Since 2008 we have seen businesses fail, jobs lost, inventories cut, marketing budgets slashed, and lots of markdowns. Over the past year however, life has seemingly resumed again. People are starting to buy extravagant items, businesses are getting back on track, and, if you don’t read the news on a daily basis, you’re feeling pretty good about life.

However, a new trend has recently popped up and it’s not a simple matter. Perhaps being in the executive search universe, we are more focused on it, but it cuts across all sectors, functions, and companies. I call it the “Art of the Negotiation.” And it’s not just playing out in the courtroom anymore.

Never before in my professional life have I seen this – and I used to sell furniture for a living. It seems we can’t get by without some haggling. Nothing, and I mean nothing, is taken for face value anymore. Everything is a dance – in which both parties say exactly what they want, how they feel, and are happy to draw a line in the sand.

Negotiations Double Time to Offer

Over the past year, the average time it takes to finalize an offer has more than doubled. At times, the negotiating process is even longer than the search itself. When a candidate and a client fall in love, it can all dissipate if the numbers aren’t quite right. More than ever before I’ve seen this dance take the wrong turn, spurring bad feelings, counteroffers and ultimatums.

On the client side there is a mentality that people were overpaid during the frenzy of the pre-2008 timeframe and that this recession should have opened their eyes and made them aware that everyone is replaceable, that they are lucky to have this offer, unwilling to budge. Needless to say, the candidates are less inclined to recognize their good fortune. From their perspective, they feel that that the economy is better, businesses are starting to boom again and 20% salary increases should be compulsory to even thinking about taking on a new job.

Job Pre-Nups

Then there is the middle ground, where the recruiter tends to act as mediator. Think of hiring a new employee like a marriage, two entities joining together to form a team, one that is bound by certain promises and pieces of sacred paper. The negotiation process is somewhat similar to drawing up a couple’s prenuptials. It’s quite uncomfortable, always takes longer than one expects, and it’s difficult to make both parties absolutely 100 percent happy – but hopefully, there’s a compromise.

My role is to advise clients about the market realities, and help them to understand that their requests may be too extravagant. On the candidate side, I have to guide and mentor them through the divergences of their fantasies and the clients’ less romantic standpoint. Fortunately, we almost always get there – in the end most parties see the bigger picture and understand the realities of the situation from the others’ side, not just their own.

Everything we experience is an opportunity for growth and learning. The “Art of Negotiation” is a dance that we are all perfecting in our own way.

This week’s inquiry comes from Tarin Yankovich:

Hello Jeff,

First off, I have been a fan of you and the Fordyce articles you write for years, thank you for all your great advice! Your experience and wisdom have giving me the foresight on numerous occasions to avoid situations that would have otherwise cost my firm valuable business. Here is a recent question that came up; I thought you’d be the perfect person to shed some light on it for me and possibly your readers.

I run a search firm in Los Angeles and run a national practice within the Finance space. We work with many of the largest finance companies in the world. As most, our business goes in cycles with clients, meaning we’ll do many searches with a client one year and the next we won’t. As a result, sometimes a couple years go by during which time we won’t work with a client but still have contracts with them.

I have one particular client I worked with in 2007; we did many VP level searches for them and they were happy with our results. At the time I had several contacts at various levels within the organization in Chicago, Boston, and New York.  Since the 2009 recession and with a myriad of internal changes at the company literally all of my original contacts both in HR and management have moved on, their assistants have moved on, and even the President of the firm has moved on. Additionally, the firm changed their name a couple years ago using hyphenated name, and recently the firm has dropped the old name altogether and only uses the new one.

Here is my dilemma, I have continued to call on the firm and know who most of the new players are.  Recently I found an open door and am trying to rekindle this relationship with a new search assignment. I don’t want to lose momentum with a new contract if I don’t have to. I have a signed contract, my contract (not theirs), from several years ago, at a percentage I really like. I don’t want to haggle with a new HR person, renegotiate a good contract, and possibly lose the search or get a lower fee than I negotiated pre-recession. However I’m smart enough to see a couple possible issues. I have a contract, with no expiration date, which is signed by a signatory who is no longer there, under a name that the firm no longer uses. I do have some wording that says should the signatory leave his position the contract is still valid, but I fear I’m facing a few issues and want to make sure I’m covered. So, is my contract still valid?

