By Aaron Dodd, Operation Director of the Mindset Group
In 23 November's Recruiter Daily Daryl Keeley, MD of specialist recruiter MACRO commented that “Low-balling” clients damage recruiters’ reputations. He is right of course, but the issue is more directly related to the contingent recruitment model.
If a recruiter is retained they are done so on a project fee basis, incorporating staged payments. The fee is negotiated up-front and is usually based on a percentage of the EXPECTED final salary package. The very act of up-front negotiation ensures that both the recruiter and the client are very aware of the salary on offer. There is no room for surprises down the track at offer time, so the low-balling scenario will not exist and the recruiter’s and client’s reputations will not be compromised. Further it commits both parties to a ‘shared risk’ model. Under the contingent model, all the risk lies with the consultant, hardly an equitable fair contract!
The other point to note is that if a client is offering a very low salary for a role and will not change their mind or their offer, why accept the assignment in the first place? If the role is going to be impossible to fill (or retain an effective candidate in) why do work that you ultimately won’t be paid for? It will make better use of time to use that non-billable time to find better new clients than to spend billable hours doing unbillable work recruiting for roles that can’t be filled due to low salary offers.
In summary therefore the Daryl Keeley’s accurate consequences of low-balling can be effectively negated with the retained model and a more selective approach to the work a recruiter actually takes on.
By Aaron Dodd, Operations Director at The Mindset Group.
Much has been written of late about the many flaws in the contingent recruitment business model. Last week I experienced first-hand just how seriously poor the model is. Those that promulgate it and try to run their recruitment businesses with it will ultimately fail their businesses, clients and candidates. They also act as the best advertising money can’t buy for those recruiters who operate with better proven exclusive and ideally, retained models. The case story follows;
Preamble; Mindset only operates on retained exclusive recruitment and selection assignments. We will walk away from non-exclusive jobs and only work on a retained basis as we like to be paid for the work we do. The client in question has an exclusive retained services agreement with Mindset that commits them to use Mindset exclusively for all their recruitment activities for 12 months, in return for a set competitive fee structure. This is not a preferred supplier agreement but an exclusive supplier agreement. Mindset has many such agreements with its clients.
We are currently recruiting a State Manager for just such a client. Mindset has advertised the position and has also carried out a parallel search process to uncover suitable passive candidates. On Wednesday I commenced a first interview with a candidate who had responded to an advertisement. The first thing he said to me was “you should be aware that I was already interviewed for this position by another agency on Monday”. Further investigation revealed that a contingent recruiter without permission of the client had advertised the position and was interviewing candidates, telling them that he represented the client.
The client was duly forwarded a copy of the web advertisement and was rightly furious. He issued an immediate request to the contingent recruiter to immediately cease and desist all actions “on their behalf”. The MD and owner of our client is a former practicing solicitor and prior to running the business was partner in a major Melbourne law firm specialising in commercial law. He believes that the actions of this recruiter may well indeed be fraudulent as he is misrepresenting to candidates (and others) that he represents Mindset’s client.
Further it then transpired that Mindset had interviewed a candidate that we had uncovered through our search processes. This candidate had been “floated” to the local manager of our clients business a week or two earlier by the said recruiter. This local manager had met with the candidate but no offer had been made. No contract had been entered into either as the local manager does not have the authority to commit to such contracts.
The contingent recruiter then started to send threatening and unpleasant emails to our client about “his” candidates and that even if they were employed via Mindset (by no means a foregone conclusion for either) that he would be invoicing our client. The more these emails came in, the more the MD hardened his attitudes towards him and better yet, the more professional and ethical Mindset was perceived to be! Naturally the legally-trained MD wasn’t the least bit perturbed about the contingent recruiter’s threats. He was more annoyed that his time was being wasted by him.
Reading these emails it became clear to me that this contingent recruiter had assumed that ALL recruiters work with the same non-exclusive competitive model that he operates under. His thinking was so set that he was unable to conceive of an alternative way to run a recruitment business. He refused to accept the definition of “exclusive”, let alone “retained”. This recruiter also had 22 separate positions listed on a major job board. It needs to be asked; how could a client possibly get a quality service from someone with allegedly so much work on their desk already? How many of these jobs were even legitimate? Our client’s listing certainly wasn’t!
To summarise the effect that the non-exclusive contingent business model has;
I recognise that there will be shonky operators in any industry and trust that market-forces will ultimately weed them out. However in the meantime I thank them profusely and encourage them wholeheartedly. They entrench our clients with us and drive new ones to us in their scores. Once they are with us they don’t leave!
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