QUESTION: Hi Mike, I received the following email from a client that I know really well and just placed somebody with him who started in October, and have already gotten paid. Last week we initiated another search for this individual. Although the first guy resigned well outside of our guarantee and the second guy is ramping up nicely, I am not sure how to help him. Perhaps I could provide some flexibility on the next search. My fee policy is a 60-day replacement, and the client is clearly outside of the guarantee period. What would you do in this situation? – Bob
The email reads:
Hey Bob, New Hire just resigned today and today is his last day. I have got to ask, can you do anything from a fee perspective? He only lasted seven months and did not sell anything. My CFO is on me about this, as you can imagine with a $30K fee that did not result in any sales and/or new relationships of any kind.
ANSWER: Here is the deal, one, obviously the client is not entitled to everything. Since this is a client, I have a little bit of background information: The client and the recruiter have worked together for a number of years at a couple of different companies, so there is a little bit of history there. This was also a contingency placement. Generally, the key thing in this line is the CFO is asking what you can do for me, meaning he has got to be able to do something. In this situation, I do not want to go back and tell the client what I can or cannot do.
Here is one thing we need to know as recruiters. We look at guarantees like we are the Maytag repairman, and we made the product in our factory. Our service is finding and identifying talent. The client’s responsibility is taking responsibility for the hire, the leadership, the management, the coaching, the setting and managing of expectations, the accountability, etc. of the employee. When that new employee does not meet expectations or leaves, the client comes back to us asking if we are responsible in some way, without them knowing it.
Based on the information for this specific scenario, here is what I would do, I would call the client back, and empathically say: “Mr./Ms. Hiring Manager, that is terrible that he left you. What did I do to contribute to him not selling and leaving?”
Then just be quiet until they answer.
Then they will say along the lines of “I know it is not your fault, but is there something you can do?”
From here I would open up the discussion to past searches where I submitted candidates, but they hired someone either through another recruiter or an internal referral. The point of bringing up this topic is to illustrate how I brought them great candidates, none of which were hired, which means I was not paid for that work. This is not meant to be adversarial, it is simply acknowledgment that I even though I delivered great candidates, I was not entitled to get paid on that on that search. I may also propose adding a management fee to keep that new hire accountable or receive a bonus if the candidate stays for more than one year.
At this point I want the client to understand that what we are talking about is a risk. That conversation may sound like this: “In this relationship, Mr. Client, I am taking on all the risk. You have been very fair with me, and have paid the fee, but you now want to hold me accountable for the downside. Does that seem fair?”
If they want to alter the arrangement to add money upfront, or to add on a bonus, we can talk about that. But in this situation, I want to set it up that way with the client defending his position with us educating him through asking the client questions, not making statements. The mistake most recruiters make is they defend their position. They go in with a series of statements, and they just tick off the client.
You have to really read the reaction because every client is different. I have had really good clients hold their ground. I have had really good clients say, “You know, I never thought of it like that, Mike. Those are good points. You know what, you have been more than fair with us.”
But if I sense the client is still wanting more, and in this situation, it is the CFO, through the hiring manager, after laying down all the groundwork as mentioned above, I would ask, “Well, what do you think is fair?”
Sometimes they might say, “Can you take like 10% off?” and not 10 points, but on like a $30K fee, $3,000. If it is something like that, “I would say, look, here is what I will do, on the next search I work, I will give you a $3,000 credit that will act as a retainer on that search. Now, if I do not fill the position, but I provide you three candidates, and you fill it internally, the credit goes away.”
I do not want to give credit to an existing placement that I have already invoiced. I want to use the credit as leverage to guarantee me future work. It is the best way to always handle the situation. Once the client agrees to this arrangement, be very careful that you put this all in writing. Because a lot of times, what I see in this email is my CFO is on me about this. He has got to have something to bring back to his CFO to make him look good in the situation.
Those are great situations. This happens once in a while where people want to creep outside of the guarantee. It is one thing if somebody quits on day 61 on a 60-day guarantee, but when seven months in contingency, not retained, I am going to put up a little more of a fight, but the fight is going to be with me asking questions.
That is a really good question.
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