As the owner of a staffing agency, one of your main priorities is driving profits. A key way to accomplish this is by managing your margins. Making sure you are charging enough for your services and keeping your expenses as low as possible help to create a healthier bottom line.
Here are three ways to manage your staffing agency’s margins to increase profits.
Pay Employees What the Market Will Bear
Pay your employees just enough to keep them working for you. After all, there is no reason to round up an hourly pay rate to $18.00 when a candidate will accept $17.65. When setting your pay rate, consider the employee’s experience, skills, assignment position, and industry sector. Also, include the rates your competitors are paying for similar positions. Additionally, review job listings and career boards to determine the nationwide average for the position in the industry and in your location. Use this information to create a range for how much you will pay your employee. Then, settle on a final wage.
Charge Customers for the Value You Deliver
Know the worth of your staffing services and charge for the value they deliver. For instance, if you specialize in staffing for IT or other industries where specialized skills are in high demand, your customers typically are willing to pay more for a qualified placement. After all, it is faster to contract with a staffing firm to source and screen candidates than to have a member of HR do the work. Also, establish relationships with your customers and candidates to increase your perceived value. This allows you to charge more for your services. As you continue to create mutually profitable placements, your customers will continue to do business with you. Additionally, understand each customer’s businesses and industry so you anticipate their staffing needs and resolve problems as they occur. Continually being proactive and reliable encourages your customers to turn to you with their staffing needs.
Monitor Worker’s Compensation Claims
Pay close attention to your worker’s compensation claims. After all, if one account causes the majority of claims, your staffing firm’s experience modifier can significantly increase. This will increase the rates and premiums for all of your accounts. So, be sure to investigate every incident and commit to improving safety. Also, make sure to properly classify employees by using the code that corresponds to the governing class code for the account. This is critical to calculating accurate bill rates and ensuring profit margins. If you use the wrong code, you could face back payments, increased premiums, penalties, and other expenses.
Read Our Free E-Book
Find additional ways to drive profits by reading our free e-book. Then, contact Madison Resources to see how our funding, technology, back-office services, and business intelligence can benefit your staffing agency.