You’ve presented the perfect candidate, and interviews have taken place. An offer is about to be made (and probably accepted) when you get the call from an HR representative who tells you they won’t pay you a fee because (pick one):

- The candidate was already in our database.
- We (would have, could have) found the candidate on a job board.
- Our hiring manager already knows this candidate.
- Another recruiter previously sent the résumé.
- We’re hiring the candidate for a different job.
- The time lag between the referral and the hire was too long.
- We didn’t have a signed agreement.

Many of us have been haunted by one (or more) of the above scenarios, since they are the top seven reasons cited for fee avoidance. As one reader told us, “This news was about as welcome as a whoopee cushion in a church service.”

When we queried folks on both sides of the spectrum (HRs and TPRs) the answers were vastly different. It is not likely to change until everyone in the hiring process agrees to some standard, and the odds of that happening are about as likely as Ralph Nader becoming our next President. The only antidote is to have a signed agreement with the employer before you submit any candidates. And many readers are now requiring a signed agreement with the candidate as well. We tend to get so euphoric when a company tells us about their urgent need that we refer candidates without a written agreement. Most, if not all, of the horror stories we hear wouldn’t have happened if a contract had been signed.

Let’s look at some of these excuses:

The candidate was already in our database.

The operative question should be “How did the candidate get there?” Were they direct respondents to a company’s website or ad, referred by another third-party recruiter, the result of an employee referral, or just one of hundreds (or thousands) of résumés down-loaded from a cybersource?

This is one of the downsides to the Internet. Companies that have paid big bucks to access the database/job board world are prone to harvest as many folks as they can. All the filters in the universe won’t prevent useless candidates from getting in. They can, however, screen out the very people they may want.

If a recruiter brings a candidate to the attention of the hirer, even if the candidate was previously found in the database by the company, the recruiter should be paid for the recommendation. In the real world, no in-house recruiters want to admit that they blew it.

As long ago as 1996, Gary Knisely of Johnson Smith and Knisely said, “The search business is not about names. It’s about understanding your client’s business from a senior management perspective – as an insider, not an outsider.”

We (would have, could have) found the candidate on a job board.

And a thousand monkeys typing on a thousand typewriters will sooner or later re-create the Iliad and the Odyssey.

Just because they’re in the database or on a job board, that doesn’t mean they’ve ever been noticed (much less contacted) by the company. They’re probably also in a phone book somewhere, but that doesn’t qualify them as an applicant or candidate immune from a recruiter’s fee.

Should a recruiter who harvests thousands of résumés from the Internet, then sends them to thousands of potential hiring companies, deserve a fee if one of these shotgun efforts results in a hire? Absent any intervening events, a fee is probably due. After all, the company would never have known about the candidate even if the methodology used to get that information to them is less than professional.

Should a recruiter who refers a candidate with the candidate’s knowledge and authorization be prohibited from collecting a fee if the company uses that referral to go back and find the résumé in their database, even if they never previously found it in their database or acted on it? That’s a problem we hear of on almost a daily basis. I wish there was a definitive answer to this growing predicament, but there probably isn’t. Unless there is a signed agreement between the parties, you are probably at the mercy of the hiring company to do what is right. Having a résumé in a massive database that does not pop up until prompted by a recruiter should be treated as though that database résumé never existed, and the recruiter should be paid the fee. To do otherwise is just unwarranted and borders on dishonesty. But no hirer wants to pay a fee, and they sure don’t want their own ineptitude pointed out to them. So you can expect this to be an ongoing problem.

If recruiters were paid just for supplying a name, the most valuable tool might be the phone book. We are paid for getting the right candidate to say yes. Trainer Larry Nobles told our readers, “When I ask recruiters what our real worth is to our clients, I generally get answers like finding candidates, screening candidates and referring the top ones, etc. We seem to think of ourselves as an old Yenta who is constantly trying to make the right match. However, our worth to the client is not at the beginning of the search but at the end!

“If we recruited 50 candidates for the position and screened them down to 10 to present to our client, and three were interviewed, two offers were made, and none accepted, then of what worth are we? None? No, worse than that! We just cost everyone a lot of time and money. Our client loses money every day that job goes undone, so our worth is not to initially find candidates. It is to eventually get the best one to go to work for our client. In fact, one VP told me that my worth wasn’t that I could find good candidates for him, but that I could help him hire them.”

And just because a candidate resides in the company’s database, that doesn’t mean a hiring company will ever find them. The following true story from one of our readers is illustrative in this context:

Roy M. ran a large firm (almost 1,000 employees), with hundreds of thousands of résumés stored in his HR department’s database. Roy’s firm had a critical opening that cried out to be filled because the vacancy was costing his firm several thousand dollars a day in lost business and a major potential contract depended upon having this unusual skill in house. The previous employee with this particular knowledge had been unexpectedly and permanently disabled. The HR staff had done their due diligence by performing all the keyword searches of their database’s residents, to no avail. The job had been advertised extensively and was posted on several job boards as well as the company website. HR had pleaded with employees to take advantage of the generous referral bonus the firm offered, but no suitable candidates had been surfaced. They didn’t want to pay a fee, but Roy was screaming at them every day to get this job filled, so they gave the opening to several search professionals, including me. After all, they were desperate, and the shouting from above was getting louder with every passing day.

I was one of the “lucky” search firms who were given the opening. This was an “anti-agency” firm, one with whom I had tried unsuccessfully to do business for several years, so I was surprised to hear from them. The closest I had previously come to doing business with them was when they sent me one of those ridiculous third-party recruiter agreements I refused to sign. They sent it again after calling me about this opening, and I still refused to sign it.

Serendipitously, I happened to have the perfect person for the job. I called the candidate, who confirmed the fact that he was absolutely ideal for the position. His résumé did not mention the vital experience needed for this particular job because it was prepared with a different opening in mind, but through extensive interviewing I had uncovered the fact that he had experience that exactly matched the needs of the company.

I mentioned the job and the company to him, and he was excited about putting his oar in the water. However, about six months earlier he had submitted his résumé directly to my “client” for a different job in a different department, and he had received a “Dear John” letter. He had also put his résumé on several Internet job boards, but none of the experience necessary for this job appeared in his résumé because he considered it to be peripheral in nature, it existed two jobs ago, and he was told to be brief in his submissions.

I rewrote his résumé to reflect that portion of his experience that mirrored the job specification. No hyperbole. No lies. No fudging. I checked his references to verify what he told me. Then I called the HR person who had first contacted me. I said, “I have good news and bad news. The good news is that I have a candidate who is a perfect fit for your critical job and has a definite interest in working for your company. You may or may not want to turn this into a conference call with the hiring manager. That’s up to you based on what I’m about to tell you.

“Here’s the not-so-good news. This person applied directly to your company several months ago for a different job, and you turned him down. Also, this person’s résumé is on the Internet in several places. Even though I’m sure he’s in your database, you will never ever find him. He can be on your payroll one week from today, but before I release his name and set up the personal interview, you must agree in writing to pay our full fee and to accept all of our normal terms. I am aware of your company’s predicament and the fact that your firm loathes doing business with people like me. I am also aware that this will probably be the last time I’ll ever do business with you. If you are agreeable to these conditions, I will email his résumé to you without his contact information or name, along with our service agreement. Within 24 hours, you must email your acceptance of our agreement to me, at which time I will release his name and arrange for the interview. If I don’t hear from you within 24 hours, my next contact will be with Roy. Check your email within the next half hour to see his résumé, and I await your return communication.”

Within an hour and a half, I received a return email confirming our agreement, and an interview was arranged for the following afternoon. After a four-hour interview session with everyone involved in the hiring loop, an offer was made and accepted. One week later I received a check for $33,000.

This is a job for which I would never have considered doing an actual search because it was a needle-in-a-haystack, time-consuming chance to almost guarantee failure. Nor would I have done business with this company under their terms, no matter how much I might have needed the business. The fact that the appropriate candidate was already in my inventory and that we had discussed this rare skill was pure luck.

Our hiring manager already knows this candidate.

How many times have you heard a variation of “Hey, I know this guy” from an employer attempting to avoid paying a fee for someone you refer? Or “Our sales manager already knows this guy,” “Our engineering manager worked with her at another company,” or “We knew about him already.”

Does the fact that someone in a hiring company knows or knows about your candidate shield them from the liability to pay a fee? Judging by the calls we get, the answer is a resounding YES from the hirer side. Unfortunately, knowing about a person and knowing that he or she is willing to consider a new job are often far different animals.

The scenario almost always happens this way: A candidate is referred to a company. Somewhere in the review loop, someone says, “Hey, I know that guy.” Often the recruiter is told there is no interest and then, mysteriously, the person is hired through a personal contact made by the person within the company who knows him. How does a recruiter still get paid?

In the absence of a direct declaration of candidacy by the candidate having recently submitted a résumé for the job in question, a fee is definitely due to a recruiter who brings the candidacy to the attention of the hiring company. Jogging an employer’s memory about a bygone acquaintanceship should not negate the obligation to pay the fee.

The obligation to pay for the referral comes with more than just mentioning a name of a potential employee. Truth be told, probably every new employee previously knew someone within the company they joined.

