For most of this book, I speak from the perspective of\nworking for a consulting firm, not a staffing agency. A consulting firm usually\nhires, trains and invests in employees like any other company, while staffing\nagencies gear towards independent contractors and temporary staffing. A lot of\nvaluable lessons in this book will also apply to the independent consultant. My\nexperiences have not taken me down the solo consultant path, I wanted to avoid\nunfair assumptions. <\/p>\n\n\n\n
A firm will hire you at a salary based on your skills,\neducation and experience. The compensation structure is like any other job. You\nget paid every two weeks, with taxes and fees taken out of your paycheck and,\nif you are lucky, you make a bonus from time to time. This is the cost the firm\nincurs to hire an employee and is lovingly referred to as \u201cemployee burden\u201d in\ncompany metrics.<\/p>\n\n\n\n
The firm will staff its consultants on a client project.\nThis is where the consultants get assigned to one of the many projects they\nhave been contracted to deliver. As a member of this project team, the firm is\n\u201cbilling you out\u201d at a certain rate per hour. This dollar amount, which varies\nbased on the role, is collected at some cadence, usually monthly, when the firm\ninvoices the client for the time and expenses billed in that timeframe.<\/p>\n\n\n\n
All that cash collected in billing goes directly to the firm.\nIt is this income that drives salary and bonuses, benefits, and perk as well as\ninvestment into employees and overall growth.<\/p>\n\n\n\n
The\nPlumber and the Leaky Pipe<\/p>\n\n\n\n
There is a classic\nstory that really hits home the point of why consultants are necessary and why\nthey can charge the rates they do. <\/em><\/p>\n\n\n\n There once was a man\nwith a leaky pipe in his home. He attempted to repair the leak but could not\nfigure out the solution, so he looked up a list of plumbers. He called the\ncheapest one first. The first plumber came by and after an hour of trying to\nsolve the issue and failing, he charged the man fifty dollars for this time,\napologized and left. The second cheapest plumber was then called. He also spent\nan hour looking for a resolution to solve the issue to no avail. He charged the\nman seventy-five dollars for this time, apologized and left. Frustrated, the\nman called the highest reviewed plumber over to his house. The new plumber\nshowed up and listened to the man describe the issue. He then pulled out a\nwrench, opened a cabinet and tightened one bolt all within five minutes. The\nleak immediately stopped. <\/em><\/p>\n\n\n\n The plumber then\nturned to the man as said, \u201cThat will be two hundred and fifty dollars\u201d. <\/em><\/p>\n\n\n\n The man was appalled.\n\u201cAll you did was tighten one bolt? How can you charge that much?\u201d.<\/em><\/p>\n\n\n\n