Ryan and Tyler also talked with their wives about their luncheon meetings. Pam couldn’t help but start to comment on how their project could be organized. She thought the initial financing should be equity. Debt could be added when the cash flow became established. But initially the founders needed the flexibility that scheduled debt repayments didn’t provide. Paula, Ryan’s wife, was a senior manager at a staffing firm that specialized in providing labor to manufacturing and warehouse operations. She was concerned that the SFHAX concept of transparent pricing of labor by certified qualification and paying benefits would be a threat to her firm.
Paula’s company faced stiff competition and had only a small number of large corporations that used her firm’s services. These companies usually required terms and wouldn’t always pay when the contract said they should. She had a number of accounts who had 30 day terms in their agreements, but would pay 60 to 90 days late. They always paid eventually, but financing the payroll became hard. By law they must pay their workers on time and the financing costs reduced their profit. Her firm tried to delay paying benefits to as many of their staff as they could, but this resulted in some of the better staffers leaving.
One day a SFHAX representative contacted her and said she would like to come and talk to her firm about how SFHAX could help them. Paula was hesitant she thought of SFHAX as a competitor not an ally. She talked it over with her colleagues and they decided to listen.
The SFHAX representative explained that SFHAX had a membership category called Qualifier Member. Paula's firm could join SFHAX as both a Qualifier Member and an Employer Member. The employees would become Employee Members. That way Paula’s firm can take advantage of SFHAX benefits for both themselves and the people they manage. Paula’s firm would be the Qualifier of the people who in the staffing model would be placed with other Employers. Pam’s firm receives a percentage of every SFHAX labor payment that is associated with the Employee Members they qualify.
One of the major points SFHAX made was that SFHAX handles all the workers’ compensation payments, employer taxes, health insurance, retirement plans of the Employee Member. Pam’s firm no longer needs to finance Employers who don’t pay on time since SFHAX has a strict policy regarding when payments are due. SFHAX does however, direct Employer Members who need terms to the SFHAX banking partners who will work out financing arrangements.
Paula’s firm can concentrate on the human resource function of getting the Employee Members they qualify into the highest and best paid qualifications. The more the Employee Members are paid the more Pan’s firm makes. The incentives are for Qualifier Members to help the Employee Members identify the qualifications in demand by Employer Members and encourage Employee Members to get the training they need to take advantage of the opportunities.
Over time, a Qualifier Member develops a “book” of Employee Members who generate a constant stream of income throughout their career. No more single payments for a placement and then no income after. Steady employment for the Employee Member as they work for various Employer Members over their career means steady income for the Qualifier. A Qualifier can also become a Trainer Member of SFHAX and earn more by teaching how to use the SFHAX tools. They can work with schools, colleges and university guidance counselors and placement officers to recruit new Employee Members at the beginning of their careers, then help them manage their careers and earn a lifetime annuity. Qualifier Member can also set up their own training programs for the qualifications they specialize in and use the SFHAX Training tools to mange their training program.
Paula and her colleagues told the SFHAX representative they would think about it. They needed to talk to their accountant and see if she thought it would make financial sense to join SFHAX. The SFHAX representative said that Paula’s firm can become a Qualifier member and try it out for a few of the workers the firm places and see how the finances work out.
This is ultimately what Paula’s firm did. They found over time that they made at least as much money as they did under the staffing model, but the income stream was more constant and they had less aggravation than before. They also found they didn’t have to work as many hours as they did in the past to make the same income. The time reduction came from the efficient SFHAX Labor Exchange which brought Employee and Employer Members together without the seemingly endless communication it took to place workers under the old staffing system model.
Copyright 2014-2020 Richard A. Cornell, PE