Dear Dan:
I don't have a clear picture of what you're recommending I should do in the interim between when a hiring manager says "I'd like to hire you as a contract employee" and when the contract employee actually begins work.

Possible problems here:

• The hiring manager may be unfamiliar and/or uncomfortable with this type of negotiating, and may want the contract employee to just go through such-and-such agency to get the job.
• The hiring manager may be open to the contractor choosing among approved agencies but may be unwilling to disclose a Bill Rate to the contract employee.
• The hiring manager may not know anything about "an approved list."
• The hiring manager may still only want to go through a particular agency.

Any suggestions you can provide for these problems would be appreciated! Signed: Buck Melton

Dear Buck:
Good question. This is precisely the situation when an independent contractor attempts to negotiate a "direct" contract, and is told that the client only works with W-2 contractors through third party employers of record.

You also raise a good point regarding hiring managers, namely that they are often as uninformed regarding corporate hiring policies as the contractors they are attempting to hire. So, you may have to do some discrete and tactful education here.

Ideally, you will already know the names of pass through agencies that service your geographic area. How so, you say? Because you regularly conduct modified informational interviews with hiring authorities, and because you have developed a powerful professional network that keeps you informed in such matters.

Communication is the essential key to your success as a contract employee. You must actively and openly share information with other contractors regarding bill rates, pay rates, contract employment agencies and their fees.

I also recommend you call the HR department of the client where you are planning to interview. Identify yourself as a contractor and ask what agencies are on their approved vendor list. They will know because that is their job. Additionally, ask if they will work with any of the pass through agencies on your list. While you are at it, ask HR what is their policy regarding 1099 and incorporated independent contractors, and whether they require, or simply prefer, a third-party employer of record relationship.

Once you know what agencies the client will work with, you can call the approved agencies to select the one offering the best deal. Of course you will NOT tell the agency where you are interviewing until after you get an offer from the manager. Now, you can assure the manager that there will be no problem bringing you on as a contractor since you already have a relationship with an approved agency.

Bill rates are often built into the budget, and the larger companies at least do not haggle on price. They will pay whatever bill rate has been approved for the position. Frequently, the manager has a requisition in hand which states the approved bill rate on it.

If the client wants you, but does not want to reveal the bill rate, you may have to contact an agency you know to be fair. Talk with the MANAGER of the agency. Negotiate a fee schedule based on the bill rate (whatever that turns out to be) based on you bringing the business to them. When you have agreed upon a fee schedule, tell the manager of the agency the name of the client and the hiring authority. Your agency will then go in and complete the negotiations. Your agency will negotiate as high a rate as possible since it is in their interest to do so. If the rate is too low, you can be assured it is because the client is low-balling and not the agency.

Ultimately, it's your call, and you may decide to pass up a so-so offer because the terms are not satisfactory.

By the way, I once had a hiring manager who was adamant that I go through a particular agency. But I knew the agency took up to 65% of the bill rate, so I was NOT going to go with that agency! I selected another agency, and nothing more was said. (Incidentally, the manager usually will not require you to work for one agency over another, although some clients do own their own captive agency -- an obvious conflict of interest with respect to providing/avoiding employee benefits.)

Several weeks later the manager who hired me took early retirement. I learned that he had gone to work as a project leader for the very agency he had pushed so hard for for me to go with. As you can appreciate, this practice is not restricted to retired military officers who go to work for their major suppliers. It is not unusual for upper management, after signing off on millions of dollars in consulting fees, to take early retirement and then go to work for a large consulting firm they were previously so generous toward. I could name names, but I won't. (01/06/98)

Dear Dan:
After 25 years in the business I have learned (the hard way) that the most important question/issue is to ensure there is adequate funding BEFORE any other discussion. Signed: Car S.

Dear Car:
You're right on the money. I have seen whole departments stripped of their contract workforce in one fell swoop because someone decided to scrap their project, or the company ran short on cash, or the project ran behind and the buget was not renewed as expected, or upper management decided to "punish" a poorly performing mid-level manager by firing all of his contractors, or . . ., or . . .