Any guidance would be much appreciated.  Thank you Jeff!

Tarin

Hi Tarin,

Thanks for the fan mail!

Amybeth Hale and the rest of the Fordyce stars will magically beam our conversation around the placement planet. You’re helping us make the world safe for placement!

Now, on to your inquiry.

If I were still working a desk (Oh, I’m not? Sorry!), I’d be smart like you. Assumptive too. I’d assume I had an enforceable agreement with the client. That’s a five-figure assumption.

There are five reasons why:

1. The terms of your fee agreement are more favorable than you’d be able to negotiate now.

This means the reward of placing pursuant to it justify the risk of it being unenforceable.

Who knows what might happen if you start making waves? Perhaps you’d be hit with a PSA (placement service agreement). That would mean a low fee ceiling, a goofy guarantee, and a basic employer-lawyer wish list. Who needs that?

At best there would be delay and uncertainty until a deal was made. Just nonproductive HR happy-talk, hassling, and hiccups.

2. Your fee agreement covers the “successor liability.”

Although I haven’t seen that agreement, I’ll take your word that it covers this sitch.

If you’re right, great. But even if you’re wrong, there are other options.

Read on.

3. Your fee agreement is “impliedly assumed” by the buyer.

The implied assumption concept is legally like your five-figure one (with more words).

An implied assumption is the legal happening that happens “by operation of law” when a buy-sell agreement is executed (completed) that omits a liability. The buyer didn’t actually (knowingly) assume liability under your fee agreement. So you can budge a judge to assume the deal included the ongoing rights and liabilities of the biz. (Just like you!)

In the absence of an actual (knowing) assumption of liabilities, a contingent liability (like a fee agreement for a future placement) would likely be impliedly assumed by the buyer in conjunction with a sale of assets of a business. Why? What changed? Just the faces and maybe the places. But basically, the business continued intact. It even needs the same kinds of employees. There was just a change of ownership of an ongoing business.

The buyer could have discharged (eliminated) contingent liabilities, but this requires notice to the creditor.

You didn’t receive actual notice (“Hi, you’re history. Bye.”), and you didn’t receive constructive (pretend) notice (because there was no publication in a newspaper to “All Creditors” or whatever).

That’s the Legalese way to lay out the case for an implied assumption of liabilities. We use it to convince employer lawyers to pay and courts to make them pay.

4. Your fee agreement is “assumed” by the “successor entity.”

The usual scenario starts when the client acts on your referral. The interviewing process starts. Then somewhere in my famous “Ten Steps In The Placement Process,” the client tries to shoehorn in some new agreement with you.

Whoa! It waived its right. A waiver is the voluntary relinquishment of a known right. Here, the client says it didn’t know of your original agreement with its ancestors, or didn’t think it was bound.

You reply that it knew or should have known about it, since when it assumed the business, it took subject to (acquired) its contingent liabilities.

Now, the client’s estopped (legally stopped or prevented) from denying liability. It waived its right to do so.

Of course, it doesn’t have to hire your candidate. But that’s not the way it works. If they’re in love, a hike in the marriage license fee doesn’t estop the marriage. I know this for a fact. When it happened to us at the counter in 1972, this HR mangler had just enough money left to move the license celebration to Arby’s.

Isn’t this fun? We’re just jivin’ with the jokers using long words with many syllables.

5. It makes no difference when your fee agreement was signed, by whom, or where they are now.

All that matters is that someone signed it. “Unauthorized” or “authorized”, demoted or promoted, fired or retired, insane or sane, dead or alive.

Anybody with a signature who signs (“X” is fine) and sends back the agreement binds the client.

Best wishes for placement after placement under that original fee agreement. Your go-for-it” approach is just what it takes. Now you have the ammo to back up your assumption.

Thanks again for the fan mail and a super JOC inquiry, Tarin!