If knowing (or knowing about) someone allowed a hirer to disaffirm the payment of a fee, no fee for a senior-level search would ever have to be paid since these high-visibility openings are almost always filled by individuals who are regularly in the news or who hobnob at some level with the very people who hire them. The fee is paid because the recruiter is able to convert the person from an acquaintance to an interested and active candidate.

The key words are “proximate cause,” “substantial cause,” “efficient procuring cause,” or even the shorthand nicknamed “but for” terminology.

In olden days, when “applicants” sat across the desk from “counselors” and signed a copy of the “send-out slip” before going on an interview, there was little question as to the source of the referral. Nowadays, when a recruiter in Peoria might arrange for a referral of a San Mateo candidate to a company in Flushing, getting a “send-out signature” is a little tougher. The paperwork and documentation of the event still occur, but for paper trail file purposes only.

Much of the attendant anguish of the “We already know about this guy” syndrome can be allayed by proper candidate preparation, but even that can confound in these days of faxes, email, and the Internet, when candidate backgrounds can be instantly broadcast to a gaggle of potential hirers, often without the knowledge of the candidate – what we refer to as drive-by shooters.

Another recruiter previously sent the résumé.

This assumes that a fee will be paid – to someone – just not to you. It is known as a Candidate Source Recognition or Candidate Ownership problem and may be the cause of more heartache than any other employer pretext. It is also the excuse that causes employers to, perhaps, be liable for the payment of two fees. Much depends on the written agreements involved.

Many years ago there existed an organization called the Professional Employment Research Council. It was formed as a liaison between HR types and TPRs in an attempt to educate employers on how to work with our industry. It didn’t last long, as it appears that many human resourcers are uneducable, but one good thing that did come out of their efforts was the verbiage regarding who should get paid when duplicate referrals are made. Their solution (which they tried to teach to employers) was to insert the following into all written communications with recruiters:

In case of more than one referral, the source whose referral caused the action leading to the eventual hire will take precedence. No fee will be paid unless the hire was the direct result of interest initiated and stimulated by the agency.

This “stimulation of interest” policy elicited some positive action on the part of many firms. Its use was encouraged with the following attempt at enlightenment:

Any employer who puts that simple phrase into an agreement will eliminate 90% of all the agency fee disputes that they might ever have so long as they require everyone to sign the agreement. They will also eliminate any requirement for logging in or date stamping résumés, which can substantially reduce record keeping expense. Most fee disputes result because one résumé (or phone call) got there first, but another (duplicate from another source) actually stimulated interest and resulted in the hire. Case law and arbitration history clearly favor the “stimulation of interest” method as more equitable than “résumé logging.” In other words, the one that stimulated interest usually wins in court, so why not make that company policy.

Résumé logging or “first contact” as a policy actually invites fee disputes when situations like the following occur: Recruiter A sends in a résumé in July when no opening exists. Recruiter B sends in the same résumé in October when an opening does exist. Both claim a fee. Recruiter A sends in a résumé in July and there is no interest. That same applicant initiates direct contact via an advertisement in October. Recruiter A claims a fee.

Recruiter A, knowing of the “first contact” policy, rushes in a poorly prepared résumé taken over the phone in order to beat out Recruiter B. Recruiter B interviews the applicant and significantly improves the résumé, sending it in a few days later. The second résumé stimulates interest. Both recruiters claim a fee.

Recruiter A sends in a résumé which is logged in and routed to Engineering Manager #1, who puts it in his bottom drawer or his waste basket. Recruiter B sends in a résumé several weeks later which is routed to Engineering Manager #2, who calls Recruiter B with some questions about the candidate and then subsequently hires him. Both recruiters claim a fee.

Note that none of these problems occur when the phrase quoted above is worked into the agreement. Most experienced recruiters actually prefer the stimulation of interest approach because they’ve all had problems with résumé logging and most consider stimulation of interest the only fair way.

Because the scenarios are endless and often exasperating, attorney Jeff Allen recommended scrapping the “causation” frustrations by merely using a calendar date as the benchmark denoting who gets paid. He recommended that the following be put into all of your agreements:

Client shall pay a placement fee to (name of your business) if Client hires or otherwise engages the services of any candidate referred by (name of your business) in any position within one year from the date of the last communication from (name of your business) concerning said candidate. This shall also include direct or indirect referrals by Client of said candidate to any other person or entity within one year. Said fee shall be paid by Client regardless of the claim of or obligation to any other party regarding a placement fee for said candidate.

Short, sweet, and contractually unassailable. While it might not be the fairest method to determine who gets the fee, it puts the “causation” issue in the back seat.

We’re hiring the candidate for a different job.

“You submitted your candidate for Job A. He didn’t fit that position so we hired your candidate for Job B; therefore we don’t owe you a fee.”

An old standby – in fact, one of the oldest tricks in the book. But it’s still very effective because the placer ties their own hands with the fee schedule.

Changing the “position” is totally within the power of the employer. So you’ll be somewhere between a rock and a hard place unless you use words like:

The fee shall be due if the candidate is engaged to perform services in any capacity as a result of the referral.

“Different” can mean “difficult” if you neglect to use these words. It doesn’t take much to change the job duties so that they appear to be different from the JO. Statistically, this happens over half the time anyway. An employer doesn’t really know what the job will be until it hires someone. If the candidate’s ego will be bruised by a lower title, a different one can always be used. The employer just says you weren’t “engaged” to “perform” a search for that job.

What can you do? Exclude anything in your fee schedule that ties you to a title; and instantly review the actual job at the actual compensation with your still active candidate.

The time lag between the referral and the hire was too long.

“Your referral was nine months ago and we only recognize referrals for six months or less.”

This is one of those clauses we find in almost every placement service agreement (PSA). Companies love to stockpile or warehouse candidates until their referral period is up, then surprisingly, they show up on their payroll with no fee having to be paid. It can happen purposely or because of “hiring freezes” or “position on hold” situations. We know of one of the big CPA firms as well as several software vendors that deliberately wait until Day 366 to make contact with candidates submitted under a one-year fee bounty. Here’s a typical example of the words and music put in the agreement of a Fortune 100 firm:

Notwithstanding any other provision of this agreement, Recruiting Firm will not be entitled to any service fee unless Company retains a candidate within one year from the date Recruiting Firm presented such candidate to Company and such candidate was not previously presented to Company by any other entity. Moreover, if a candidate presented by Recruiting Firm is rejected by Company or rejects an offer made by Company for a position described herein, Recruiting Firm shall receive no fee even if the same candidate is later presented for the same position by another recruiting firm and is thereafter hired by Company.

We didn’t have a signed agreement.

“I know you sent us an agreement to sign, and if we’d agreed to your terms, we would have signed it. Since we didn’t sign it, there is no agreement to pay you a fee for this hire.”

How often have you heard “It’s being reviewed by our legal department” or “The hiring manager hasn’t finished looking it over”?

Attorney Jeff Allen’s Placements & The Law column in our March 2004 issue was entitled “Getting the Employer’s Signature Agreeing to a Full Fee,” in which he spelled out the ABCs of the methodology. In a previous writing, he succinctly explained why:

This excuse is probably the most predictable prestidigitation in the entire bag of HR tricks. You’re the dealer, and you deal the trump card to the employer – a fee schedule (or letter) that has a place for the signature of the hiring authority.

It’s a great idea: Get the employer to sign while the tears are falling. The only thing is, you don’t. You think the JO is so urgent that you start recruiting, presenting, referring, and sending out candidates even before the schedule arrives.

Not much incentive for the employer to sign. Considering that human resourcers and supervisors often don’t have the authority to sign legally binding documents anyway, there’s even less chance you’ll get it back. If you do, it’s probably signed with invisible ink. Still you go on thinking you have a deal – everyone is so nice.

Then one day the tears turn into a smile. The next day the smile turns into a grin. Eventually the grin turns into a chuckle. They play the trump card as they cackle, “If we’d agreed to the fee, we would have signed your fee schedule.” Now it’s your tears that are falling. A little levitation levity makes for lively litigation. Only you’re the loser.

You must not have a place for the hiring authority’s signature on that schedule unless you won’t begin the search without a signed copy. A fax or email authorization is fine. A promise isn’t.

Implying acceptance by the “acceptance of referrals” is a dangerous way to do business. Particularly when you can’t even prove knowledge of the fee. But that’s what you’ll do no matter what this lawyer says.

No matter how agile your lawyer, some states require that fee agreements be in writing. There will be more states following suit. And some states require that you be licensed or “registered” to be eligible to collect a fee from a client in that state regardless of a signed agreement. If you think that getting an agreement signed before working a JO is just a minor inconvenience, perhaps you’re in the wrong profession.

I’m on my way to the Pinnacle Society conference in New Orleans – 75 of the top recruiters in the United States. We meet every six months at various locations throughout the world. I always get all kinds of great ideas at these meetings and they’re fun, too. I’ll share the best of the best ideas with you next month.

