If you work temp-to-perm. Do you get a raise when you get hired on permanent?

mxmaniac

I had a recruiter call me today about a temp-to-perm position. Supposedly it would have been 3 months temp, and then possibly hired on permanent. (unfortunately it turns out I'm not qualified since I have no active directory experience).

Anyways, the hourly wage the recruiter quoted would have put me on a slightly negative income. I'm wondering if its typical to get a raise, once you get hired on permanent. Like once the recruiter is out of the picture, do they typically raise your wage up to what they were paying the temp agency, giving you a big bump, or do they try to keep you at the same amount.

Reason I ask, is so I can know if I should take a job like this in the future. I could work on a negative income for a few months if needed, if I was quite sure a raise was coming.

markulous

Probably depends on the business. The job I work at did that when I got hired on full-time, but I know of other places that don't give a raise.

I wouldn't ask the recruiter. Those guys are full of it a lot of times and have no clue what happens after the person gets hired on full-time. Ask the company in the interview.

MeanDrunkR2D2

Also, be on the lookout when they say there is potential to go permanent. If it's not written in the contract that it will be permanent (or they let you go) at the end of the initial contract they'll likely string out your contract with extensions that can last for years. I'm currently in a job now through a recruiter and was told it was temp to perm after 6 months. Come to find out a month after I started it was just a 3 month contract, no perm, but there is a potential 2-3 years down the road doing the same job I am now. Also, come to find out that if I want to be promoted from this role to a higher level, I would also have to relocate to another area. Something else I was lied to about as well. Right now I have a bad taste in my mouth from my current contract company and have been looking for better opportunities that are full time positions.

iBrokeIT

Also, be aware if you are a 1099 temp worker and get converted to a W2 employee position at the same rate that would be considered a net raise because of the change in tax status and added benefits like PTO, insurance and 401k match.

210mike

It doesn't always happen, but sometimes our contractors that convert over to full time employees actually take a net cash pay cut. Total compensation goes up (401K match, our awesome benefits, vacation), but net cash can go down slightly.

ratbuddy

I just went from $23/hr with no benefits on a W2 contract to $63k/yr ($30.69/hour IIRC) with full benefits and 9% bonus. I was on contract for three months.

It's all up to how well you perform and how you sell yourself. Make yourself worth the money and it will come.

bridgestone

Not a raise per se but it depends.In most organizations, it's cheaper to hire a temp than a perm. Reason being that hiring a perm involves a big one-off cost for all the admin. In Fortune 500 companies this can be equivalent to a year's salary cost to the company.I worked for one company and the temp rate I was paid was calculated directly from the equivalent perm salary.But often, the temp rate is higher than the equivalent perm rate i.e. you don't get a raise. You get a drop in your pay. But remember you get things like employer pension contribution (many countries require this by law), paid holidays etc.Of course, if you've proven yourself and they want you to go permanent, you're in a bargaining position on pay because it's a major PITA for them to try and start from scratch in finding a perm employee again.I would never personally work a negative income for more than a month though.

mxmaniac

bridgestone wrote: »

In most organizations, it's cheaper to hire a temp than a perm. Reason being that hiring a perm involves a big one-off cost for all the admin. In Fortune 500 companies this can be equivalent to a year's salary cost to the company.

Can anyone elaborate on this? Why does hiring a perm involve a huge cost? I could understand costs associated with training and stuff like that, but those costs apply to temps as well. I could also understand if it was a cushy company that offers severance pays, retirement options, etc, but so many companies don't offer that stuff. So what makes a perm different?

I've often never really understood the logistics of why companies want to hire temps, or go through staffing agencies in general. It would be one thing if workers were hard to find, and the company didn't want to waste time. But the situation the economy is in right now, where there are so many people looking for work, and so many people fighting for positions, why use a temp agency at all and pay them an extra 33% or whatever, why not just hire employees themself? Even if they only want temp work, why not just hire people as temp or seasonal workers, and not use a staffing agency?

100k

I am on a temp to perm I always thought you would get a raise when you went Perm. Lame

kurosaki00

Depends on the job.
Hiring you for full time means more expense for teh company (vacation/healthcare/sick days/etc) ...that alone will duplicate how much the company spends in you.
Ive only had two permanent jobs on IT, both did not raise my salary when hired me full time.