Jeff

If you have a legal question you’d like to have Jeff answer here on The Fordyce Letter, check out Jeff’s On Call! and submit your question.

To commemorate the fifth anniversary of my career in recruiting which recently passed, I am sharing with you over the coming weeks the five biggest learning lessons I’ve experienced thus far during my time at the Aureus Group. Last week, I shared the story of an email that got me ‘fired’ from a client. This week, I bring you…

#3: Story of the Botched Salary Negotiation

The client was a bank in Nebraska that had multiple branches in a mid-sized Nebraska town, and the position was Market President. The person hired would oversee all Commercial and Agricultural Lending in that Market and surrounding areas. I made a call to the HR Manager of this bank on a referral from someone I knew who worked there. Things started poorly as the job order call proved to be a total disaster. From the beginning, I felt no connection to this HR Manager and she even admitted she had engaged several recruiters on this search hoping to fill it quickly. She paid no attention to questions I was asking that were critical to finding the right person, and went right into asking about fees. Amazingly, she quickly accepted my 30% bid, and started ushering me off the phone immediately. She referred me to the regional banking manager to ask more questions regarding the position.

I called this so-called “hiring manager” an hour or so later, and he had absolutely no idea who I was and would not give me any info at all. He took my info quickly and said he would get back to me after he checked with HR. So far, nothing about this process went how I would have liked. In retrospect, this is the point at which I wish I had run away like I stole something. My stupid pride and low job order pipeline at that time refused to let me leave.

The next morning, the hiring manager called me back and said he had talked to HR and received authorization to talk to me. At that moment I knew who wore the pants in this hiring process! Nevertheless, he and I talked through what he needed and his urgency was ever-apparent. We worked through the criteria he was selecting from and I was convinced we had candidates that would be a great fit. We then talked about why this was a great opportunity for someone, and he was able to sell me on this compelling story. Feeling re-energized on this search I next asked about money. His response to the compensation question brought me back to Earth:

“Our bank does not believe in compensation ranges. We’ll pay what we think the candidate is worth.”

Huh!? What in the world does that mean? I tried to ask the question two or three different ways but he was like Fort Knox with this information. The only thing we arrived at was, “We can’t pay this person more than what I make, because they will report to me.” Okay, that’s something to work with. So naturally I asked the obvious question.

“What do you make?”

“I’m not going to tell you that!” He responded with a tone of condescending annoyance, and quickly ended the call by saying, “You can send your candidates directly to me.” And that was it.

So, this is where we were:

1. Not sure who the decision maker truly was.
2. Lack of trust in HR.
3. An apparent lack of trust in me.
4. No compensation bands.
5. No idea how the position is compensated at all.

But, we had urgency! So, of course, I ignored all the blood-red flags and pressed on. All of what transpired to this point was so counter-intuitive that it should surprise nobody that within three days of this disaster job order call, we would have an offer on the table for a candidate we presented.

We talked to about five total individuals that first day of recruiting about the position. Three showed genuine interest in looking at better opportunities. Two of them knew of the opportunity already and had no interest. Just a simple lack of desire to work for the bank in general. The third, however, agreed to interview. On paper, she was perfect! We did our interview, started background checking, and submitted this candidate with resume and complete compensation requirements. The client responded almost right away with an interview request for later that week. We set everything up, prepped both sides, and awaited feedback on the meeting. It was late in the afternoon, following the interview, that the call came in from the HR contact with a desire to offer.

I dutifully took notes on the details of the terms they wanted to offer her. As I scribbled furiously, I realized that what they wanted to offer was nowhere near where our candidate needed to be. I told her point blank, “This offer is not going to get accepted.”

“Why not?”

“Well,” I started my explanation. “First, it’s well below where this candidate needs to be to make this move. Second, she still has more questions about the position and would not be ready to accept any offer.”

“What does she need?”

“If you look at the resume cover letter I sent you will note that her requirements are…” My perceived attitude was not appreciated at all, and she admonished me much the same way I would my 4-year old for talking back to me.

Okay, so I could have handled that better for sure. Even still, she asked me to put together a detail of this person’s full compensation package.

