Increased bill rates are a direct reflection of increased pay rates.
There's a lot that goes into determining what a worker should be paid. The job title they have, the skills they need, and where they are located. In a complex and evolving economy, wages are constantly changing across the labor market. To determine pay rate, and ultimately your bill rate, you need to know what you’re up against. The right data points provide just that, and they are crucial to effective client conversations.
When it comes to determining appropriate compensation for a req, there are several factors that will impact the likelihood of success that you’ll have in placing someone.
4 questions to answer when determining pay rate are:
What does this person do and what are they actually called?
What are the skill requirements for the role?
Where is the ideal candidate located?
What are wage trends in a specific market for that occupation or job title?
Once you have the answers to these questions, you can achieve positive staffing outcomes like:
Increased pay/bill rates that lead to higher revenue for your organization
Decreased time to fill when pay and skills align with the market
Increased employee retention, less employee attrition, and placements who stay on assignments longer
Great client relationships and and enhanced trust using qualified data
Staffing at the right price is the key to a successful partnership. And when you get it right, you’ll continue to win new business.
To make a data-supported pay rate decision, let's use a tangible example to understand how it all works together. Using SmartReq, we can access the necessary information to know exactly what your client should pay to get the right talent. Remember, the right pay rate qualifies your bill rate.
This means to attract qualified candidates, the client will need a competitive posting and pay rate. Let’s dive deeper to gain more information.
Does the job title the employer is using align with what the person will actually be doing in their role?
Is “Software Developer” the right title? Suppose that our client is adamant that a candidate is a true “Java Developer” with all of the skill sets associated with it. We can look at comparable job titles to see number of postings as well as the salary advertised on those job postings in the last 14 days. The role with the title “Java Developer” would have a slight pay rate bump while a role with the title “DevOps Engineer” would have a lower pay rate.
Skills inform job titles, and ultimately pay rates.
This is where skill requirements come in. Variances in job titles determine pay rate and essentially, your bill rate. Conversations with clients, early on in the relationship, about skill specifications for particular job titles can help inform more accurate wages for the talent they are trying to attract.
Supply and demand will vary in any given market, and they impact pay rate.
Time to look at the supply of workers in the specific metropolitan area of Austin, TX. We see there is a somewhat poor supply of Software Developers in this location, which means there are fewer candidates who might be willing to consider this job.
We should also check demand in the specific market to see the actual number of postings and the other companies currently looking to fill this job. In Austin, demand for Software Developers has dropped off over the last several months, but there are still multiple companies competing for the same talent.
Depending on client preferences (and their ability to do so) a remote hire could be on the table. If the position can function virtually, consider looking to an area with a more ready supply of workers. Let’s say the client would like to stay in the central time zone. Looking at the Minneapolis metro, we can see there is a very strong supply of Software Developers with relatively low demand.
Now for the most crucial piece of data: wage rate in the client’s specific market.
The Austin market has moderate wage inflation and advertised wage is over $70/hour. How committed is the client to a specific market? If the client is determined to hire a Software Developer in Austin, they will be paying a higher rate than if they adjusted their market preferences.
Let’s compare wage rates for Austin and Minneapolis: advertised wage in Austin is about $7/hour more than in Minneapolis, where there is somewhat low wage inflation, and that’s not accounting for remote wages.
Qualified data informs client conversations, determines pay and bill rates, and solidifies your expertise in staffing.
Advising your clients on insights founded in data rather than hearsay will allow you to justify your recommendations, resulting in better client relationships. Staffing companies with qualified data and the right insight become the experts for their clients and are able to consistently maximize bill rates. Use SmartReq to take the guesswork out of compensation and find out exactly how much your clients should pay to get the right talent. Get the pay rate wrong and your bill rate will feel it. Gain instant access to real-time data on supply, demand, and compensation to see the full picture and make the best staffing decisions possible.