Hiring "Short Term" Help

[Jetgirl8]

My company is in a position where we have been unable to hire the talent we need for a program, so we are looking to external contracting companies to provide that talent. The skill set we are hiring for is the skill set that I provide for the company, and as a respected individual at my company, I have been asked to review resumes and be part of this hiring process. I believe we sign paperwork today to bring on someone to do what I do for 4x my pay. 3x if you take into consideration the benefits I receive. While we are notionally calling this work "short term", the project for which this work is needed is slated to last for 4-5 years. Given how things work around here, I could easily see it lasing 7-10 years.

I think it's time I have a chat with my boss about my salary. Any advice on how to approach that conversation?

When the future's architectured
By a carnival of idiots on show
You'd better lie low

 

[MiketheEngineer]

Don't forget the supplying company gets a cut of his salary, too. And your company can fire him at a moment's notice - actually you too if you work in a "Right to Work" state.

You may just have to have a heart to heart with your boss. Find out what other salaried people in your area make. Aim in that direction.

But don't expect to get what the contractor gets. That is a crazy life - often periods of high pay - no benefits - followed by long stints of unemployment....

 

[Jetgirl8]

No way would I expect to make what we're paying out - I assume in the end the contractor will probably only really be realizing about 2x my salary. And I agree - if I wanted that life, I would have already had my resume on the desk of the contracting agency. I keep rationalizing it away only to think that it is okay to speak up for myself and at least have the conversation.

When the future's architectured
By a carnival of idiots on show
You'd better lie low

 

[zdas04]

Contractor's are nomads. The first full year after I started my business (2003) I made 4X of the last year I worked on salary. In 2009 I made 2/3 of my last year on salary. If 100% of the risk of slow times is mine, then good times should pay very well. Was your salary any different in 2009 than 2007? Maybe a touch higher, but not down by a factor of 6.

Bottom line, you are asking to be compensated for non-existent risk. You are just keeping score. If you came to me with a demand for a 300% raise because you are worth more than the temps I would fire you on the spot and increase my number of temps by one. Your salary plus associated vacation and benefits (way more than 1/4 of your total compensation, closer to half) goes on indefinitely. The "temp" only gets paid while he's working and the billing rate is the only compensation he gets.

When I was making $50+/hour and paying contractors $200+/hour I did it knowing that the minute I could cut them loose I would. If they could find another gig, good for them. If they couldn't find another gig, that is the life they chose. You just can't have it both ways and when I read Wanks like this I get mad.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.

 

[KENAT]

Yeah, for the contractor themselves to see 2X isn't uncommon. As others above say with contract staff like this you're paying for all the gaps between jobs, uncertainty, often lacking benefits (depends on job shop etc) and having to travel around...

You might be better off trying to get a feel for what the going rate for direct folk like yourself is if you want to go that route for trying to justify a raise.

I would have thought the fact they're having trouble finding someone else with similar abilities might be better leverage but I'm no expert negotiator.

Posting guidelines faq731-376

http://eng-tips.com/market.cfm?

(probably not aimed specifically at you)
What is Engineering anyway: faq1088-1484​

 

[Drazen]

Too often I am the one who is such contractor and I can see or feel anger that is created among regular employees. With such experience I even included fee secrecy on some projects, but it came our even worse once, as such information "leaks" and creates even more grievances later.

Colleagues are right, most of that fee is eaten by company costs, particularly by insurance and contingency costs and so on.

even if you manage to put all that on even ground to be able to make comparison of actual, personal incomes, there is still issue of risk of not having work at all which cannot be quantified easily.

Yet, here are some thoughts on how to deal with that:
- wait for some time, for instance one year, than initiate talk about raise with your superiors, using outside contractor's fee as an argument in your favor. that way you will not look as someone who changed views at the moment outside contracting fee became visible, but as someone who weighs things carefully (for which you will indeed have time within wear)
- explore opportunity to undertake your own business. this will also take time to evaluate many things, but will anyhow give more weight to your eventual negotiations
- try to access and compare your contribution with contribution of such new employee. this has to be taken in fair and well-intended manner, anything else will turn into hostility. once you reach honest conclusion about that, observe your boss, he (or she) would certainly do the same activities, and he could be expected to take some measures.

 

[berkshire]

Jet girl
As a person who worked as a contractor ( Job Shopper ) it was not uncommon to be paid twice the hourly rate of the fulltime guy/gal you were working alongside, then, the contract company you were working through, would be doubling at least, the money you were getting.
As contractors we were always told," Do not discuss money, you are always going to be making more than the guys/girls you are working alongside, and you do not want to get them stirred up.", very often this money came as a lump sum with a 1099 at the end of the year, with no medical or other benefits that, you, supplied out of your own pocket. You had better be paying quarterly taxes on this, or look out at the end of the year when the IRS came calling.
As far as job duration sometimes it would be 2 weeks, sometimes if you were lucky 2 to 4 years.
So you have a choice, you can take the safer lower salary, or you can join the gypsys.
B.E.

The good engineer does not need to memorize every formula; he just needs to know where he can find them when he needs them. Old professor

 

[ajack1]

Go to the other side of the fence, the grass is always greener.

 

[moltenmetal]

Training people who make more than you do is gallng, isn't it? But unless the contractors are self-employed, don't assume that any contractor is making significantly more than you are.

As mentioned above, a self-employed person makes a bill-out rate which has to compensate them for lots of costs and uncertainty that an employee, even a term employee, doesn't share to the same extent. With that rate goes the understanding that your hours and length of service are at the whim of the "employer".

An employee of a contracting agency makes a lower hourly rate, with the contracting agency taking the rest to cover their costs and provide the firm's ownership with profit- otherwise there would be no firm. What those rates are depends greatly on the labour market at the time.

Here in Canada a typical contract (term) direct employee engineer's premium over staff salary is only about 15%, which compensates them for the lack of benefits. Term contract employees may not be let go before the end of their contract period without compensation. In the 'States, that premium may be higher because employers pay for health insurance for their full time staff professional employees, whereas here in Canada we pay for it through our income taxes.

A company hiring contractors from another firm for long terms (4-5 years) at a full hourly bill-out rate (3-4x salary) is probably not doing the best job of negotiating that it could do, especially if those workers will actually work on your premises. That kind of bill-out rate definitely includes the overhead cost of a workplace.