We went back to the candidate and found that she now magically made more money than she did a day ago. Of course she did. Somehow, she remembered she got a raise last month, and a bonus she had forgotten. Now she needed even more money, and she still had questions for the hiring manager. I went back to the HR Manager, tail between legs with the description of her comp package, and her newly defined needs.

I think we all know what happens next.

After the berating, she finally asks me, “Well, how does she earn her bonus?” I had absolutely no idea, as it escaped me to ask my candidate.

Another rookie error.

So, I went back to my candidate and asked her how she earns her bonus, and she had no idea. She could not recite any version of how it might be earned, except that she knew it was dependent on “certain bank and individual factors.”

The next day we re-delivered the compensation picture of this candidate to the best of our ability, and even got the candidate back in front of the hiring manager again. Shortly after, they made the same offer they had before, which represented just a small increase for my candidate’s current pay. She considered it fairly hard, and said that due to the increase in responsibility she simply needed more money than that. We went back to the client and countered, and finally found that invisible ceiling I wish I knew about all along.

“That kind of money violates our internal equity guidelines and just won’t work. Our initial offer is our final offer.” The offer was turned down, and I became the scapegoat for everything. The candidate was upset that we would represent her to an opportunity that would never meet her goals. The client was upset that we would find candidates that were above their range. And I was upset — if they just would have told me their top end, all of this could have been avoided. That was a moot argument to my client though and too late. They decided it was better to not work with me anymore (the feeling was mutual, by the way).

This engagement proved to be a blizzard of failure on all parts. The client was ridiculous in their attempted partnership with me, but my personal mistakes were many. Here is what I learned from this experience;

• Always, always, always understand your candidate’s current compensation package completely. Inside and out.
• Never spend any of your precious time on a search without an intimate knowledge of the compensation package.
• Sometimes, high client urgency is just not enough to justify a search.

Stay tuned next week for #2…

image source: Images of Money

And it starts with those six dreaded words: WE NEED TO NEGOTIATE THE FEE.

Your mind starts racing; how can this be? It’s the end of the process – why is this coming up now?

DON’T PANIC! This happens to the best of us…even when we have a signed fee agreement in place.

Take a deep breath, and…

Evaluate the situation:

1. Did the search fundamentally change during the process? For example, did they hire someone at a lower salary range or in a different role than the search parameters first specified? Needs and wants evolve throughout the process and you want to be mindful of how your agreements are written. Do they address the exact job title and salary range or is there room for interpretation on the client’s side?
2. Has the client’s business position changed since initiating the search? Hopefully your fee agreements cover change of ownership or structure in the client company but if they don’t you might want think about including language that will hold the agreement through such restructuring.
3. What is the real reason this is coming up now?

The most common reactions might include:

• “What are you talking about? We have a signed agreement in place!”
• “We are at the end of the process and I have provided you the candidate you intend to hire based on the engagement letter you signed, correct? Tell me, what part of the service did I fail to provide?”
• “In what way do we need to negotiate?”

A less defensive, consultative approach sounds like:

• “Tell me, how can I help? What’s happening?”

This response will reward you with a more complete answer.

We’ve all heard these common reasons people want to negotiate fees at the last minute, but just in case for the newbies:

• The C-level executive has a friend that s/he can bring in…but s/he likes your person best…but s/he doesn’t want to pay such a high fee.
• We found the person in our database.
• It’s between your candidate and another and yours is top choice but their fee is half yours.
• The person who signed your agreement was not ultimately authorized to do so.
• We’ve lost a big client/contract and will see a decline in our revenue because of it.
• Since this person is unemployed we want to bring them on temp to hire rather than direct hire.

Since none of these has anything to do with you or your service, here’s some ammunition for your polite response arsenal:

• “I can certainly understand your situation, however, we have an agreement in place, and I have worked honorably under that arrangement and will continue to honor it, including the guarantee portion, non disclosure, and non compete (if applicable).”
• “My competition’s fee and services are not within my area of control.”
• “I can empathize with unexpected changes in our constantly evolving business climate, but the work has been done and the candidate is ready to accept. Perhaps we can negotiate differently on a future search to accommodate your budgetary changes.”
• “People are more committed to the job if you are committed to them. Bringing them on as a temp may not stop the interviewing process for them and it will be very unfortunate if they leave your company for another job after a couple of weeks.”