I have been a member of the Pinnacle Society for over a dozen years now, and I have observed some things about the members that might help you. See how many of these success habits you can make your own. I call them:

Pinnacle Philosophies

In my first article on this subject (TFL, 9/07), I outlined a historical convergence of four problems facing healthcare employers today. They are: declining revenues from reimbursement cuts (federal, state, and third-party payers); shortages of skilled professionals; inadequate services; and misconduct by recruiters. Hanging over it all is the political uncertainty created by the looming 2008 presidential elections – and complicating everything is the relative scope of these problems.

As I described these symptoms, I also promised to reveal an antidote, or at least the proper mixture of pharmacological agents required to bring a healthcare recruiting operation back to life. Don’t you love those puns?

All through September, I could hear the faint whispers of those readers who have always been bearish on the healthcare industry saying, “I knew it; the healthcare industry is flat while other industries thrive.” Well, I may have given the bears a month to gloat, but this bull isn’t about to miss a good fight. I am here to tell you that the healthcare industry is as strong, if not stronger, as it’s ever been. If you have been feeling the sting of missed placements or declining momentum in your health-care recruiting operation, maybe it’s because you’re part of the problem.

If that hurt your feelings, I’m not sorry. It’s time someone started shooting straight about what’s going on, and if you’re not part of the solution, you’re part of the problem.

While you were reading the last article, you may have thought I was overly hard on recruiters. Well, I’m not here to give slackers a bye, but to give the most committed healthcare recruiters a sense of reality.

For more than two decades I have watched healthcare cycle through declining revenues from reimbursement cuts (federal, state, and third-party payers) and shortages of skilled professionals, while getting all wrapped up in the uncertainty of the geo-political course as a result of a presidential election. It’s just the way the industry works. It’s the fuel the industry runs on. And anyone who’s been in this industry for any length of time at all knows this. I like to call it growing pains. The more pain coming from these areas, the more rapid the growth occurring in the industry. So the first lesson is: if you’re planning to make a living in this industry, get used to them because they’re not going away.

But why has this industry all of a sudden taken this opportunity to focus on recruiters as scapegoats? To better explain, let me paint a picture for you. Let’s say you’re driving down the road and notice your car is running low on gasoline. As you pull into a gas station, people start running up to your car trying to sell you diesel fuel. They chase you all the way up to the gas pumps, telling you that your car will run just fine on diesel fuel. You notice car after car leaving the gas pumps running just fine on their diesel fuel. On top of this, they are even willing to sell this diesel fuel to you for half the going rate of gasoline. You are skeptical at first, but decide to give it a try. As you drive off, the diesel pusher waves and smiles like nothing’s wrong. What do you suppose is going to happen to you and all those other gasoline-powered cars in about two or three miles? Your engines will start blowing smoke, then stall, leaving all of you stranded beside the highway. Unfortunately for all those people victimized by these diesel pushers, they have learned a valuable lesson not soon forgotten. Could this ever happen to you? No way, you say.

Well, this is what’s going on in recruiting these days in healthcare. Over the past few years, inexperienced recruiters have flooded the market, peddling whatever they could to make money. Without regard to what the market needed, they pushed these candidates onto the market at any price. Unfortunately, many employers fell victim to the wrong candidates, candidates fell victim to the wrong job orders, and recruiting (in general) fell victim to a loss in credibility.

What most newbie healthcare recruiters don’t know is that there’s a finite number of employers in healthcare. That number is very small compared to other industries. At last count, nationally we have fewer than 6,000 hospitals. And although there are many more specialty clinics and doctors’ practices, bad news spreads like wildfire in healthcare. Everything flows back and forth through the hospitals. You do something to hospitals and the entire industry will know about it in short order. So to go back to our story, the diesel pushers started selling the wrong fuel for gasoline-powered cars and pretty soon, even if you actually needed diesel fuel, you wouldn’t buy it from someone off the street.

This one point has changed healthcare recruiting forever. At the core of this problem isn’t price or value or competence, but rather the delivery of a conscientious product in the most professional way possible. I’m not saying that price, value, and competence have no role – they do. But if brain surgeons did their job the way recruiters in general are doing their job, you could get a lobotomy these days down at your local hardware store along with your choice of hand drills – cheap!

Secondly, the people managing our healthcare system today are the best of all people. They are the few remaining people who would still give the shirt off their back to help a total stranger. For a better explanation, see my article “What You MUST Know to Work with Healthcare Candidates” (TFL, 4/06). Yet these are the same people being victimized. For recruiters to victimize the people of this industry equates to not just stealing a baby’s lollipop, but also slapping it in the face as you leave just because you can. I had one recruiter tell me that he likes to work with healthcare professionals because they are (by and large) still naive. Although he had no plan to take negative advantage of this point, there are many who have taken advantage of it. Ask yourself how you are looking at your position within healthcare recruiting. Are you saying to yourself, “With much power comes much responsibility?” Instead, I would ask you to think of it this way: “With much responsibility comes much power.”

What you bring to the table represents their (employers and candidates) greatest needs. Treat it that way. Treat your profession as a profession. I can’t ever remember a “snake oil salesman” being described as a professional. If you are serious about becoming part of the solution, let me offer some suggestions.

First, as a recruiter, learn as much as you can about why this industry goes through the three legitimate issues I have described.

Second, slow down. Take more time to interview your candidates. Take a personal interest in their needs, and in return you will learn about the industry from the inside out. Metaphorically, be willing to get in the car with them as they drive away with the diesel fuel you sold them. Be confident enough in what you’re peddling to not only talk the talk, but also walk the walk. Make a commitment to these candidates and they will give you the power to represent them.

Third, own the car. If you were the employer needing refueling, what would you be looking for? If you are saying, I can’t get an employer to talk to me, then learn by speaking to the employers as candidates. As I said, connecting to candidates will help you learn about the industry from the inside out – so if you want to know what employers need, call them up and interview them as candidates. In the beginning you will talk about what they need, but could you also ask them their opinion on what the industry needs today? After they have learned they can trust you, would they not talk with you about what they need as an employer? Sure they would.

And finally, be willing to make a car payment or two to win a customer. “Delivering a conscientious product in the most professional way possible” means you’re willing to fall on the sword if something goes wrong. You’re so confident in your scrupulous, honest, painstaking precision that you’ll hold their hand until things are certain. An example of this is our retention and attrition programs. For employers that require more, we offer fee and guarantee options that include increased retention and reduce attrition. You ask how we can do that? Because of the confidence we have in the scrupulous, honest, painstakingly made product we deliver. Without giving away proprietary information, these programs include higher fees and much longer guarantees. We have come to know and understand the needs of our industry and the professionalism with which we deliver our product.

I hear people talking about their candidate-to-send-out ratios, or send-out-to-placement ratios, but you never hear about a recruiter’s length of stay after a placement ratio. What I’m telling you is that this is the only ratio that matters to your healthcare employers and candidates.

In healthcare, you not only have to provide the highest degree of service, but you also must know the proper fuel needed for the vehicle, and the efficiency at which that fuel will burn. The better you are at those three things, the more business you will come to have.

So where did the smokin’-hot healthcare market go? Well, it’s about two or three miles down the road, waiting for a ride. But before you race out to save the world, do your homework. Decide to change the way you approach the industry. Become a professional by understanding what it means to be a true professional healthcare recruiter.

John “Clay” Abbott is a true “Healthcare World Changer.” He believes recruiters should learn from caregivers by giving more of themselves to others. As president and founder of the Academy of HealthCare Recruiters, Inc., Clay is one of the healthcare recruiting industry’s leading recruiters, trainers, and consultants. With more than 21 years of direct healthcare experience and 10 years of experience in healthcare recruiting, he has successfully developed the only guaranteed HealthCare Recruiter Training programs in the industry. Many solo recruiters and recruiting managers are finding the crossover into healthcare possible with Clay’s leadership and knowledge. Clay is a widely known public speaker on issues pertinent to audiences ranging from independent recruiters to hospital management groups. He guides recruiters on how to find qualified healthcare candidates, how to utilize a systematic approach to keep a full pipeline of candidates, and how to stay ahead of the trends. Clay continues to operate his own healthcare recruiting firm while training others to do the same. He remains an expert in the market and an activist for positive change in healthcare recruiting and management. To learn more about his training products and services, visit his website at www.academyofhealthcarerecruiters.com. Clay can be reached at (812) 522-2992, or email him at clay@academyofhealthcarerecruiters.com.

Over the years it seems like one of the questions I am asked most frequently pertains to finding the keys to hiring the ideal recruiter. Questions regarding ideal background, behavioral traits, intellectual capabilities, etc., are good, but in my opinion, they are not nearly as important as how to start up a new recruiter.

My premise is that recruiters with great potential can start in areas with poor preparation and fail or languish, while average potential recruiters can achieve greatness with effective preparation.

Many times people start by expending their hard work on activities that are simply low gain or no gain. Their frustration then causes a fight or flight mentality. In the case of flight, the recruiter will quit because he/she does not see the proverbial light at the end of the tunnel of hard work or will take the form of mediocrity by doing just enough to not get fired. In the case of fight, the recruiter will press on and work even harder, eventually having enough quantity and energy to find the quality ultimately leading to success. It will come at a price, and that is their potential feeling that their success was in spite of you rather than inspired by you. Their loyalty will begin to deteriorate while their independence accelerates, leading to the day when they decide to “go out on their own.” The odds of a successful hire and subsequent retention dramatically increase when you make their initial climb easier. With this in mind, let me share with you a checklist of the key areas of importance related to starting someone and maximizing their odds of success.

