For example, a staffing firm specializing in light industrial staffing may have a totally different company culture than, say, a staffing firm focused in legal staffing.

Additionally, the size of the firm makes a big difference. A smaller family-owned boutique staffing firm is likely to have an entirely different company culture than a large multinational staffing firm with many different divisions.

Picking the culture and size of the firm you choose to work for is as important as your compensation structure. Making sure that firm is right for you and that you are right for that firm means the difference between a 6 month tenure and a 10 year tenure!

3. How many staffing firms are in the US?

According to the Staffing Industry Analysts, there are over 10,000 staffing firms in the US. 113 of them are over $100 million in revenue.


Recent Posts