How you handle these situations says a lot about you as a recruiter.  When you’re able to position yourself as a consultative partner, you’re able to work from a place of mutual trust for the future.  Showing some kind of understanding, flexibility, and empathy goes a long way when you’re developing a long-term relationship.

There were responses coming from all kinds of perspectives for this inquiry:

• “Remember that salary requirements should never be spoken about in first interviews (provided you know that there will be a 2nd or 3rd round of interviews). Unless the employer brings it up in the first interview, don’t bring it up.”
• “Start by being honest with yourself, why are you taking a step back? Are you going to bolt when something better comes along. You need to research the position you are applying for and tell them that you are aware of the difference in salary. You need to look at the role and state honestly why you want it and what you could do for them.”
• “Generally candidates try to deflect discussions about salary and benefits until they have been offered the job and persuaded the interviewers that they are ideal candidate for the job. Smart candidates will do everything to avoid answering direct questions about salary and benefits. Try to bring him back to the parameters which he is looking for and put emphasis on your your suitability for this job.”

This is a tricky topic these days with lots of job-seekers putting themselves up for positions that are a level or two below them simply because they need to make ends meet. There is always the possibility that these candidates will cut and run once things improve, but this is also a very real situation that doesn’t seem to have any one agreed-upon answer.

There are really two issues here: interviewing for positions that are a notch or two below one’s current level, and discussing salary during the interview process. Would you send a candidate to interview for a position that was below his or her current level? How do you advise your candidates on when to discuss salary? Weigh in with your thoughts below.

You have probably seen this in your free training, but this will be live! So join us to refresh what you know, or to ask questions or share with your team. This fast-paced session will bring you back to the basics — let’s face it, everyone in the industry is often faced with having to lower their fees or go head-to-head with free resources, such as job boards and ads.

If you hear, “Your fees are too high,” or “We are going to see what we can get for free first,” this session can save your desk.

The method can be implemented on your very first call after this session; the concept lies in getting back to the point of understanding what the word contingency means and how you can better sell this to the client. In essence, you can never be overpriced when it will always be the customer who will decide if they want to pay the price. The best part about this technique is that you don’t have to change the things that have worked for you in the past.

Be sure to register here.

As closely connected as these two processes may be, negotiation, if necessary, should begin only after an initial commitment has been reached with your prospect.

Consequently, don’t get dragged into a negotiation unless you have reached agreement in principle to do business together. That’s the purpose of the sales process.

In my negotiation training programs, I stress that all negotiation is based on power, whether real or perceived. A carefully executed sales process will establish what degree of power you possess as you enter the negotiation process. If you have positioned yourself and/or your services in a manner that creates an image in the eyes of your prospect that he/she cannot walk away, you have a powerful negotiating position.

Since the prospect believes they cannot walk away, they will be negotiating from a weak position, a position of need.

Remember

In negotiation, need is death, want is life.
Jim Camp

The best example of need and the negative leverage it creates in negotiating is the recruiter who believes they must make the sale.

This belief will make them accept just about any concession the prospect requests from discounted fees, to an extended guarantee and unrealistic payment terms.

The best defense against the negative effect of need is the establishment of a BATNA. In negotiating cycles, this acronym stands for “Best Alternative To a Negotiated Agreement.” In other words, what is your back-up position, your “line in the sand” from which point you will no longer negotiate? Your BATNA gives you the ability to walk away from the deal if acceptable terms cannot be worked out. Ultimately, in addition to your prospect’s need, this is your real source of power when negotiating.

In the July 2009 issue of this publication, Dave Staats (Pinnacle Perspective) stated, “There are almost NO programs on pure negotiating theory sold to our industry.” Whether or not this is true, I don’t know. I can only speak to my own training programs on this topic. That is why the editor suggested we rerun the following article from the July 2007 issue. My above commentary serves as an introduction to this article.

Do You Negotiate or Surrender?

