The Hybrid Contract-To-Hire Conversion

Is a combination of the Temp-To-Perm and the Fee-Placement programs.

You run your new-hire on our books until whatever time you are comfortable that he’s a good investment.

When you are ready, we convert his contract to a Buy-Out, wherein 100% of the fee portion that you’ve already paid is credited towards the final bill. That balance is invoiced over the remainder of 8 months.

History tells us that this process yields the most long term success and costs Companies the least.

Why the hybrid approach is arguably the best approach

  1. Your success rate will likely be higher simply because your new employee won’t feel like a “temp”. No one wants to feel as though they’re not worth as much as the next employee.
  2. Because the term is twice as long (while the fee remains the same), the odds that you might pay full price for a person who still fails is essentially cut in half—because the original term is doubled. Explained: Our temp-to-perm contract is for 640 hours. 640 hours typically works out to 16 weeks or 4 months. Your total fee is packed into that timeframe. The buyout is twice as long (or 8 months). If the new guy fails during that longer period, you will only have paid one-half as much.
  3. The cash flow out is vastly reduced for several reasons, giving you time to collect on your receivables before you need to pay for a significant part of your labor cost. Explained:
    1. First, as a temp, not only do you pay the gross payroll weekly but also all of the burden items (FICA, Workmans Compensation Insurance, Unemployment Insurance) that are passed through to you. On your own payroll these items are typically paid later (monthly, quarterly, or sometimes annually).
    2. Secondly, because the term is twice as long and the fee fixed, the cost per hour is essentially half.
  4. Overtime. In the straight temp-to-perm version, the faster a temp accrues hours, the faster his fee is paid off. The fee portion of the time and a half does not change, but why not take the full 8 months to pay off the commission and better your odds of a good investment?
  5. Your burden may be less. On our books, you are forced to pay our workman’s comp and unemployment rates. Yours may be lower. Perhaps you are part of a safety group or have an exemplary Modification Rate.

 

While the traditional contract to hire strategy works for many companies, You are encouraged to crunch the numbers to see for yourself. A hybrid or direct buy is often the best strategy.

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