Danielm7

They also have to pay the employer taxes that they are likely getting around by paying a temp agency. They pay a temp company a flat 50 an hour for an employee, then the temp agency has to pay everything, then pay you. If they bring you on direct they have to pay SS, unemployment, vacation, sick, holiday, etc before even considering 401 or training budgets. Unless they really have a reason to want to pay you more it doesn't make sense to pay you the same they are paying the temp agency as they would just lose money that way.

bhcs2014

As another poster said it should depend on how you perform while a temp

bridgestone

mxmaniac wrote: »

Can anyone elaborate on this? Why does hiring a perm involve a huge cost? I could understand costs associated with training and stuff like that, but those costs apply to temps as well. I could also understand if it was a cushy company that offers severance pays, retirement options, etc, but so many companies don't offer that stuff. So what makes a perm different?

I've often never really understood the logistics of why companies want to hire temps, or go through staffing agencies in general. It would be one thing if workers were hard to find, and the company didn't want to waste time. But the situation the economy is in right now, where there are so many people looking for work, and so many people fighting for positions, why use a temp agency at all and pay them an extra 33% or whatever, why not just hire employees themself? Even if they only want temp work, why not just hire people as temp or seasonal workers, and not use a staffing agency?

Maybe others can chip in but this is how it was put to me when I worked for a Fortune 500 company. They told me there was huge up-front cost in hiring someone as a perm.


Actually, I see it the other way to you. I've never understood why companies want to hire perms. As perms can give a month's notice anyway, why hire them? You're not really getting anything in the way of loyalty, especially in IT where it is common to move every one to two years (I actually look at people who have been somewhere for 5 years in IT negatively, as it will be sheer luck if they have managed to keep up with technology from the standpoint of a single firm). And you can be very flexible with temps, hiring and firing as soon as you need a person or don't need them anymore.

I think a big part of the reason to hire temps is to get the agency to handle your recruitment i.e. screening etc., for you instead of waiting for your HR department to do it. Plus, you can interview less and waste less time with the inevitable fools who will try their chance.

I know a lot of employers who constantly hire temps for their IT Support. The only real negative for them is that when they get someone good, they're unable to offer them a decent perm salary (this is quite common i.e. the temp rate paying better than the perm salary) and so they lose some really good people.

bridgestone

100k wrote: »

I am on a temp to perm I always thought you would get a raise when you went Perm. Lame

It would be nice but why would that be? Companies don't reward employees for no reason.

But as mentioned, if you've done the temp part successfully and they say "we want you to go perm" then you're in a massive bargaining position on pay, at least I would say you can demand the max that they can offer from their salary range.

e.g. if the job offers 30-35k then you'll nail 35k.

Whereas if you were applying for a perm job generally then often they don't like to quote the salary upfront and they'll end up offering most candidates somewhere in the middle.

Companies seem less likely to chance it on pay if they have already seen that you're an effective performer in the workplace.

210mike

mxmaniac wrote: »

Can anyone elaborate on this? Why does hiring a perm involve a huge cost? I could understand costs associated with training and stuff like that, but those costs apply to temps as well. I could also understand if it was a cushy company that offers severance pays, retirement options, etc, but so many companies don't offer that stuff. So what makes a perm different?

I've often never really understood the logistics of why companies want to hire temps, or go through staffing agencies in general. It would be one thing if workers were hard to find, and the company didn't want to waste time. But the situation the economy is in right now, where there are so many people looking for work, and so many people fighting for positions, why use a temp agency at all and pay them an extra 33% or whatever, why not just hire employees themself? Even if they only want temp work, why not just hire people as temp or seasonal workers, and not use a staffing agency?

I'll try to address your questions from the business side of things, as we hire quite a few contractors for various reasons.

Why does hiring perm involve a huge cost?
Hiring a Full Time Employee (FTE) directly doesn't always involve a huge upfront cost, but hiring someone with the assistance of a recruiting/staffing firm can be expensive. I believe that is what the previous poster is referring to. A recruiting firm trying to fill specialized roles can command a large fee from the company as a 'finders fee'. It's not uncommon to see 6 months salary as the fee. If you're hiring a specialized programmer in Silicon Valley, that can easily be 85,000 or more. If you want to convert a contractor to a FTE, there is usually some language in the contract specifiying what the cost of that is. It's often pro-rated over a period of time. 0-90 days may be 50% of annual salary, 90 -150 days 35%, etc.

