Times are tight. Recruiters, like everyone else, at times need to tweak the marketing of their services to create demand.
Remember when I said this?
"Here's the reality regarding contingency search fees:
-Almost every recruiter is going to say their rate is 25-30% of the first year's salary.
-You have to have a position on what you are going to pay.
-After negotiating, the 25-30% quoted initially can usually be whittled down to 20%. If the recruiter is playing a volume game in terms of trying to be active in as many searches as possible, you can sometimes get 15%.
So, the recruiter says 25%, you say 15%, and you usually agree to 20%. Welcome to the wonderful world of negotiation, where the first number is rarely the real number. It's like buying a house…"
A couple of my recruiting buddies took me to the woodshed for that view. One of those buddies at FOT, who shall remain nameless, still hasn't cut their part of the point/counterpoint FOTv series around this topic. Offer still remains, my friend. I say it's 20% in the market.
As it turns out, even the recruiters who are working at the 20% level are having to tweak their marketing message. From The Fordyce Letter:
"An executive recruitment company has just announced its plans to undercut competitors by offering a flat fee of 10% per month of what the employee is paid for 24 months.
If the employee does not stay with the company — Schwelling Recruiting Services, which specializes in C-level executives as well as sales executives and new business development executives — the employer is only responsible for the months actually worked.
What does this say about the company overall? And what does this say about the economy and what it’s doing to our competition?"
No details on whether the entire 10% of 2 years comp (that's 20% people..) is collected upfront. The 20% remains the reality in my eyes (Even an expert like Harry Joiner talks about 20% being a common fee), but the equivalent of a two year guarantee? 2 years? Hugo Chavez might be running the company in 2 years for all I know…
20% yes…. 2 year guarantee? Insane…
It’s what ever can be neogtiated on the spot. Right now, twenty percent with a client who is realisitic, responsive, informed, and organized is pretty attractive. A lot of companies respond by saying, Ok, we’ll wait.
The company I recently worked for had a policy of only paying 20% across the board and easily got away with it (we probably could have negotiated lower in this market). There were times when I would get 20 calls a day (sometimes more)from third party recruiters wanting to do business with my company. Everyone wanted to start at the 25-30% mark, and there were a few that did not want to budge. All in all, I hired and trained my internal recruiting team to proactively recruit so we really didn’t have a need. However, in the rare instances where we were able to use a little help, we had many niche recruiters to choose from. Now to go much lower than that could be kind of a stretch, as I have also been on the agency side and have an idea of what can go on there as well. A third party recruiter might have accept a low rate (contingency)if there was nothing else to work on, but your requisition goes to the back burner as soon as they have something to work on that will pay more.
Regarding the two year guarantee, that reminds me of the scene in Tommy Boy where he talks to the store owner regarding guarantees. (Sorry couldn’t quickly find a link.) Bottom line is that TPR’s are paid for finding top quality candidates for you to hire. It isn’t their fault if the candidate doesn’t stick around for 90-180 days or two years. That has more to do with the selection processes, onboarding/training, and management of the individual. In this case it sounds like Schwelling has taken a page out of the staffing playbook…think billrate-payrate without having to carry the payroll.
Owww. Owww. Owww. I’m getting called out by KD playing hard ball on his 20% fee platform. Now that I hear FOTv is back on deck, I guess I’ll have to bring it! Stay tuned…
I concur with one part of your post KD. In a word “INSANE” works for me.