Direct Sourcing: Rates

In a typical direct sourcing scenario, the hiring manager identifies a resource that they would like to hire either a referral from their network or someone that the manager knows or has worked with in the past. Questions relating to rates to be considered are as follows:

  1. Are the hiring managers negotiating these rates?
  2. Are there competitive pressures?
  3. Who do you think will have the upper hand during the negotiation process?

If we unpack these questions to gain a better understanding, we uncover the following:

If you are an experienced recruiter either as a professional or a manager who has extensive experience in recruitment, you will understand that there is always a difference in rate between the candidates first ask with what they are prepared to accept with the presence of competitive pressure and negotiation. It is for this reason that it is imperative that the rates are always scrutinised and negotiated.

When you look at direct sourcing situations typically a hiring manager is only looking at a single candidate in most cases and therefore pricing information is limited to him and is only aware of what they are currently paying for this role, and what their budget is, which is more than often only the bill rate.

In addition, candidates often know more about the on goings at a company inclusive of the rates and salaries paid by chatting to their network of previous employees or who are currently working there. Candidates know what the managers are prepared to pay and will often work towards the highest rate or closest to it.

Additional questions to ask:

  1. How many hiring managers would call out the difference between a bill rate and a pay rate?
  2. How many hiring managers would understand that they should be negotiating contractors to the pay rate rather than the bill rate?
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