Unfortunately, even when EVERYBODY involved believes the project is solid, there is always SOMETHING that can come out of the blue to threaten your assignment. Of course, this goes to the heart of why companies hire contractors in the first place! (See: Using Contractors: The Benefits And Risks For Client Companies.) A contractor's best defense is a healthy emergency fund and a well developed professional network. (See: Your Mission as a Contract Employee.) (10/19/97)

Dear Dan:
Loved your Website - However, I must tell you I am an Agency Recruiter -ahh!!!

Anyway, you should have a spot for Contractors who make "Asses" of themselves and give all other Contractors bad names..., such as the contractor who went to a job fair and gave his resume to a Hiring Authority in a company he was working for. Apparently he didn't read the huge NEON sign with the company's name as he was telling the person what a crappy place he worked at and wanted to get out of, ...stories like that.

What do you say? Keep up the good work - I tell any contractor I work with to read this site. Signed: James M.

Dear James:
What a classic! Just goes to show that noone has a monopoly on sheer stupidity! I bet you've got dozens of stories like that one about clueless contractors. Why not flesh out the details, and send them in to the Handbook? I'll publish them in True Stories. We can all learn from stories like that. (10/10/97)

Dear Dan:
Isn't the term "contract employee" an oxymoron? I know it's part of your domain name, so I'm not suggesting you change it, but surely you're talking about true Independent Contractors, the folks who qualify as 1099ers, and the furthest thing from these folks' mind is to be anyone's legal employee. If you're talking about W-2'd temporary/leased employees (those payrolled by a third party but who don't have the right to deduct their business expenses, etc), I can understand the term "contract employee", but from perusing your site it seems as if you advocate assertiveness, proactivity, and independent thinking among your readers -- skills many W-2'd folk might claim but which (in my experience) very few actually have. Instead, those skills reside much more frequently among true self-marketing, consulting-oriented, 1099'd independent contractors. After all, if you've got to go through a third party, you always run the risk of surrendering some negotiating power with your client, and you also lose your business deductions; why do it if you can incorporate and consistently go 1099? Signed: Andrew

Dear Andrew:
Actually, Andrew, you hit the nail on the head. The Contract Employee's Handbook is aimed at the W-2, third party, contract employee. I AM advocating assertiveness, proactivity, and independent thinking among that population who are all too often taken advantage of by unscrupulous, commissioned headhunters who bill as much as they can get away with, and pay as little as their unfortunate victims will accept.

Since many contract employees are recently downsized or otherwise laid off permanent employees, they simply don't yet have the "street smarts" to avoid being taken for a ride. And, as we all know, they are unlikely to learn the ropes from their friendly local headhunter. I hope to give contract employees the information they need to avoid being taken advantage of, and at the same time give them a head start toward becoming independent contractors by showing them the skills and attitudes that characterize a successful IC.

Certainly, only a small minority of all contract employees have the skills and aptitude to go into business for themselves as independent contractors. And, I don't advocate that they do. But, every contract employee stands to benefit by knowing how to deal effectively with the commissioned headhunters who try to recruit and employ them. By helping contract employees become more aware of their options, and by administering the "Acid Test", I hope to promote ethical behavior and full disclosure by all employment agencies.

Andrew, I spent over two years as an executive recruiter, so I am very aware of the enormous effort and expense associated with placing candidates in jobs. I am also aware that there are many, many highly principled and ethical recruiters in the business. I am not a raving liberal. In fact, I am quite the opposite. I do feel that individuals ought to be responsible and accountable for the consequences of their behavior. But for that to happen, individuals must also be informed so that they know their options. That is the mission of The Contract Employee's Handbook. (8/23/97)

Dear Dan:
Being badly treated by the permanent employees of the company I work with is awful... This is the first time for me to work as a contractor and I first heard that it was a good thing, but since April when I started; I'm not sure... is this the same across the board. That the permanent employees resent the contractors? Signed: Basket Case

