Seven Key Attributes to Look For in a CWM Partner
Are you looking for a CWM partner? Check out these seven key attributes to look for in a CWM partner.
1. A Full-time Compliance Manager
This is HUGE. After all, when employer risk mitigation is the core focus of a CWM, they’d better have someone with a strong compliance knowledge base in the employment sphere. Employment regulations change frequently and new legislation is constantly being introduced across the country. There’s enough here to justify a full-time job. Thus, any CWM who claims to be an “expert” in the industry will have a dedicated compliance manager – even better if that person has a law degree.
Speaking of law, a CWM with its own general counsel/in-house attorney should be highly preferred. If a contractor or client files a suit of any kind, you want to ensure that there’s someone on the front line to prepare a proper case/rebuttal/settlement.
2. Thorough, Personal On/off-Boarding Process
Contractors are contractors, but first and foremost they’re people. You need to ensure that any CWM you partner with, has a strong customer service culture, that aims to make every on-boarded worker feel comfortable and at ease with the transition. The process should be simple, uncomplicated, and efficient.
The CWM should be available continually to answer any questions that the worker or you/the client may have at any point in the process, and someone should always be reachable by phone. Just as well, if a contract is terminated, the CWM should have a thorough, clear process for off-boarding the worker in any situation – whether the worker is expecting the termination or not – and you should become familiar with what this process is. The CWM should be solution-focused and know how to navigate conflict with individuals, without allowing situations to escalate.
3. Flexible Pay Cycles
Different states and/or cities will have different requirements for how frequently a worker should be paid, so the first thing you want to ensure is that the CWM is 100% compliant with what the requirements are for a given contractor. If the requirement in San Francisco is that an employee should be paid semi-monthly, but the CWM only offers a monthly or bi-weekly pay cycle, that could turn into a major issue if the worker does a bit of research and ends up reporting the CWM – causing problems between you and that contractor (not to mention, you and your client).
Just as well, if the client requires a more frequent pay cycle (say, weekly) than is required by law, the CWM should be flexible to provide that pay cycle. Bear in mind, this may mean that you have to pay for the additional payroll run once or twice per month, but typically those costs are minimal, and shouldn’t have a substantial impact on your profitability, at all.
4. Easy, Direct Access to The Executive Team
There may be times when you need your CWM partner to make an exception on something. Perhaps you need a special payroll run in the middle of the week for an employee. You should have easy, direct access to a decision-maker. Whether it’s the director or officer of the company, you may need to be able to pull rank at times, if you’re being denied such flexibility at the account management level.
Bear in mind that an account manager may be instructed to decline certain requests, and that’s okay. They’re just doing their job. But there should always be the opportunity to discuss an issue with someone at a decision-making level, so from day one; you need to have that person’s direct contact information.
5. Financially Independent
A lot of people don’t think about this but it’s important. The CWM partner you choose should not be highly-leveraged. Meaning, they should not be counting on banks or lines of credit, in order to make payroll for each pay period. There have been highly-publicized cases whereby leveraged CWM companies are thriving one day, and completely out of business the next, because a bank pulled their line of credit, and they couldn’t make payroll without it. Now, this might mean that the best CWM partners don’t offer long net payment terms, and you need to be okay with that.
If you can’t make a 10-day turnaround time on an invoice from your CWM, then you may need to look closer at your own financial situation and determine what you need to do to improve cash flow. If you’re turning over your payroll to a CWM partner, then assuming you were funding your own payroll just fine prior to the transition, you should always be able to cover an invoice within 10 days.
Self-funded companies that offer payment terms beyond 15 days, usually charge an extra percentage point for going past that period on an invoice. So, be prepared to pay invoices quickly with a self-funded CWM partner.
6. Properly Insured
As noted in our “risks” section above, there are a lot of uninsured contingent workers out there. Ultimately, it’s the employer’s responsibility to provide this coverage. Thus, you need to ensure that your CWM partner has sufficient coverage for any type of worker that you may put on their payroll at any given time, including but not limited to General Liability, Umbrella, Professional Indemnity, Aggregate, Errors/Omissions, Property, Auto and Crime Bond.
You should request a sample of the CWM’s insurance certificate before committing to a partnership, to ensure that they’re covered and have sufficient amounts of coverage in place (per the requirements of the client for whom the worker(s) will be performing the work). Workers Compensation is the other big one. This should be included on the certificate.
This can be tricky as some CWMs will attempt to co-insure or have your workers compensation policy remain in place to cover the workers. Run far away from these. This is one form of what is called “piggy-backing”, and for several agencies, has resulted in massive fines and penalties being paid by all participating parties. The CWM partner should have their own workers compensation policy, independent of yours or the client’s.
7. Simple Cost/Pricing Model
The goal in onboarding a worker is to be efficient. You don’t want to have to wait for a pricing evaluation on every contractor that you submit to the CWM partner for onboarding. Thus, the pricing/cost model should be both easy to understand, and easy to apply/implement. Some CWMs will have you submit a full profile on each worker before you’re even provided the price. That’s unnecessary. It’s actually pretty simple.
There are employer costs (payroll taxes, workers comp, liability insurance, etc.), and then there’s a service fee. That’s it. Often, the simplest way to implement these costs, is for the CWM to have a pre-determined rate for a given state or city, that you’re provided in a rate sheet or automated onboarding document prior to, or during the process of onboarding the worker. This is referred to commonly as a “bundled” rate, and makes the onboarding process very transparent and efficient. Now, this doesn’t mean that the cost shouldn’t change by industry.
For example, if you’re putting on IT workers one day, and then wanting to put on a cell tower cable installer the next, you may find substantial differences in the pricing, due to the workers compensation portion of the employer cost being higher for the latter. So, although the pricing may change between types of workers, the pricing model and the way it’s communicated should be consistent, regardless (i.e. bundled).
In light of the risks we’ve laid out here, as well as the key attributes to look for in a strategic partner to manage your back-office, you should now be armed with the information you need to determine what your next organizational steps will be, in eliminating existing and ongoing risks that you may currently be exposed to. While the process may require some substantial research and work upfront, we believe you’ll find it to be a worthwhile endeavor, to ensure that your business is set up to enjoy the many benefits and advantages of contingent workforce engagement for the long haul.