1. Database. Several hundred companies AND the relevant contacts in each firm should already be downloaded into whatever system you use prior to their start date. This can be done with many different online content providers. You can also, at times, purchase a directory on CD-Rom and download it into your system. If these aren’t available, you will need to hire an outside research company to help with this. There are some overseas firms that can do it for $6 to $8 an hour. Having new recruiters surfing Google and Hoover’s all day trying to find companies to call that they first must enter into your database is poor utilization of their time. So, make the additional up-front investment to ensure that they can “hit the ground running.”

2. Marketing materials. A new person is more likely to be asked for his marketing materials, website, business cards, etc., than a veteran. However, many times, neither the website nor the marketing materials talk specifically about his market. Business cards may not even be ordered for some time. What is your reaction when you go somewhere and someone hands you her card and the name on it is handwritten? How about rookie, newbie! What do you think she’s thinking? Maybe something like “My company believes in me so little that they don’t even want to spend $50 on some business cards.” Effective marketing materials may not close deals, but they can help rookies significantly when they are impressive. They are sometimes just the “ante” that is necessary to get in the game. They are also part of the long-term value proposition of the person remaining with your firm.

3. Training. Some firms have great foundational training programs, but others rely on the old system of “just get out there and do it” and then occasionally throw in an old VHS/DVD by the trainer du jour. The old system did work in some cases, but so did the abacus before the calculator was invented. Our industry has evolved in the caliber of talent we can attract, and that talent expects a professional training program to help them. The training should include a blend of teaching, watching select DVDs, deskside evaluation, role playing, practice, and demonstration. New hires should be handed a schedule for their first 30 to 60 days with the activities that they should be following. For example, perhaps one day it is teaching MPC marketing for an hour. Then they watch a DVD on marketing (try NLRT module #5!). Then they must write their own presentation for someone to review and correct. Then they must make 10 new marketing presentations or 70 attempts (whichever comes first). If they get a possible JO, they should let the hiring manager know that they would like to schedule a time to review it in greater detail with their team leader (You). Then there would be a review of what transpired with a discussion about what to keep doing, what to change, and what to stop doing. The coming and going time should also be realistically laid out. The key is to create a formal program designed to teach them the fundamentals of being a successful recruiter. Training is critical to retention, and it is what spurred the theme “train to retain.”

4. Coaching and mentoring. This is different from recruiting training. This is teaching them about their market, if necessary, and holding them accountable to specific performance metrics. A good plan focuses on what they want and then builds a program of requisite activities and energy to achieve them. Meetings should be held daily and should spend equal amounts of time on market-place education, numeric analysis, and specific coaching around any areas of need that are identified. Marketplace training is critical in ensuring that the recruiter can talk “shop” as rapidly as possible, in addition to being able to talk about recruiting issues. There should also be some specific collaborative activities in their start-up. Perhaps the coach will participate in the first five job orders, first 10 closings, first 10 presentations of candidates to clients, etc. This way the recruiter can learn by observation and co-participation. The recruiter will also respect the organization for putting his career first and helping him put some deals together faster than he otherwise could have.

5. Physical space. Not much needs to be written here other than to make sure that the person has the necessary supplies, technological equipment, and furniture. The physical surroundings are a reflection of who you are. Do yours convey who you are or want to be?

6. Quality job order and potentially quality candidate. Some start people only recruiting and others teach both from day one. However, in either case the new recruiter should start by working on a job order or with a candidate that has been prequalified by someone at the firm. The odds of an early success are increased, and the recruiter will get an early opportunity to know what a good candidate/job order looks like for the future.

7. Cultural assimilation. De-pending on your size, it is always good to make sure that the new person feels at home. Giving her a buddy to show her “the ropes” is a good way in larger environments. In smaller ones, it should be some orientation about the firm’s vision, mission, and values. It should focus on why the organization exists. Are you in business to earn a profit, or do you earn profit to be in business? If it is only the former, then that is all this person will ever care about. If it is the latter, then this is the time to enroll this person in something bigger than a job and a paycheck and instill a sense of meaning in pursuing the firm’s purpose.

Some of these you/your firm may already do well. Some you may not need to do. The main message here is that spending quality time preparing a new recruiter for success is as critical as the caliber of the person hired, and it will impact the individual’s subsequent attitude and work ethic. A great tool is a checklist, much like the one NASA uses to launch a mission; only after the checklist is completed does the “takeoff” or the mission move forward!

This month’s top producer’s tip comes from Christine Alan. She has been with Kaye/Bassman since 1989. In those 18+ years, Christine has not only billed millions of dollars and been named a managing partner but has also had a profoundly positive impact in developing many others, as well as the overall face of Kaye/Bassman. In 2006, she billed $420,000 as a solo producer and is currently pacing to do the same this year, all the while battling and beating breast cancer and raising her son and daughter.

The Power of Reaching Out

Never underestimate the power of communication between a candidate and his/her future boss. There often comes a time in the negotiation process when we as recruiters need to step out of the way and let magic happen. I would hope that we are all in the common practice of having candidates follow up directly with their new employer to confirm acceptance of an offer that we have extended on behalf of our client. The latter is a simple courtesy whereby a candidate calls to thank his/her new boss for the offer and for the faith they have shown in the candidate.

Then there are times when we extend offers that are not immediately accepted. It hap-pens to the best of us. In a case like this, a simple follow-up call from the hiring manager to the candidate can help keep the romance alive. More important, it is a forum whereby any issues that are delaying the candidate’s acceptance can be addressed and resolved.

For example: I recently had a situation where my candidate went from being 100% in love with the client and the opportunity to practically talking herself out of the job after receiving a good offer. As it turned out, she was admittedly the recipient of some negative third-hand information, and bad advice in general. This resulted in making the candidate “conflicted and confused” about accepting my client’s offer versus another company’s offer that was on the table. It was a classic case of “fear” (false expectations appearing real). What’s the solution? I had the client reach out to the candidate to discuss the newly surfaced “issues” head-on. The result was a candidate who felt great relief after talking things through with her future boss, and an acceptance of the offer that same day.

Another example is that of a candidate who gave a verbal acceptance of an offer I extended on behalf of my client. He even confirmed his acceptance by reaching out and calling his new boss, as I had suggested. However, when he received the written offer, panic set in. The company has a policy of including the job summary in the written offer letter. The summary was actually more comprehensive than any written job description that had been previously shared with the candidate, causing him to second-guess his decision and wonder if he was being set up for failure. The remedy was for me to direct the candidate to reach out to his new boss and get clarity and comfort directly from him. After all, there is no better time than the present for a person to get in the habit of open and direct communication with his/her new boss. The result was a message from the candidate stating that he had talked with his new boss. In the message he said, “We worked through the issues to my satisfaction and everything is fine.” I then took my own advice and reached out to both the candidate and client to confirm!

Jeff Kaye is president and CEO of Kaye/ Bassman International and Next Level Recruiting Training. This former Management Recruiter National Recruiter of the year has helped build the largest single-site search firm in the country, with annual search revenue in excess of $18 million. His firm has won national awards for philanthropy and workplace flexibility and also was named the best company to work for in the state of Texas in 2006 and 2007. Kaye/Bassman has retained over 30 search professionals whose annual production exceeds $400,000. The same training that helped build this successful firm is now available through Next Level Recruiting Training. They are making a series of DVDs for training. The first series was on the candidate side, and the four hours were dedicated to marketing. The new series, on the client side, is dedicated to marketing, effective search assignments, and fee clearing. It is over seven hours in length. To learn how to take your practice and business to the NEXT LEVEL, please visit www.nlr training.com to view their product and service offerings. You can also email Jeff a thought or question at jtk@nlrtraining.com.

1. Use the Book

If you are interested in finding a contract researcher, rather than hiring one as an employee, then your first step would be to check out The Directory of Researchers. We sell this directory on our training site (www.therecruitinglab.com/researchersbook.html), and it’s the only one I know of that gives an exhaustive listing of researchers found in the United States. You will get information such as where each researcher is located, what their fees are, what they specialize in, etc.

I often tell recruiting firm owners that they will want to have contact with several good researchers before they ever need them. This way you have the confidence to take on large search projects knowing that you have an ad hoc workforce ready to pitch in and provide support. This will give you more confidence when selling your services as well. Seek out several contract researchers and negotiate agreements with them in advance.

2. Hire a Pro

You can find and hire professional researchers from either corporate human resources departments or retained search firms. Both of these sources will typically have people who fulfill a researcher-type role within their organizations, although they may go by a different title. The upside is that they come in ready to work, well trained, and experienced. The downside is that they will cost you much more than a person that you would train yourself.

