I receive many comments from staffing owners asking how to maintain their businesses gross profit when they receive significant workers compensation rate increases. Of course they can shop for a new policy with a Professional Employer Organization (PEO,) but for some, getting lower rates through a new policy just is not possible; especially if their experience mods are too high.
Here are my suggestions for maintaining your gross profit that worked well with my national staffing company, as well as with my current staffing consulting clients.
1. Explain and provide back up support to your clients about the hardened workers compensation market using some of the articles from Work Comp Staffing Solutionss previous blogs. https://StaffingCompSolutions.com/blog/
2. Negotiate increases with clients so they go into affect over a few months. For example on a code 9410, where your comp rate was 5 %, and is now 8 %, ask the client to accept a 3 point increase over 3-4 months instead of at one time.
3. Try not to make sudden rate increases with a client. Study which codes are most affecting your Gross Profit and negotiate with your client for those rates only. They will appreciate that you are willing not to raise rates across the board.
4. Communicate rate increases in person to your larger clients (or all your clients.) Buy your client lunch or coffee when chatting about this sensitive issue. Sending out template notices of rate increases can seem cold and usually alienates the client. Poor for relationship building!
5. As a last resort, be more creative with your temporaries pay in order to maintain margins, yet still get the same productivity. For example have a “starter” rate for new temporaries that may be .50 less than the “experience ” rate. This may help soften the impact to your total Gross Profit– depending on your turnover.
Remember to always be prospecting for new clients who may be more open to your new higher rates- especially if you can deliver superior service and value. Many of my staffing consulting clients use social media tools for this.
As we all know, the staffing industry is just getting its sea legs back after the rough economic storm called the Great Recession.
I have many more suggestions that I regularly share with my consulting clients to help their gross profits.
Please feel free to contact me at davidstaffing@gmail.com or visit our web site consulting page at https://StaffingCompSolutions.com/Work Comp Staffing Solutions-staffing-consulting-services/
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
California Staffing Association Member
Exclusive PEO Broker for the United States Staffing Association
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