Dear Basket Case:
Your question raises an issue that we haven't really addressed in the Handbook. Let's consider three possibilities:

1. There is real resentment directed at you.
   The permanent employees may see you as a threat. They see you as an outsider who is coming in to do "their" job. Or, perhaps, they see you as a sign of things to come, and they don't like it. It is natural that some employees will express resentment when they see their friends get "surplussed" or forced to take early retirement. After all, they could be next. In their frustration they may direct their hostility at the contractors who are replacing their former co-workers. It's sort of like yelling at the waitress because the chef burned the filet mignon -- you may feel better, but it just doesn't solve the problem.
   
   Another reason permanent employees may show resentment toward contractors is the tremendous freedom contractors have to do their job without the constant distractions of stupid corporate busy work, interminable meetings, and pressure from above. Employees are often envious of contractors, and of the perception that contractors make more money with less stress.
   
   
2. There is real resentment directed at everyone, including you.
   Corporations are increasingly undergoing downsizing, reorganization, acquisition, and merger. Projects come, and projects go. Change can be very disquieting to permanent employees. As an outsider and a short-timer, you make a convenient target for their frustrations. It's not you, it's just everything!
   
   
3. Some people are simply rude, and you perceive it as resentment directed at you.
   I occasionally meet managers who are arrogant toward everyone. Others are operating so far above their level of competence that they are extremely defensive about their intellectual and professional impotence. Unfortunately they may feel compelled to prove to everyone how important they really are, sometimes at your expense.
   
   

Once, when I found myself assigned to a particularly disfunctional group, I looked around the client company for another group that could use my talent. Then I just transferred to another project. I didn't even miss a beat.

Remember, you were given the assignment because the client company doesn't have the personnel or the talent in house to do the job as well as you can. You are the outside professional who is above corporate politics and professional infighting. Contracting is not for everyone, but if you can ignore the small stuff, you'll find it's all small stuff. You have only been contracting four months, and with only one client. That's an awfully small sample on which to base a major career decision. Good luck! (8/6/97)

Dear Dan:
I am a recruiter at what you call a full service agency. I would like to point out that the contractors who work with me don't have the time to look for their next assignment. They hardly have the time to upgrade their skills. Most of my contractors are very poor at managing their money, and simply cannot afford to be unemployed while they look for a better paying assignment. Personally, I don't know any contract employees who would benefit from your rag. Signed: Name Withheld

Dear Withheld Recruiter:
Of course! The contract employees you work with have become dependent on agencies, and by self selection are the only contractors you find yourself doing business with. The Contract Employee's Handbook is directed at contractors who are willing to do what it takes to advance their careers. We probably won't convert our fellow contractors who are happy with the status quo (God bless 'em). The Contract Employee's Handbook speaks to contractors who are motivated to make a change! (8/5/97)

Dear Dan:
I would appreciate any help you can give me, since I'm new to this area (East Bay San Francisco). Attached is my resume. I am a mainframe programmer with about 15 years experience, and can be reached at (510) XXX-NNNN. Signed: Susan

Dear Susan:
I am unable to help you directly as you have requested. The Contract Employee's Handbook is not an employment agency. Neither is it a resume registry, nor is it a job listing service. Nevertheless, The Contract Employee's Handbook can be a tremendous resource in your search for profitable and rewarding contract assignments. I especially recommend the section called Landing Your Next Assignment. This section outlines the steps you should take to locate your next assignment on your own. The section called Your Mission As A Contract Employee discusses the steps you should take during your current assignment to increase your exposure and develop the professional contacts that will lead to future assignments. By locating your next assignment on your own you earn the luxury of shopping the pass through agencies for the lowest possible agency cut. If you decide to let a full service agency find an assignment for you, make sure you select an honest agency, namely an agency that will consistently pass the Acid Test. (8/4/97)