3. Hire a Novice

If you prefer training your own person from the ground up, there are several options available. I have had very good luck with this profile:

A woman in her 30s or 40s who used to work in a business setting but has been out of the workforce for several years while raising children. She now wants to rejoin the workforce, but not at full speed.

Typically these women want a part-time or three-quarter-time position but also want a lot of flexibility in their schedule so they can be available for their children. If you can offer a flexible schedule, this is an excellent group to target, as they are often loyal, seasoned, and professional.

4. Hire a Student

It might sound funny, but I’ve also had good experience with college students and know many others who have as well. Obviously, they will perform lower-level tasks, but if you have a clear system, scripts, and forms for them to use, they can be quite effective. I’ve found that good majors to target are Business (good drive) and English (well-spoken).

Call up your local college and find out about running an ad in the school newspaper. You can often also post a flyer on the bulletin boards and submit your position to the career center. Be sure to interview them via the phone first to test for vocal quality and maturity.

5. Work Your Network

Ask everyone for referrals: neighbors, friends, employees. If you see someone in a restaurant or a store that you think might be a fit, talk to him or her and see if you can make a connection. Post a want ad at the local church or fitness club.

Create an employee referral program to encourage your current staff to join you in looking for researchers. Give them an idea of what your ideal researcher would look like. Provide a cash incentive for anyone they refer who makes it past 90 days.

Gary Stauble is the principal consultant for The Recruiting Lab, a coaching company that assists firm owners and solo recruiters in generating more profit in less time. Gary offers several FREE SPECIAL REPORTS, including “14 Critical Candidate Questions” and “The Search Process Checklist,” on his website. Get your copy now at www.therecruitinglab.com.

Q. When you target a company for a specific search, how do you identify the “right” person to call?
Donna F., Omaha

A. Here are several tips on identifying the “right person”:

- Depending on the level of your search, many executives are listed on a company’s website.

- You can also call at the end of the day and ask for the “spelling” of the “engineering manager’s” name. Often when you ask for the spelling of a name, the person answering the phone assumes that you have the name.

- If a gatekeeper will not give you names, call between 1 and 2:00 p.m. Normally, someone is “filling in” for the gatekeeper during this time, and you will be able to get the information you need.

- Call and ask for accounts payable. They will always transfer your call to A/P, thinking their company owes you money. Once you are transferred, sound confused and ask them to redirect your call to the “engineering department” or “IT department,” and ask for a direct line or name in case you are disconnected.

- Call and ask for the sales department. Again, they will always transfer your call, thinking you want to “BUY” from their company. Repeat the above process.

- Use a common name like John and ask for John in the engineering department if you are recruiting for an engineer. If you are told there is no one named John in the department, ask if there is someone with a similar name. You will be amazed when this person starts to read you the names of everyone in the department.

- The key is to sound authoritative but not condescending. The best time to place these information-gathering calls is late in the afternoon.

Q. How many MPCs do your recruiters work at any one time, and is there a limit to the number of calls you will make using a particular MPC? Do you call just the top five companies that the person identified as their favorite target companies?
Bill B., Ft. Myers, FL

A. We market an MPC (Most Placeable Candidate) each day. We make at least 10 calls, once we go through the process of writing out an MPC Presentation Form.

We start with the top five identified by our candidate, but plan to make at least 10 to 15 calls for each MPC. If we believe we have a “walking/ talking” placement, we will market them until we schedule interviews. There is no set limit on the number of calls we make. If you would like to receive a FREE copy of our MPC Presentation Form, please email support@staffing andrecruiting.com and we will email one to you.

Q. Thank you very much for your awesome training in S. Africa. Our team has benefited tremendously, but I’m having trouble with “production time.” I under-stand the value in having them focused on outgoing calls between 9 and 11:30 a.m., and not answering emails, but I know they are still answering emails as they are receiving them, which is a waste of their time. I don’t know how to make them stick to this schedule. Any tips?
Tanya K., Cape Town, S. Africa

A. See if your tech person can actually SHUT DOWN email capabilities during the hours of 9 to 11:30 a.m. That is what I initially did in my office, to ensure I had everyone focused on outgoing calls. Once my recruiters realized how much their production, time management, and effectiveness improved, they did not need further convincing.

If you are working a fast-paced temp desk, you can NOT hold your calls or emails. If you are working any other discipline, this advice works!

Your recruiters will only change the way they “work their desk” if they see the “What’s in it for them.” Run contests during those hours for the most “recruiting hits,” most “job orders with a new client,” most “send-outs booked” as a result of marketing a candidate, until your recruiters develop the habit of making outgoing calls during this time frame! This will allow them to control their profit-and-loss center by the outgoing calls vs. the incoming.

There is something very magical that happens when everyone is on the phone at the same time – that hummmmm all owners love to hear which is the result of conversations taking place. We actually hold all calls other than the list we give to our receptionist with “possible closes,” the hard-to-contact references, and the calls that say “Barb said to interrupt her,” which is the message I leave on all recruiting and marketing-presentation voice mails. The goal is to complete at least 60% of planned outgoing calls during that time.

We also know that whenever a call comes through for any of our recruiters that says “_________ said to interrupt her,” it is either a recruiting or a marketing hit.

You will be amazed at the increased production, income, and profits you will enjoy!

Q. Even though everyone is talking about how great the current job market is, we are having a problem writing fillable job orders to fill. Clients are calling in job orders, but they are all “needles in a haystack,” and some are reduced fees. How can I increase our job order flow the quickest? Our contract orders are also very “low margin” assignments.
Frustrated in Milwaukee

A. It is important that you “target” the companies you want to represent. In this candidate-driven marketplace, you need to represent the companies candidates want to work for. Ask everyone you interview to give you their list of the top five companies they most respect and market them into those companies the following day. This presentation is simple and very effective:

“I would normally be calling my best clients right now because I have just interviewed a ___________ who (list accomplishments and sizzle), and I know she will not be on the job market long. When I asked this person where she would love to work, she gave your company as her #1 choice. I didn’t want the fact that you and I don’t currently do business together to prevent you from meeting this outstanding ______________. What would it take to get the two of you together?”

They will either give you an interviewing time or give you an objection. This gives you the opportunity to find out what types of positions are their most difficult to fill. This process works very well in a candidate-driven market.

TIP ONE: Ask every candidate you interview where they have interviewed on their own for job order leads, or “contracted” (identifies companies that utilize contractors).

TIP TWO: Ask them for the salary level of the positions or pay rate so you know what level of candidate to market, or contractor to present.

TIP THREE: Ask candidates which company they would rank first and why (inside information on companies that helps with your marketing presentation).

TIP FOUR: Ask candidates how they have secured jobs in the past, to help identify which companies utilize recruiting firms. For contract placements, target the companies where your candidates worked their longest assignments. (Their past assignments can be your lead.)

TIP FIVE: Send an email to all your current clients announcing your new Client Referral Program. Offer them a gift certificate to a place of their choice or offer to donate money to their favorite charity. The quickest way to increase your job-order flow is by getting REFERRED business from current satisfied clients. As-sure your current clients that they are not giving you competition for the talent they need to hire from you. As an established client, they would always have first choice of your top talent.

TIP SIX: Check references that will get you on the phone with hiring authorities. After your reference check, turn the call into a marketing presentation.

TIP SEVEN: Market candidates who have similar credentials to companies your current candidates have worked for.

TIP EIGHT: Contact your current database of candidates and update their information. At the same time, ask where they have been interviewing in the last six months.

TIP NINE: Enter all the companies you have targeted into www.watchthatpage.com. This is a free service that will send you an email each time your targeted company posts a new opening on their employment pages. When you get the email, market a candidate to them that fits the specs they have listed.

TIP TEN: Also remember to utilize testimonials from your current clients. They are more effective than the fanciest brochure you could design. If you don’t have testimonials, call to ask for them, and while you have the client on the phone, have a conversation about their current and future hiring challenges. These calls will generate additional job orders.

Utilize any of these tips and I guarantee you will increase your flow of fillable, full-fee job orders and profitable contract assignments.

Barb Bruno, CPC, CTS – If you’d like to get a copy of all Barb’s 27 Proprietary Forms, go to www.staffingandrecruiting.com/forms. Anyone who schedules a demo of Barb’s Top Producer Tutor will receive a copy of Barb’s Greatest Audio Hits, worth $499. You must be an owner to schedule a demo. Call today at (219) 663-9609.

The climate is changing, and I’m not talking about global warming. Our business climate is undergoing significant shifts. The talent pool is evolving, and businesses and individuals everywhere must adapt or face professional extinction.

What we’re experiencing is the cusp of a talent crisis, and we’re already seeing some major changes. And there are more ahead. It’s time for businesses – and recruiters – to deal with this new reality.

At its heart, the talent crisis means that organizations will not be able to find, attract, hire, and retain talent. This is due to five trends: more jobs than qualified people to fill them; the increasingly multigenerational work-force; the end of retirement as we know it; stronger demands for employer flexibility; and a big drop in average employee tenure. Taken separately, each of these trends presents a challenge. But now, as at no time before in our history, these trends are converging and strengthening.

I feel so strongly that the talent crisis is the single most important problem businesses face today that I’ve written a series of articles on this topic. This month, I examine the people – and skill set – shortage and what it means to our clients, to us, and to both of our bottom lines.

