On Getting to Yes On a Job Offer… Here, Candidate Joe – Take $5K Out of My Own Paycheck.

As recruiters, we’ve all got stories of job offers gone wrong. But it’s rare that I get knocked off of my bum with job offer horror stories like this particular one I heard the other week. Call me naive… but, I’ve got to admit that I was a little surprised when an independent, third party recruiter friend mentioned to me a recent situation where he had personally agreed to give a candidate a cut of the fee he was to receive from the employer for the candidate’s very placement… tragic story indeed.

Free-money-mwWait. Huh? The details, I’m still having trouble recalling because I am still stuck at – this recruiter agreed to give his candidate a cut of the placement fee if he accepted the job? What the…? I mean – does this really happen all the time and I just have never been aware of the practice being on the corporate side? I’m still kinda baffled by this and something about the scenario just doesn’t sit well with me. 

First, to the third party recruiter – I get it. That fee is yours. If I hire you on a contingent basis, and you find me the best possible candidate, you’ve earned your fee and you can honestly do with it as you please. Take that 20% that we’ve agreed upon and send off your mortgage payment. Go buy a Gucci bag or two, pay a semester of tuition, put it in the bank… it’s yours. But pay a candidate a portion of your fee? Really? Are other folks seeing this? Are other folks doing this? 

I suppose there are a few ways to look at this situation. 

In this third party recruiter’s mind – he’s doing the client and candidate both a favor. The candidate is right for the job. The client is a great fit for the candidate. It’s a match made in heaven and to please all parties – the client, the candidate – what’s $5K in the grand scheme of things? To deliver the ultimate client service possible, to get that candidate in the door and the offer package he really wants, why not give $5K to the candidate personally if that’s what’s needed to close the deal? 

On the flipside though… let’s say a candidate we’re working with needs an extra $5K in their offer package in order to say yes to a job offer. How there could not be any other viable alternatives to the third party recruiter giving up $5K for their own fee? Could we not explore getting that additional $5K to the candidate-turned employee after they’ve shown their worth, post hire? Maybe do it in the form of a retention bonus tied to results of some kind? 

Fine. Let’s say that option fails. If really, truly I can’t squeeze another ounce out of my company’s budgets to add in that $5K needed to seal the deal, but you as a third party recruiter will close the gap – doesn’t this bode poorly for the candidate that a third party is literally stepping in to meet their expectations? Because really – that third party surely won’t be around come time for future bonuses or performance reviews. I promise you that. So, who’s the candidate going to turn to then? See where I’m going with this? And so, why muddy the waters up now? If salary expectations can’t be met from the get go – how will they be met later? 

Of course – there are details to this story that I probably don’t know and that could change the dynamic of this story in many ways… but I’m still baffled and slightly troubled by the very premise of a third party recruiter paying out of his or her own pocket to close a deal. Or am I alone on this one? I’d love to know what folks are seeing out there – from both sides of the fence as a corporate or third party recruiter. Hit the comments section up…

FOT Background Check

Jessica Lee
Jessica Lee is director of digital talent strategy for Marriott International. In this newly minted role, she leads their talent related digital and social media efforts for the Marriott International family of brands... which means she blogs, tweets and plays on Facebook all day. Kind of. In what she'll quickly tell you is her dream job, JLee is working to differentiate and position Marriott to most effectively optimize innovative technologies to address the brand's business needs in the talent space.  Check out the baseline of what Marriott has done on Facebook, or in this profile via Fortune Magazine in which they are called out as a social media star. Pretty freaking cool what they've done already... and she'll work to take it even further to the next level. Don't be fooled by that fancy pants digital stuff though, she's still an everyday HR gal in the trenches at the core. SPHR certified, a decade or so into trench HR life... she can whip up a corrective action plan or source for your purple squirrel in a heartbeat. Talk to Jessica via EmailLinkedInTwitter or Facebook... See Jessica's riffs and rants on Fistful of Talent here...

11 Comments

  1. Josh says:

    “Of course – there are details to this story that I probably don’t know and that could change the dynamic of this story in many a ways…”
    No, there really aren’t. This is wrong on so many levels I don’t even know where to start…

    Reply
  2. Tim Tolan says:

    This is really bad. One bad apple gives the recruiting industry a “cowboy-like image” that is (really) hard to shake in the marketplace. Recruiters on the take is simply bad business. WOW!

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  3. Nope. This isn’t an “accepted practice” of ethical search consultants!
    If it takes $5k (or any number) from the search consultant to push a candidate over the edge, then I’d have concerns that there are things the candidate is concerned about – or not excited about – with the potential employer that will become more apparent after they’ve joined the company.
    Paying any percentage of the fee out to a candidate devalues the services provided by the search consultant as well. If they charged 25% of the first year salary, in theory, that should be to cover real work that is done. If their services are only worth 20% instead of 25%, then that’s what they should have pitched as their fee.
    Finally, the employer should wind up being the “good guy” in any placement. Part of selling the candidate on the new position is convincing them that the company wants them to join and is willing to address any concerns and/or meet their needs to make that happen. If $5k will seal the deal, the search consultant should talk to their client and get them to offer it as a signing bonus, or as in the example you provided, a retention bonus. There’s nothing like calling a candidate who is already excited about a position and telling them that the client is offering something above and beyond because they really want them to join. The recruiter can then be a part of starting the employment relationship off on a positive note that could continue throughout their employment, versus starting off the employment relationship with the recruiter being the “good guy”.
    In the example you shared, the recruiter is not the candidate – or client’s – friend. They’re clearly motivated by their fee and not by making a placement that meets the needs of their client or candidate. If I were the client in this instance and I found out about the $5k deal, I’d be pissed, and I’d certainly never do business with that recruiter – or firm – ever again.

