Wednesday Wisdom: Short-timer's Disease

Dear Claudia,

Should third-party recruiters be held to the same standards for new hire retention as internal recruiters? My corporate recruiters are held accountable financially for retention up to one year post-hire (their bonus is tied partly to the retention of the candidates they hire), but our agency recruiters currently have no standardized expectations around this metric. What do you think is reasonable?

Cat Herder

Dear Cat Herder,

Reasonable is one of those words that depends entirely on the perspective of the beholder, don’t you think? Since you already know that you won’t be able to please everyone in setting this policy (and there are those who may get downright pissy with you when you do), keep your eyes on what you believe is most important in the outcome. Here are a couple of things to think about in that regard:

What is “healthy” turnover at your company?
Having zero turnover can be as debilitating for a business as having unusually high turnover. And turnover in some jobs can impact the business more heavily than others. So what’s healthy for your company? Usually it’s not a number that stands alone; it is influenced by other numbers like revenue (and who produces it), expenses (and who manages it), and productivity (and who drives it). Before pay is tied to performance for recruiters, you need to know the impact that turnover is having financially on your company, which recruiters (or agencies) are the “source” of that turnover, and if the departure was desired or not.

What is the role of the recruiter in the decision to hire?
I’m a firm believer that the punishment should fit the crime, so to speak. How much influence do your recruiters (agency or otherwise) have on the hiring decision? The more control the recruiter has on the selection of the finalist, the more they should be held accountable for turnover in that first year. This goes for managers too, by the way (although their sphere of influence extends for as long as the employee reports to them); a policy like the one you are considering should affect the company as a whole, and not just recruiting. Are manager bonuses tied to retention in their departments as well? If not, consider to be an agent for this change at your company.

How do you incent long-term outcomes when payment is made immediately after hire?
Ultimately, accountability implies that there are consequences for actions, and it seems to me that there are only so many consequences that can be imposed on agency recruiters: you can fire them, give them more business, or set a minimum fee for their services that is increased based on a solid track record of employee retention for their hires.

I like the third option, because you’re paying for a win-win: lower turnover and a long term working relationship with agencies that are as committed to your business success as you are.

**

In my day job, I’m the Head of Products for Improved Experience, where we help employers use feedback to measure and manage competitive advantage in hiring and retention. Learn more about us here.

Do you have a question you'd like answered in this weekly forum? Drop me a line!

Tags: agency recruiters, dear claudia, dear_claudia, fees, metrics, turnover, wednesday wisdom

0 members like this

▶ Reply to This

Replies to This Discussion

Permalink Reply by Peter Ceccarelli on July 9, 2009 at 1:45pm

Nice! Very well stated my dear!

Sandra McCartt said:

Ok Cat Herder,
Lest you think i am one of those egocentric, rat bastards that Claudia was talking about, i got a deal for you.
Since it sounds like you really want TPR's to work on the same retention metric as your internal recruiters, here's the deal. You pay me a monthly retainer equal to your most experienced recruiter for a year, plus another allowance to equal the % of that retainer that equates to the benefits your internals receive, plus matching my 401K contribution at the same % as your internals. In addition you pay my phone bill, my office rent, the cost of any advertising i do for your positions, job board costs, furnish me a computer, internet costs, ats, tech support, two to three weeks paid vacation, overtime after 5:00 and weekends or no overtime if your internals are exempt. Oh, and you pay half my self employment tax on that retainer. That should level the playing field with your internals on base comp package.

In addition i will need full access to all your hiring managers without having to go through one of your internals, a listing for every job you have for the year, be included in all recruiting meetings, strategy sessions, planning sessions, make me aware of every potential termination in advance and every promotion so i have a little lead time to be on top of it when the HM is ready to backfill. I get to be involved in the onboarding, have access to the new employee during training and orientation. And of course since i'm new you won't expect me to produce much for the first 30 to 60 days until i get up to speed on the company , people and culture.

Now about that bonus for retention on top of all the comp and conditions that will make me as a TPR equal to your internals ...sure, you betcha, i'm in, onboard, let's roll. Go buy the gold watches. What's my bonus potential for retention???

If that is not acceptable then maybe since i don't cost you anything until i produce a better candidate than your internals can identify or find one they can't and your HM's hire them and they stay 90 days or i do it all over again at no cost to you ,plus if i want to continue to recruit for you my referrals that you hire need to perform above average ...maybe i have earned my fee when my candidate is hired and completes the guarantee period.

Not to mention that if i don't produce and my hired candidates don't stay put you don't have to fire me, you just don't call or write or send flowers, you can just hit delete and i'm gone. No severence, no pool, no pets, no tickee, no washee, no wrongful firing, no unemployment claims. Let's face it , i'm a cheap date and i never have a headache.

Now really, i perform a service just like the priest who married you. Would you expect to tie his fee for service to the fact that you and your spouse got a divorce in the first year or two after you were married. Would you expect to only pay your lawyer if you got the settlement you wanted.

▶ Reply

Permalink Reply by Jerry Albright on July 9, 2009 at 4:00pm

Uh, hope you don't mind but I'd like to offere just one smidge of clarification.

Our fees are not "Employment" expenses. Sorry. They are professional services - at least that's the category I use for any outside consulting services.