A Severe Skill-Set Shortage

We’ve all heard that according to government statistics, there will be more positions than people in the near future. Estimates vary, but experts agree there will be between 3 and10 million more jobs than people by 2010. Those are daunting statistics, but as a recruiter you know we’re already facing a shortage in 2007: a lack of qualified individuals for specific positions. A skill-set shortage is preceding the people shortage.

If you’ve spent a day recruiting in the healthcare or IT fields, you know what I’m talking about. We’re experiencing a severe skill-set shortage. Last month, I took a look at the job aggregators to gauge the demand for IT talent. There were over 38,000 openings for SAP FI/CO consultants on jobster.com alone. But this problem is not unique to healthcare and IT. Many other industries are facing this same issue. Your market is in the midst of a skill-set shortage if:

1. Time to fill for some critical jobs lengthens to six months, a year, or more.
2. Companies start lowering their standards to fill positions, refusing to hold out for top talent.
3. Salaries are moving up. What was once the high end of a pay range will become the median income for hard-to-find skill sets.

The skill-set shortage is wide ranging. If it isn’t affecting you and your clients yet, it will, no matter the industry. For example, it’s estimated that 56% of unskilled laborers need to have the skills necessary to use some type of automated technology. This isn’t your father’s workplace: most ware-house laborers on the shipping dock today use wireless hand-held computers to process transactions. Statistics indicate that to keep up with the jobs generated by current economic growth, the United States will need 18 million new college graduates. That’s 12 million more than we’re currently graduating.

Clearly, this dilemma isn’t going away anytime soon. But as a recruiter, you’re uniquely positioned to use this trend to your advantage. It’s Recruiting 101, but it’s more important to our industry now than ever.

Become your clients’ trusted business adviser.

This is a problem that you can turn into a huge opportunity: clients need us now more than ever. Function as their guide, getting them on the right path in this marketplace. As a professional search consultant, you must shift from being just a tactical recruiter who finds talent to a business adviser who develops successful talent strategies.

Most important, work with your clients to streamline their hiring methods. In this talent-starved market, the entire interview process should take from one to four weeks. No longer. No exceptions. The longer the process takes, the greater the chances of top talent accepting another position. They’re in high demand and they know it.

Help your clients create a win-win interview process. They should ask thorough questions to establish whether or not a candidate has the right stuff to join their team, while at the same time selling candidates on their organization via the all-important Employee Value Proposition.

Developing a strong EVP is a critical part of the business-adviser relationship. The EVP clearly states all the reasons why a candidate would choose to work for a company as opposed to any alternative. If a client cannot articulate an EVP, it is essential that you help them to construct one, and quickly. Culture, benefits, work environment, compensation, office location, management flexibility, and much more can go into a winning EVP. And in this tight market, it can mean the difference between top talent choosing your client – or their competitor.

As a business adviser, try to ease your clients into a new way of thinking about job openings. If your client has an ongoing need for specific skill sets within their organization, propose a “continual opening.” This is a great way for you to deepen your professional ties to a client. Establish an agreement stating that anytime you encounter clearly defined skill sets in a candidate, you will bring that talent to the table. This is a symbiotic relationship, benefiting both client and recruiter. Your client will no longer be able to just hire when there is an opening. They need to hire when the talent is available.

Flexibility is increasingly the name of the game in hiring. Educate your clients on the virtues of flexibility in areas such as compensation, benefits, vacation, work schedule, and work location. This isn’t a market in which it’s wise to dismiss a candidate if she falls outside a given salary range, or wants an additional week of vacation. Encourage clients not to lose candidates over relatively minor negotiation snafus.

I recently began a global procurement search for a Fortune 100 company by sitting down with the client and determining how much money they’d lost by letting this critical position remain unfilled for two years. The hard costs and missed opportunity costs they’d incurred were staggering – millions of dollars. Once I’d helped my client see this clearly, it was amazing how flexible they became.

Bring only impact players to the market.

In a talent- and skill-set-starved market, trying to fill those needle-in-a-haystack searches will inevitably lead to frustration and few placements. It can feel like you’re pushing a boulder uphill all day, every day. But you can make your job easier by returning to the talent-agent mentality. That’s right, the old “MPC” approach. In today’s competitive market, it’s the best bet to make placements.

Impact players are most important to a team and a recruiter when a defined market-place requires a specific skill set. My preference is to go to the market with three impact players whom I present in distinct ways. One is the main focus, another is one level above, and the third is one level below. If the organization has a need for that type of talent, chances are good I will get send-outs based on a quick conversation.

Develop your paper route, but on a larger scale.

Define a marketplace of 500 to 3,000 potential clients, and take your impact players to them. Not just once, but routinely. Develop a “paper route:” share the top talent in your specialty with them over and over again. Think of a hometown newspaper route. The paperboy delivers papers to the same houses every day. His customers get to know him, and most become fond of him. You need to develop that same relationship with your potential clients.

Touch every one of them every 60 to 90 days. Not all of your prospects will have a need for the talent you present in your first call. Don’t let that discourage you. As you get to know them, you’ll have a better idea of what they want so you can bring value to the table the next time you talk. By the second, third, or fourth “delivery,” you’ll be amazed at the send-outs you get and the placements that follow. Never get too busy to give personal attention – it pays big dividends.

Don’t forget your candidates!

Establish regular contact with your candidate database. Think of it as a paper route for 2007. It’s a new concept to many, but it’s an exciting frontier for recruiters to explore, another way to add value to your candidate pool so when they’re ready to make a change, they automatically think of you.

Top candidates need to be touched once every 60 to 90 days by you or your firm. Many recruiters are getting creative in their approach to this, sending out mass emails, newsletters, or announcements, and making direct calls. Remember, it will always be the recruiter who can deliver the best talent who will win. Market to your candidate database, build your brand identity with them, and show them how you can help them achieve their career goals.

The best recruiters in this tight market succeed through a combination of time-tested recruiting truths and innovative solutions that benefit both client and candidate. Yes, we’re faced with a talent crisis, but who is better positioned to capitalize on it than talent agents – people with a real understanding of the market? Success is ours for the taking as long as we’ve put into place real strategies for dealing with talent-pool trends.

Next Month: The second in Jon Bartos’s series of articles focusing on the five major trends affecting business today, and how to turn them to your advantage: “The Talent Crisis, Part Two: The Multigenerational Workforce and the Unique Challenges (and Opportunities) It Presents for Recruiters Everywhere.”

Jon Bartos is a premier speaker, writer, and consultant on all aspects of human capital. As CEO of Jonathan Scott International in Mason, Ohio, he has achieved industry-leading success. He is one of an elite group of executive recruiters who bill on average over $1 million annually. Since 1999, he has achieved over $9 million in cash-in on his personal desk performance. Jon has also established JSI as a top 10% executive search firm. The office has won 15 international awards in the MRI franchise system, including International Billing Manager of the Year and Top 10 SC Office. Jon runs an executive-coaching program for recruiters and recruiting managers called “Magnum Program.” He also hosts a career-focused talk show on Fox radio, Talent Wins with Jon Bartos, Your Personal Career Coach. Are you ready to take your company or career to the next level? Jon can be reached at (513) 701-5910, jon@jonathan scott.com, or www.talentwinsonline.com.

SIX OTHER PLACEMENT FEE OPTIONS AND WHEN TO PROPOSE THEM

If all you talk about is that tired old “one percent per thousand” contingency fee, you’re talking yourself out of placements.

Search fees have always been negotiable. While some placers negotiated downward from their “standard” fee, others were quietly looking for more creative ways to get paid. They proposed them. And they were accepted, giving these quiet, creative competitors the inside track.

Now you can propose the options successfully too:

1. FIRM FIXED FEE CONTRACT

This is sometimes called a “retainer,” but it’s not. A firm fixed fee contract merely provides for payment of a specific amount for filling a particular job. Of course, multiple amounts can be paid simultaneously for a series of openings. It’s fixed because there are no additional charges, and it’s firm because there are no changes.

Firm fixed fee contracts are generally paid on an installment basis, and generally in three installments: upon commencement of the search, and at 30 and 60 days. Costs are not itemized or paid separately. They’re factored into the fee.

A survey conducted by one magazine revealed that fixed price consultants make 87% more than those who work on a time basis (hourly, daily, etc.). While no comparison was made to contingency-fee’ers (real management consultants rarely work on this basis), a fixed fee is definitely preferable to a contingency one.

This is because the employer is truly a “client,” and has paid “earnest money” (“front money”) to hire. There’s a commitment in the relationship that rarely exists in contingency work. The loss in search flexibility isn’t that great, since only a small number of searches are on a fixed-fee basis.

The problem with firm fixed fee contracts is that the installment payments can too easily be interpreted as progress payments. Employers purposely don’t clarify this, and recruiters too often fear mentioning it. This fear is known as “feephobia.” For advice on how to overcome it, read Chapter 4 in The National Placement Law Center Fee Collection Guide, entitled “Feephobia: Behavioral Modification to Get You Paid.” (www.searchresearchinstitute.com)

Progress payments are like those a building contractor gets as the work progresses. No “progress,” no payment. Legally the right to payment is conditional – not absolute. In the search business, “progress” is useless. Time and effort don’t mean a thing. Leads, résumés, send-outs, and even offers don’t mean a thing.