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 only hire the candidate if the recruiter agrees to the following payment terms; $6666.66 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 agreed to the terms, the placement was 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, 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

Any time 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. 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 in order for them to justify paying your full fee (See my article “Add One Placement Per Month”). If not, select a different candidate, different prospects, or prepare to be compromised 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 decision is a positive reflection on you, the value of your services and lends support to the overall objectives of your organization.

In the scenario described above, the recruiter believed he 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 prior to 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 may 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 just 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 the Recruiter stands 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.

As always, if you have questions or comments about this article, about negotiation strategies and techniques, or wish to receive my input on any other topic related to this business, just let me know. Your calls and emails are most welcome.

A: In general, I am not a believer that lowering your prices will bring in more business. That is not the purpose of your question, but if you are thinking of trying it, then DO NOT.

Here is a brief video on that topic. If you get really good at selling contingency, then you should almost never have to discount it. If you haven’t seen this episode of Fordyce TV on perm fee negotiations, take time to watch it now!

Any time supply exceeds demand, it is reasonable to expect to see some element of pricing pressure. There are always times where we need to drop the fee on a particular order, but you are right to worry about your ability to raise fees later on. It is much easier to lower fees than it is to raise them! The same holds true if you agree to work with a client at any fee below your full fee.

Here is a great trick to ensure that your discounts are viewed as one-time only discounts:

NEVER, EVER, EVER, NEVER, EVER, NEVER (get it?) LOWER YOUR FULL FEE. NEVER!! BUT, feel free, WHEN YOU HAVE TO, to offer a special one-time or limited DISCOUNT to your fees!

For example, if you always do a 30% fee with a client and decide that you WILL agree to what nets out to be a 20% fee, here’s how you do it.

Simply KEEP YOUR FEE at 30%, but give them a 33% special “recession buster” (or whatever you want to call it) discount.

Thus, your invoice would show the fee at 30% less a special “recession discount” (or “agreed-upon one-time discount”) of 33% and then show the net fee. For example, on a $50,000 salary, you would invoice the client $15,000 and show a $5,000 discount, with a net fee of $10,000. Thus, your fee is really a NET of 20%, but you have invoiced them at 30%!

The client gets what they want and you have made it clear what your fees are. Thus, you haven’t lowered your fees, per se.

This is also great because even many recruiters get stumped by how much of a discount you are offering a client (or what they are asking for). For example, a client may not think twice to ask you to go from 30% to 20%, because after all, that is a 10% discount. But we just showed that it is a 33% discount. Similarly, going from 25% to 20% fee is a 20% discount (and not the perceived 5% discount).

Twenty percent is a huge discount, so if you are going to do it, you might as well make your generosity obvious!

Do this even if you are happy to get a fee at 25%. Start your negotiation at 30% but as soon as you agree to do the deal at 25%, write it as a 30% fee with a 16.67% discount. This way, you may raise the fee one day. Even if you never plan on raising the fee, you can always agree to give your client a lifetime priority discount of 16.67%.

***

Ask Neil any question that is vexing you! Have trouble closing deals or selling? Neil can help! To ask your question and possibly have it published online, email Neil at Neil.Lebovits@TheDynamicSale.com and put the words “Nudge Neil” in the subject.

In this fast-paced, highly energetic, information-packed episode, Neil will “go back to the basics” to share a technique that most recruiters, let alone clients, don’t even think about.

“You can never be overpriced when it is always the customer who will later decide if they WANT TO PAY THE PRICE,” he says.

It’s a simple but seldom used close that works almost every time, he adds.

“If what they fear now is true — that you are indeed overpriced — then they will indeed not hire your person later. However, if they are wrong now, then they will be thrilled that they saw your person!”

Neil will share the concept, closes, analogies, and potential scripts that can go along with it. This is a great method that can also incorporate all of your proven “fee closes.”

The show starts promptly at 2pm ET on www.fordyceletter.com (right before the show you’ll see a small TV logo — click that box and enjoy the show — if you don’t see the box at 2, try refreshing the screen once or twice until you see it). There will be a live Q&A session via the chat box after the presentation, too, so come prepared with questions.