QUESTION: I have heard of recruiters being paid upfront to cover their time and costs for searching and then paid the balance when someone was hired. The question is, how do you do this, and what you have multiple roles for the same client?
ANSWER: There are two great questions here. Yes it is possible to get money upfront, it happens all the time. My business went from all contingency to 97% money upfront, retained. When I used to work retained, at least as it related to my firm and to the way we teach our clients, it is not for the most part a third upfront, a third on short listed, a third on fulfillment. Ours was about a third upfront, two thirds on fulfillment. I sold that as we still have skin in the game, but not guaranteeing anything. We still have to make the placement.
Companies will never pay a retainer to help you cover your expenses because they do not care about your expenses. What companies care about is getting a position filled, especially one that they have been challenged with. One of the things they need to be crystal clear on is, what are the consequences for the position remaining open? What is it costing them in money and time and frustration wise? Do they want to wait randomly for 90 days for a bunch of contingency recruiters set at 17% to fill it or do they want to have it filled is six weeks? I knew what our performance metrics were and was confident that we could fill the position within 6 weeks. I would then explain in explicit detail how we were going to do it.
People buy certainty when they pay for retainers. There is a term that I love a friend of mine, Jon Bartos, uses a lot, which is Shared Risk.
The value proposition for your client is that you are going to invest time and money on their critical need. Effectively selling retained search consists of a series of highly qualified diagnostic questions and then a very specific prescription on how you are going to fill it. From there you make the proposal of retained or money upfront search. That proposal would explain that for us to execute on this search, our fee is 28.6% with $7,500 upfront. The $7,500 will be completely applied toward the entire fee when it is fulfilled. That investment in the search allows us to fully unleash our research team, fully engage my team. If your research team is your dog, because the dog makes you feel secure, whatever, if you are your research team, that is how you present it. That is basically how you present it.
If you have multiple roles for the same company, let us say they give you three openings. Most likely they would be for the same type of role, for example they need three widget makers in New York City. All three openings pretty much the same profiles, same location, now I need a bigger list to recruit from but I am leveraging some of my time. What I have done with some of those is I will say, look, you know, it is $7,500 for a retainer. I will just charge you a retainer on two of them, and I will take the retainer out of position number of two and number three.
Note on purpose, the first one we will charge the 28.6% for, the second one will be 28.6% less $7,500, and the third one will be 28.6% less $7,500. The likelihood of not filling one of those is greatest with the third one, so in case they do not fill all three, in case they cancel the opening, in case they fill it with somebody that they find through an employee referral. That is how you protect yourself.
However, if they searches are related, such as a sales positions, but they are located in New York, Chicago, and Los Angeles. These are three distinct searches that require three full research lists. You are not really leveraging your work or your time in those because each one is a fresh list. The conversation would be the same, where you explain that it is going to be $7,500 times three, so I am going to invoice you $22,500 and we will take $7,500 off of each one of those searches.
Fantastic question. Thank you for that.
P.S. Whenever you’re ready… here are 4 ways I can help you grow your recruitment business:
1. Grab a free copy of my Retainer Blueprint
It’s the exact, step-by-step process of getting clients to give you money upfront. Click Here.
2. Join the Recruiter Think Tank and connect with firm owners who are scaling too
It’s our Facebook community where smart recruiters learn to make more money and get more freedom.
3. Join me at our next event
3x a year, I run a 3-day virtual intensive, sharing the 9 key areas that drive a 7-figure search firm. Click here to check out the dates of our upcoming event:
4. Work with me and my team privately
And if you ever want to get some 1:1 help, we can jump on the phone for a quick call, and brainstorm how to get you more leads, more placements, and more time.