Progress means a placement – an accepted offer from someone who actually starts.

So trying to enforce payment of the remaining installments (and not defending a cross-complaint for return of those paid) depends on words like this:

It is agreed and understood by (name of your business) and (name of employer) that the installment payments herein are merely partial payments of the search fee herein, and do not depend upon performance by (name of your business). They are due and payable at the specified times regardless of the progress of the search or the satisfaction of (name of employer) with said progress.

Note that we don’t call the fee a “placement fee.” If you do, the employer will argue that it “reasonably believed” you were entitled to be paid only if you placed someone. Call it a “consulting fee” and the employer will show that you didn’t consult. Call it a “retainer” and you’ll be recruiting until you retire or refund.

“Search fee” (implying effort, not results) or even “fee” is fine.

2. VARIABLE FIXED FEE CONTRACT

Variable fixed fees are similar to firm ones, except that the last payment is adjusted according to some predetermined formula. It’s usually a percentage of the candidate’s annual starting compensation. Whether it equals a full fee pursuant to the contingency fee schedule depends largely on the negotiating skill of the recruiter.

Since they’re optimistic by nature (and also oversell by nature), most recruiters don’t cover the two major issues that arise.

They are:
a. The adjustable payment implies that a placement must occur.

Otherwise, why not simply pay a fixed fee for the search activity itself?

b. By implication, the adjustable payment does not become due unless a placement occurs.

Even if a court were to find that no placement was required for the recruiter to retain the payments already made, the final one “adjusts” to “0.”

As just mentioned with regard to firm fixed fees, you need to protect yourself against both of these arguments.

Here are suggested words:

(Name of employer) agrees that in the event the final installment of the fee becomes due and no placement has occurred, the amount of $ ____ shall be paid to (name of your business). Upon receipt of said payment, the search effort shall continue by (name of your business) for a period of 30 days unless otherwise agreed by the parties in writing. (Name of your business) shall have no obligation to (name of employer) to actually place someone with it to retain the entire fee herein.

3. TIME INCENTIVE FIXED FEE CONTRACT

If you’re dealing with a highly motivated employer, you can both benefit from an incentive contract. There are two ways the time incentive can work:

a. The employer receives a reduction by hiring someone within a certain period.

This is a great marketing device that is effective in almost every fixed-fee agreement. The two primary reasons recruiters don’t use discount incentives are:

i. They think the employer will hire quickly anyway.

They’re wrong. Employers never hire quickly enough.

ii. They think the employer won’t hire quickly anyway.

They’re wrong here too. Make the hirer a hero and they’ll help.

The words are simple enough:

a(Name of employer) shall receive a reduction of __%/$____ if a candidate referred by (name of your business) accepts employment within___ days from the date of this Agreement. The reduced search fee shall be due and payable in full upon the candidate reporting for work.

b. The recruiter receives a bonus by placing someone within a certain period.

If the opening is really “hot,” the employer won’t mind. It also won’t stall to obtain a lower fee. Unfortunately, few fee openings are hot enough to justify a search surcharge.

Here the words are:

(Name of employer) shall pay a bonus of __%/$____ to (name of your business) if a candidate referred by it accepts employment within ___ days from the date of this Agreement. Said bonus shall be due and payable in full in addition to the search fee upon the candidate reporting for work.

4. TARGET CANDIDATE BONUS FIXED FEE CONTRACT

Occasionally an employer identifies certain individuals it prefers to hire. Unlike a time incentive bonus, a target candidate bonus is paid to the “roto-rooter recruiter.”

Here’s the way the words usually read:

If (name of your business) arranges an interview for any of the following individuals and (name of employer) hires them within three months from the date of said interview, a bonus of __%/$____ shall be paid to (name of your business):
(name of first individual)
(name of second individual)
(name of third individual)

Said bonus shall be due and payable in full in addition to the search fee upon the candidate reporting for work.

It’s imperative to have specific candidates listed, and don’t let the employer talk you out of it. Invariably, these are high-profile prospects often featured in business publications, active in trade associations, or personally known by the employer’s management.

A roto-rooter recruiter can work awfully hard only to have the employer say he was “just passin’ through.”

If the hirer tells you he doesn’t want to have the target candidates revealed in the agreement, ask for a confidential letter. It should reference the bonus and the names.

Occasionally, target candidate contracts are executed. But usually they’re in the form of a bonus during a thorough search.

5. HOURLY FEE CONTRACT

As every lawyer knows, hourly rates are a difficult way to earn a living.

Employers negotiate the rate as though it means something. Few consider that one recruiter works faster than another. Or better, since they’ll never know the candidates that weren’t recruited. And almost none really understand that it’s all “funny money” anyway, since the recruiter is keeping track of the time. No matter how scrupulously this is done, there are always judgments about how much time to bill.

Starting out a relationship so subjectively starts you out defensively. Every billable minute will eventually need to be justified. For this reason, hourly rates should only work against the full (preferably fixed) fee.

Take your average search time for the type of job (53 hours for upper management jobs, according to Search Research Institute) and divide it by your average full fee for it. That will give you an idea of the hourly rate to charge. Then negotiate your best deal.

The words to use are:

(Name of employer) shall pay (name of your business) $_____ per hour for time expended in performing the search. (Name of your business) shall submit an itemized statement of said time on or before the first day of each month immediately following it. (Name of employer) shall pay (name of your business) in full within 10 days of receipt of said statement. All hourly fees charged shall be deducted from the search fee of $_____.

Of course, the full fee should be structured so it isn’t conditioned upon a placement (see Item 1). It’s a good idea to show the credit toward the full fee on each statement, too. That way, when the hiring authority changes his mind (or just changes), your lawyer will take your case on a contingency-fee basis.

If not, call (310) 559-6000 and ask for a referral to one who will.

6. COST PLUS FIXED FEE CONTRACT

Regardless of the type of fixed fee contract, reimbursement for actual costs may be included. Since “CPFF” contracts are common in many industries, you may be able to negotiate your costs in addition to the fixed fee more readily in them. The 15 usual cost items are:

a. Telephone
b. Facsimile
c. Postage
d. Express Mail
e. Photocopy
f. Résumé Preparation
g. Special Status Reports
h. Meals
i. Entertainment
j. Travel
k. Lodging
l. Advertising
m. Special Publication Purchases or Subscriptions
n. Industry Association Memberships
o. Special Project Fees (Surveys, etc.)

Cost reimbursement can be wonderful or worrisome, depending on these factors:

a. Relationship with the employer
b. Difficulty of the search
c. Necessity for the expenses
d. Extraordinary nature of the expenses
e. Ease of prior approval of expenses (if any)
f. Reporting requirements to justify the expenses

Overall, the rule is not to even attempt reimbursement unless the expenses are extraordinary. There are few searches that justify non-routine calls, faxes, meals, entertainment, travel, or lodging. Any expense reimbursement can never compensate you for the loss of desk time involved.

But if you must, here are words:

(Name of employer) shall reimburse (name of your business) for actual (telephone, facsimile, meal, etc.) expenses incurred in performing the search. (Name of your business) shall submit an itemized statement of said expenses on or before the first day of each month immediately following their payment. (Name of employer) shall either reimburse (name of your business) or notify (name of your business) of the reason for not doing so in writing within 10 days from receipt of said statement.

There you have it. The options that can have you placing and billing like your quiet competitors.

For more on this subject, read Chapters 105 and 107 in Placement Management, entitled “Fee Negotiation” and “Cheaper by the Dozen: Volume Fee Discounting.”

Then pick up a copy of The Contract and Fee-Setting Guide for Consultants & Professionals, by Howard Shenson. It is available from your bookstore or the publisher.

Jeffrey G. Allen, JD, CPC, turned a decade of recruiting and human resources management into the legal specialty of placement law. For over 32 years, Jeff has collected more placement fees, litigated more trade-secrets cases, and assisted more search and placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of many best-selling books in the career field. He can be reached at Law Offices of Jeffrey G. Allen, 10401 Venice Blvd., Suite 106, Los Angeles, CA 90034; (310) 559-6000; jeff@placementlaw.com. The Placement Strategy Handbook and other books on search and placement can be purchased at www.searchresearchinstitute.com.

A reader sent the following scenario and it has a familiar ring to it, as others have written on the same subject. This one, however, has a bizarre twist.

Recruiter has an exceptional MPC (Most Placeable Candidate), and he calls the hiring manager of a company with whom he has previously done a lot of business. Hiring Manager (HM) requests an immediate interview since he just lost a similar person and wants to fill the position as soon as possible. He hasn’t even written a requisition to send to the brand-new HR guy yet. HM loves the guy, makes an offer, thanks the recruiter, and asks for the invoice to be sent directly to him for approval. There was a previous open-ended signed contract with the HM and he is deeply grateful for this coincidental stroke of luck.