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  4. Darin R says:

    I was on the receiving end of a deal similar to this. Back in the late 90′s, I was placed with a company by an independent recruiter. I was under the impression that the position was supposed to be a permanent gig, but after 6 month (and a month before my wedding), they outsourced the project. Turned out that was the plan all along and I was just there to get them over the hump. The recruiter felt awful and vowed to find me another job, and he did pretty quickly. Problem was it was 2 1/2 hours away with no relo package and I couldn’t afford to move. He paid for my relocation (a Uhaul, deposit and 1st month’s rent on a new place, some cash to get me over the hump, etc.). Total amount was about $3500.
    This was a unique situation and I don’t think it’s the normal deal, he did it out of his own sense of justice and wanted to take care of me. It didn’t work out too badly for him in the long, I’ve used him several times over the years and gotten some really good candidates from him.

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  5. Mike Coffey says:

    I guess the first question is whether the employer knew about this arrangement.
    Employers offer signing bonuses all the time to candidates in hard-to-fill or highly competitive positions. Depending on the relationship between the recruiter and the company, perhaps it made sense for the signing bonus to come out of the recruiter’s fee. Maybe their relationship is structured so that, on occasion, the recruiter pays the signing bonus, recognizing that the other three positions that are currently open will be relatively easy.
    From an employer’s point of view, this would work great budget wise. Employers want to know exactly what the cost-per-hire is going to be, especially when that cost is being allocated to the hiring department’s expenses, and if they fold a little extra money in the cost of every position, they can expect that the recruiter will have room to go the extra mile on those that need a little bump to onboard them.
    This is all wild speculation but I can see circumstances where it makes sense.
    Of course, all of this begs the question of whether signing bonuses work in the long term. I think they are short-term solutions and it would be better to build a company brand that makes you the preferred employer so you don’t have to play these games.

    Reply
  6. Above all, this sounds like a marriage made in hell. How did the recruiter get to this? It really devalues the recruiting process and the recruiter in so many ways. There is also an ethical line that has been crossed here.
    I know that realtors do this all of time to get a deal to close. But for recruiting, it just seems like a chattel purchase… really wrong on so many levels. And it seems like if this was the last resort, that the recruiter doesn’t have much of a relationship of value with the hiring company.

    Reply
  7. R Sherm says:

    Recruiter is hurting for money. The recession is affecting all of us. Recruiter needs to make that mortgage payment or pay that tuition. Recruiter only gets his 20% if the employee takes the job – this is an incentive to do so. And he does what he needs to do to get his cut. At the end of the day, it’s all about money for both the recruit and recruiter.

    Reply
  8. Andy says:

    I had a candidate who, in our conversations, was fishing for what kind of incentive I’d kick in for having such a fine candidate as him self working with me.
    I let him know I was clearly not the right recruiter for him, wished him well, and put him in my “red flag” file.
    This sounds different, but, as mentioned above, if that’s what it takes, is that really the “product” you want to be offering to employers?

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  9. Being a former third party recruiter, I have never heard of doing this nor would I advocate it. My philosophy has always been, if you have to sell it too hard, it’s not meant to be. Ideally, the candidate should want to take the job no matter how much money is offered. Of course, that’s the ideal, and more often deals need to be made. But if you are spending so much of your own energy, and ultimately money, to make the deal happen, it’s not going to happen, or if it does, last.

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  10. Josh, this is an excellent, albeit sad post. I agree with Jennifer McClure. From a organizational systems point of view, the recruiter made the wrong call. However, I question the systemic condition of the Company. Is there something askew with the organization? Let’s not be quick to judge. It’s so easy to point the finger and say “bad recruiter.” Where maybe it’s “bad economy,” or worse, “hungry recruiter.” I’m the Compassionate HR girl, so I’m reading this post and thinking the recruiter who tried to arrange such a deal must be really desperate. I think what s/he needs is coaching. As other’s have said, a recruiter of ethics and high integrity would not engage this way. It’s not fair to judge this person as low brow. Clearly, this person is scared. The entire tactic smells like fear to me.
    Thanks Josh for bringing this situation to our attention. It’s posts like this that make us take a deep breath, pause, and think. Good job my friend.

    Reply
  11. I have never done this and have no plans to. Re-read that.
    However, it seems to me that Jeff Allen, legal columnist with the Fordyce Letter, wrote once that this practice is neither illegal nor unethical. (Correct me, someone, if I’m wrong.)
    Personally, if it’s legal, then it’s legal. End of story. Lots of laws are morally reprehensible, but I’m not going to address that here. I’m all for anything that is legal and expedient.
    My job is to recruit within the limits of the law. Is this practice legal? YES / NO

    Reply

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