Understanding the value of agencies

The majority of contractors and consultants will use an agency or multiple agencies in their career at some point as it can often be the most practical way of sourcing a contract.

If you have a good network of contacts within your chosen industry you can secure contracts yourself but this can be time consuming and very resource heavy on your part. Using agencies can give you greater access to the contract market place as well as freeing you up to work and therefore earn more.

There is one crucial point to remember when utilising agencies to find work – they work for the hirer not the contractor and it’s your job to woo them as the gatekeeper to the contracts you want to win. Many of the good agencies have dedicated contractor support teams, but essentially the hirer is the client, they pay the bills and you are the commodity.

Why use an agency?

  • Agencies are on the Preferred Supplier List of the larger companies you want to work for.
  • They have almost limitless contacts and resources to keep the contacts fresh.
  • They are professionals when selling your skill set and negotiating contracts.
  • Going direct is resource heavy with a low success rate if you approach a company cold.
  • You should have a dedicated team to ensure you are paid correctly and on time.
  • Good agents know when you are coming to the end of a contract and will look to place you again somewhere else so you have little earning down-time.

How agencies work

Agencies work on behalf of the hiring clients to fill contractor vacancies. Many lager clients hire through fixed margin agreements through agencies to ensure that there is parity against similar contractor roles within their business (as you’d expect with your permanent peers if you were an employee). This means that direct contractors don’t usually get paid more than ‘agency sourced’ contractors. In the main, agency rates are pretty stable and can range from about 12-20% dependant on the role, sector and client. Additional fees can come into play if the role is particularly specialist or senior and the rates agencies charge to their clients isn’t a discussion point with contractors and consultants.

A lot of agencies will be held on Preferred Supplier Lists (PSLs). Large organisations will only engage with companies on their PSL as they meet financial and business criteria. It’s worth noting here that most companies with a PSL will not hire a contractor direct if they have an agency on the PSL.

Your contact at the agency will want to ensure that they submit the contractor or consultant with the best fit for the client i.e. the one that will perform best at interview. That way they secure as many contracts as possible to meet targets. Whilst you will have a contractor liaison team that will ensure you are paid correctly and on time and can deal with resolution support, it is your job to ensure that you are the most attractive candidate for the roles you want. Building a good solid relationship with the agency is critical to getting the most out of it.

There is some confusion around the scope of the Agency Worker Regulations that came into force in October 2011. Here’s a snapshot of what you need to know:

The regulations were designed to protect the rights of agency workers across Europe to halt the exploitation of more vulnerable agency workers. As a contractor or consultant in the UK you are unlikely to require protection given under AWR as you’ll more than likely command higher rates than your employee counterparts.  The regulations are designed to give agency workers the same rights as employees after 12 weeks in the same contract.

If you chose to work via an umbrella company you’d more than likely fall within the scope of the regulations, but as a limited company owner that provides a service as a ‘business undertaking’ you fall outside the scope of the regulations.  The line is blurred but a great rule of thumb to use is if you want to provide a service as a ‘business undertaking’ falling outside IR35 regulations, then you’ll almost certainly fall outside the scope of AWR.

Dealing with agencies and building relationships

Agents and their recruitment consultants want to close as many contracts as possible – that’s what they are targeted on. Speed and security are the things they look for in ‘reliable’ candidates. The best way to ensure you are top of the pile is to ensure you appear keen and committed to the role they are trying to fill.

  • Being in demand isn’t always a bonus – don’t say you have lots of interview lined up, it just means you’re less of a sure bet if the client likes you. It’s good to show you are in demand but you have to ensure that the client and agent sees you as really wanting the role they are trying to fill. Show real enthusiasm for the role and the client to the agent.
  • When interview skills trump technical skills – you may have all the technical prerequisites (agents weed this out in the first cut) but interview skills are king. A candidate that comes across well in the interview and is consistently snapped up is preferred over the most qualified. Polish up your interview skills, present as if your financial health depends on it and sell yourself to the best of your ability.
  • Negotiate with understanding and good grace – you’ll need to set your rate with agents you work with, the goal is to set a rate that is attractive to you, the agent and prospective clients. Don’t rush in with a figure; this can flex for the right contract and you don’t want to paint yourself into a corner. Check out market rates then look to set a range for yourself. When pressed for a ‘best rate’ (lowest) be vague as this can quickly turn into your standard rate. Look for a healthy range and negotiate based on the roles offered. Don’t accept reduced rates after the interview stage as clients rarely reduce their offers, it tends to be the agent increasing their margins.

A collaborative approach goes a long way to securing a long-term and mutually beneficial relationship with your agency. If you are reliable, professional and take a pragmatic approach to working towards securing roles, you’ll find you become one of their go-to suppliers for their clients.

Top ten tips for working smart with an agency

When you are working for yourself as a contractor or consultant, it’s important to ensure you have mutually beneficial relationships with clients, and their agents. Quid pro quo – ‘something for something’ is a great saying to live by.

Here are our tips to ensuring your relationship is strong from the start.

1. Don’t provide references up front. The client doesn’t need them and it can be a way of increasing the lead list for the agent.

2. Don’t name drop. Again, any agent worth their salt is looking to increase their client list with named contacts in hiring firms – unless they are securing interviews for you, keep your best assets (your contacts) under wraps.

3. Know your worth – do your homework on rates. You need to ensure that your expectations are realistic and have a goal to negotiate to.

4. Ensure any contractual terms you sign up to are fair – if you want a notice period ensure it reflects the notice you need to provide to the agent.

5. Be a great candidate – make it easy for the agent to work with you. Be proactive in searching for the roles you want and call them.

6. Be a great interviewee – nail the interview by being keen, well prepared and then follow it up. Show the agent how much you want the contract.

7. Be a great contractor – exceed the expectations of the client for the duration of the contract. Let the client down and you let the agent down too.

8. Work at building your relationship and knowledge – regularly ask for feedback and how the business and market are performing. You will gain invaluable market information that allows you to plan ahead for future assignments and personal development goals as well as showing a real interest in the agent and their business.

9. Earn more from your contacts – many agencies offer finder’s fees, but you need to ensure you are paid the fee. When your contact is placed, chase for the reward!

10. Keep negotiating – if a client loves you at the interview, you can negotiate your rate up but ensure you don’t push it too far to affect your relationship with the agent.  Keep tabs on the market rates and renegotiate your fees every 12 months as a rule.

Working with an agency can take the pressure off finding the right contracts and ensure that you have a steady pipeline of for providing you understand how they work and you make the most of the relationship. A little effort wisely applied, goes a long way to securing choice contracts for the longer-term.

The first step in building strong agency relationships is finding the right agency for you. One size doesn’t fit all and we’ve covered how to find the right agent in the next article.


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