Shortly after sending the invoice, the recruiter receives a call from the new HR Manager saying that no fee will be paid for the following reasons:

1. There was no authorized requisition for the opening.
2. The HM had no authority to bind the company to a fee.
3. The recruiter was not on the new approved vendor list.
4. The recruiter had not signed an agreement with HR (nor had he been invited to do so) even though he had a long-standing relationship with the company and signed agreements with this and several other HMs.
5. The company had found the hired candidate’s résumé on their database from a couple of years before and probably would have contacted him on their own.

We’re hearing more and more stories like this where a new HR guy or gal says, “There’s a new sheriff in town, and everything you’ve come to expect has been turned topsy-turvy.”

Of course, The Fordyce Letter has addressed almost all of these objections many times in the past, but frankly, even though the rebuttals sound awfully good in print, they rarely get the required positive response when bounced off the eardrums of the HR person you’re trying to persuade.

So, I was surprised when this practitioner took a road less traveled. Not necessarily one I would have suggested or supported, but one that worked in the final analysis. He asked a number of his industry friends about this new guy and learned some disturbing things about him, both professionally and personally.

Rather than walk away from a $35K fee or give a large percentage to a lawyer, he called a friend who also happened to be a private eye and requested what he described as a “deluxe” investigation.

What he received was evidence of prior fraudulent dealings involving splitting of fees with pet recruiters while with two previous employers. He claimed a degree he did not have, which had been missed by previous employers who never checked his academic credentials. Two DUI convictions popped up, and he’d had several romantic affairs in the several cities where he had previously worked. There was even a videotape of this guy in the back seat of a car with a female coworker, and it was obvious they were not discussing business.

So what did this practitioner do? He called the HR guy and invited him to lunch – something the HR guy didn’t want to do but was persuaded that it was in his best interest to do so.

At lunch, he told the HR guy, “Whether you know it yet or not, I am now your new best friend, and I will expect my check within 48 hours if you want to keep your job. Not only am I now #1 on your preferred provider list, but I will have complete access to those hiring managers with whom I have very successfully made placements in the past. I will not sign your agreement. You will sign mine. I expect to have first crack at all your openings within my niche or I will have no choice but to reveal your tawdry background to your boss and your boss’s boss.”

He told me the HR guy’s attitude went from arrogant and obnoxious to respectful and humble. Since our practitioner had his contract with him, he had it signed on the spot.

I do not know how the relationship has developed, since it happened only a few weeks ago. I do know that the check arrived on time, as did copies of a number of critical openings the company had.

Would I have done this? Nope! I don’t like extortion, and I like to sleep at night. Knowing the company for which the HR guy works, I suspect that his back-ground will surface on its own. One reader, with tongue in cheek, suggested it should be included in the next version of Closing on Objections and labeled as the “Blackmail Rebuttal.” Right!

For more information on these topics, see the “Gotcha” article later in this issue.

Highly successful practitioner Tim Richards sent along the following tip/script to use on employers who try to squeeze you on fees:

“If you want to pay less than our 30% fee we will be happy to oblige you. Please understand that this is an economically driven business and our best candidates go to the employers who pay our rate. That being said, once again, we will be happy to send you their rejects if you want to pay less than the 30%. Given the current market conditions, there are way more employers needing people than there are solid, successful, qualified candidates. So, Ms. Client, I’m sure you understand this business model.”

Many readers ask for “different” ways to charge fees, a topic that Jeff Allen addressed several years ago. Because of the many requests, we are reprising his suggestions in the following Placements and The Law column.

Does this set of circumstances look familiar?

An experienced recruiter markets a management candidate to a company that is not a client. The company agrees to interview the candidate but negotiates the recruiter’s fee down from $30,000 to $20,000. There is no signed agreement.

The company evaluates the candidate and decides to make an offer. At this point they call the recruiter and tell him they plan to issue an offer. However, they will hire the candidate only if the recruiter agrees to the following payment terms: $6,666.66 paid after the new hire has successfully completed 30 days of employment, $6,666.66 paid after successfully completing 60 days of employment, and $6,666.66 paid after successfully completing 90 days of employment.

The recruiter agrees to the terms and the placement is made. The candidate has been employed now for over 50 days, and the recruiter has yet to receive the first payment.

The recruiter’s comments were, “I did the best I could at negotiating with this client. But after the fact, he had me over a barrel and I agreed to his terms of payment. I figured that $20,000 spread over 90 days was better than nothing.”

Since many recruiters, almost on a daily basis, encounter circumstances that are similar to this situation, let’s take a closer look at exactly what happened and why it happened.

First of all, there is the confusion between effort and value. Many recruiters have a difficult time justifying their standard fee when marketing candidates. After all, it’s not the same as completing a comprehensive search process. That’s true but has nothing to do with deviating from your standard fee schedule.

Remember

Anytime you allow a client to compare the effort you expend on their behalf with the size of the fee, you will probably lose.

Ultimately, the cost of your service must be justified by the positive impact the candidates you place have on the performance capacity of your client’s organization (See TFL, 12/03, “Justifying Your Fee: A Value Proposition). And this has little correlation with your effort.

Prior to marketing a candidate, you need to determine whether or not that candidate can bring enough value to the targeted prospects for them to justify paying your full fee (See TFL, 5/05, “Add One Placement per Month”). If not, select a different candidate, find different prospects, or prepare to be com-promised on your fee.

Bottom Line on Fees

What you charge for your services, regardless of the amount, is a business decision that can only be made by you. However, make certain that the decision is a positive reflection on you and the value of your services, and lends support to the overall objectives of your organization.

In the scenario described above, the recruiter believed he had successfully negotiated his fee because the client agreed to interview the candidate. In fact, he surrendered as soon as the prospect balked at paying $30,000 based on one phone call.

Negotiation is a two-way street, and in a successful negotiation both parties should receive equal value for each concession they make whether real or perceived. If this candidate is truly worth a $30,000 fee based on the value he brings to the prospect’s organization, then the recruiter surrendered $10,000 without receiving equal consideration.

Something else to consider is the impression the recruiter left in the mind of the prospect when he surrendered the $10,000. No doubt the prospect had one or more of the following thoughts:

1. This recruiter does not have the courage of his convictions or belief in the validity of what he charges.

2. This recruiter was trying to “rip me off” by asking for $30,000. This was obvious by how quickly he backed down to $20,000.

3. If I had pushed a little harder, how much more would he have discounted his fee (“The Better Deal Theory”)?

4. Does he give other employers a better deal on the fee than he gave me (always a question when you negotiate)?

To unilaterally give a concession when negotiating without gaining a corresponding benefit is tantamount to surrender. The recruiter allowed the prospect to place a value on his candidate before completing a proper evaluation, and all the recruiter received in return was a compromised position and a heavily discounted fee, which has yet to be paid. Quite a deal.

The two articles referenced above will provide several examples of alternatives the recruiter might have utilized that could produce a realistic and equitable negotiated agreement.
Now to the second part of the problem, the extended payment terms.

After the recruiter surrendered his position on the fee, it was only natural for the client to leverage the payment terms. In the client’s mind, the recruiter would give in because he doesn’t want to lose a $20,000 fee. Unfortunately, for many recruiters in similar situations, the client was right.

Herb Cohen, in his book You Can Negotiate Anything, states, “In negotiating, power, whether real or perceived, is everything. If you believe you have power . . . you have power.”

In this situation, the recruiter does not believe he has power. After all, the client can hire someone else and the recruiter will be out $20,000. So, instead of negotiating, he surrendered and agreed to the client’s payment terms. The recruiter’s fear of loss was greater than his desire for gain.

The recruiter neglected to consider that if the client were not truly interested in hiring the candidate, they would never have attempted to change the payment terms in the first place. They would have simply said no and closed out the relationship.

The source of the recruiter’s power at this point is the client’s interest in hiring the candidate. The terms of payment are just another concession the client is trying to exact from the recruiter. In almost every instance, if recruiters stand firm, even if they have already surrendered on their fee, they will achieve a better outcome.

However, the best position to be in when confronted with a negotiation of this nature is to have options – in this case, to have more than one client interested in hiring the candidate. The options then become the source of power. It is remarkable how much negotiating power you possess if you have options, if you do not NEED to make the deal.

Time will tell whether or not this recruiter will ever see his full $20,000. Nevertheless, if it served as an object lesson as well as an opportunity to realize where and how he can improve as a professional, then the experience may well be of benefit.

Negotiate if you must. But without achieving concessions of equal or greater value, you may be surrendering more than just the size of your fee. You may also be surrendering your self-respect.

If you have questions or comments, or would like to discuss this issue further, just let me know. I’m only a call or email away.

Recipient of the 2006 Harold B. Nelson Award, Terry Petra is one of our industry’s leading trainers and consultants. He has successfully conducted in-house programs for hundreds of search, placement, and temporary staffing firms and industry groups across the United States, Canada, Mexico, Australia, New Zealand, Russia, England, and South Africa. To learn more about his training products and services, including PETRA ON-CALL, visit his website at www.tpetra.com. Terry can be reached at (651) 738-8561 or email him at Terry@tpetra.com.