How to Avoid a Credit on a Replacement

QUESTION: I have a client that will consistently make multiple placements who had a concern with a candidate we placed and asked that we send our guarantee for this one person.  We send them the guarantee on a one-time basis without increasing their fee.  So the client did not feel obligated to end the employment prematurely without giving the candidate an opportunity to rectify their shortcomings.  The candidate remained employed beyond the new extended guarantee period and voluntarily resigned 10 days beyond the extended guarantee.  Client now wants to know if we would be willing to discount our fees since they had reservations about the candidate all along.  My position is that we went above and beyond what were contractually obligated for.

What is a nice way to remind our clients that the additional compromises are not mutually fair and equitable?  – Tom, Denver, CO

ANSWER: These situations are never easy and I agree with you 100%. When you extend a guarantee, say from 30 to 60 days and then the person leaves in 70 days or even 80 days, well it is only 20 days after.  No, it is really 50 or 60 days after the guarantee.

Here is what I would do is on the replacement, in order to avoid this to becoming a credit.  I am going to make this number up just because I can do the math real easy.  Let us say you have a 25% fee agreement and let us say the position pays $100,000.  That would be a $25K fee.  I would say to the client that I am going to treat this like a retained position.

I give the client a $5,000 credit on this position which will be the retainer which they do not have to write me the check for.  So we will go out, we will find this person, we will replace them under our regular guarantee.  I would even put this in writing, as our reminder our normal guarantee period is ___.  You are not going extend this one because it is like extending two guarantees.  You will discount it and maybe you will have to negotiate this amount a little, but $5,000, $6,000, or $7,000 is okay for me as a retainer against this position.  If the client fills the position through alternate means or cancels it, just like a retainer, they lose it.

If you work your butt off on that to find a replacement and then the client hires somebody internally or froze the position, now we want that $7,000 credit again.  Nope.  You have used it.  That is a happy compromise.  A lot of times I found my clients were very happy with that.  It sounds like they work with you and are fairly reasonable.  They are going to be happy to get the discount.

I want to remind them just as you put here very well in your note that you owe them nothing.  You already went above and beyond the call.  So a win-win scenario is for you to fill this you have to redo the search.  It is like starting over.  Normally you would have paid me ___, but I will charge X minus ____ and I am going to use that amount as a theoretical credit in retainer against this replacement position only.  What I found is my clients that I did that for were usually pretty happy.

On the flip side, anything you do for them, they know they are pushing the envelope.  They kind of know they are pushing the envelope.  When you show that you are reasonable, they do remember it.  By discounting it in the way that I outlined I got a ton of goodwill.