I've often never really understood the logistics of why companies want to hire temps, or go through staffing agencies in general.
There are several reasons to hire temps from a business standpoint.

1- Our internal HR departments are not really equipped to handle the activities the staffing agency takes care of for us. The staffing agency handles all the recruiting, advertising, initial screenings, background checks etc. Our HR department is not large enough to handle this on an ongoing basis. It is worth the premium the staffing agency charges for them to handle these things.

2- Easier to get rid of. Yes, this is a business decision. Things get slow, or a project gets cancelled it's really easy to get rid of the contractors as they don't technically work for the company. They work for the staffing firm, and are assigned by them to do work for us. No severance packages, no unemployment claims, no lawsuits.

3- From a financial perspective contractors are Operational Expenses (OpEx), while adding FTE heads affects long term budget planning. We use a lot of contractors for short 6 month gigs, especially when doing specialized system upgrades (SAP, Oracle, Exchange Migration). OpEx can fluctuate year to year, FTE budgeting can be hard to get approved. If we need 2 million to pay for contractors for a 6 month project... no problem. Adding 2 million worth of FTE payroll? Forget it.

4- You just need the help for a short period of time. We acquired a company last year and we brought on 4 additional help desk people to be onsite for 2 weeks during the transition period to help out. We only needed them for 2 weeks, so we had a staffing firm screen some candidates and we selected 4 of them for the 2 week project. Once the transition period was over we didn't need them anymore. Staffing firms give you that flexibility, in turn, they charge a premium on the contractors hourly wage.

It would be one thing if workers were hard to find, and the company didn't want to waste time. But the situation the economy is in right now, where there are so many people looking for work, and so many people fighting for positions, why use a temp agency at all and pay them an extra 33% or whatever, why not just hire employees themself?

This really isn't true at all, especially in the highly skilled IT sector. It's true there are a lot of people looking for work, but they're not people with highly skilled IT backgrounds. We have a lot of positions we just can't fill, or if we can we would have to overpay ridiculous amounts of money. I work with some Sr. Level Java programmers and they're basically turning down job offers every week. Skilled systems administrators, especially in Linux, get snapped up as soon as they hit the market. The entry level market is tough, but for really skilled positions, they can't be filled fast enough.

As for the temp agency's, I covered most if it before... temps give you flexibility. If you need to "lay off" 50 temps, you make a phone call and the staffing firm has to deal with it. It's much easier for the company to deal with than hiring 50 FTE's and then laying them off and all the associated HR and Legal headaches that come with it. They can also be used as a 'trial run' in some environments. Some places it's really hard to be fired after you finish your probation period, by having the person be a contractor for 90 days you can get a feel for the work they do and give yourself an easy out if it's not working out. Honestly the 33% premium that the staffing firm charges is money well spent.

100k wrote: »

I am on a temp to perm I always thought you would get a raise when you went Perm. Lame

Your overall compensation usually does go up. You might not make more hourly, but the cost of that health insurance plan, vacation and sick days, paid holidays, etc all adds up.

My work covers 80% of my companies very nice PPO medical plan, the medical insurance plan costs almost 20,000 dollars a year, of which I probably put in a little less than 5K pre-tax. That 15,000 dollars the company is kicking in for medical insurance is very real compensations. It's not cash that shows up on your paycheck, but it's still compensation. Same for the 4 weeks of vacation I get, or 8 sick days I can take. That has a dollar value associated with it. There is a lot more to your compensation than just cash.

GailJohnson

It my experience I have taken a reduction in pay when I've gone perm. I have had four jobs that I have gone temp to perm and in three of them I took a reduction of salary--for me:

Job 1 - $4.85 to $5.05
Job 2 - $7.00 to $6.75
Job 3 - $8.85 to $8.00
Job 4 - $10.00 to $9.36

I worked a job where I was getting $7.95 and hour. We would hire temps who were getting $9, $9.50 and $10 an hour doing the same work I did. In most cases I have earned less when I was hired.

GailJohnson

For a large company hiring a temp can be a cost saver. The temp does not get benefits--no insurance, no sick leave, no vacation, no holidays, no pension. Also the company doesn't have to spend time calculating the paycheck. It gets the bill and pays it.