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Wednesday Wisdom: Short-timer's Disease
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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!
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
Replies to This Discussion
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Permalink Reply by KarenM on
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I wonder how an Inhouse recruiter is held responsible for retention as well.. especially if the hiring manager makes the final decision... They too have no personal impact over the hiring manager and his management style - or what is going on in that area of the business..
a whole year - wow, that is a business really taking advantage of a recruiter.. in many ways!
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Permalink Reply by Claudia Faust on -
Karen, Karen... just like it takes a village to raise a child, it takes a whole company (hiring managers, interviewers, recruiters, business reputation, and all) to hire and keep great employees. (Jerry, I can hear you shaking your head about all of this psychobabble all the way down here in Florida, and I hope you know I'm smiling as I'm writing it ).
Everyone is affected by the quality of new employees and their tenure with the company. Turnover costs a business dearly in terms of revenue, expense, market share, employee productivity, and burnout that can lead to even more turnover. Everyone has a vested interest in hiring well. So how is it possible that you think the recruiter has no influence? To me this perpetuates the stereotypes of renegade HMs and transactional recruiters – ego centric, short-sighted, mercenaries, bastards without a conscience (alright, so I exaggerated a bit here). When I was recruiting in a corporate setting, my job was to select, screen, and present the slate of candidates, and then work with all parties to get someone hired; mostly I worked with HMs who trusted my judgment explicitly, but even when working with difficult HMs I still had plenty of opportunities to influence the outcome.
One effective way to eliminate bad behavior is to reward good behavior. If turnover is a problem, a retention strategy should reward every single person in the hiring cycle for getting it right – and further provide training and support for a healthy relationship between the employee and the manager (consistently one of the top 3 reasons why people choose to leave a job) .
And if TPRs are part of that hiring cycle for the company, their connection to both hiring AND retention should be an active part of the reward (payment) system. My .02.
KarenM said:I wonder how an Inhouse recruiter is held responsible for retention as well.. especially if the hiring manager makes the final decision... They too have no personal impact over the hiring manager and his management style - or what is going on in that area of the business..
a whole year - wow, that is a business really taking advantage of a recruiter.. in many ways!
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Permalink Reply by Thomas Patrick Chuna on -
Sandra - excellent points, all.
Claudia - Of course it's in the interest of corporate recruiters to take responsibility to aid in candidate retention...they still have to deal with their hiring managers everyday. The effect of a moonbat getting past them would linger and create lasting consequences, correct?
That's why in house recruiters are stricken with paralysis every time they get a resume.. they reflexively reject anything that might get them yelled at by a superior. there's a company policy against the underling using one's own judgment, and by god, there's penalties for anyone involved in anything that isn't 100% successful.
(drags out soapbox)
company policies that financially penalize in house recruiters for actions they can't REALLY control are abusive.
I can see a penalty for measurable things like incomplete reference checking or the like, but holding someone financially responsible ( who doesn't have final hiring authority anyway) for what comes down to a "chemistry" and "fit" issue seems like a policy designed by someone educated beyond their intelligence. That's not a knock on you college folk, but we all know degreed desk jockeys who don't live in reality.
That's why working for a corporation can suck - other people's decisions and actions create consequences that roll downhill. being independent means I can weed out the idiots on both sides of the equation, and create mutually beneficial transactions.
Reality check - relationships between third party recruiters and hiring companies are at their core, transactional. any way we slice it, it comes up peanuts. Companies only deal with us when and if we have what they want...if we serve well, then we'll be allowed to participate in more transactions.
Trying to impose "the way" of corporate recruiters onto TPR's kind of flies in the face of why we're TPR's to begin with.. to have autonomy to control what we can, and not be hamstrung by the things we can't.
And presenting ourselves ( TPR's) as having some special process or magical ability to make hires work out long term for our clients is a bit egotistical..none of us is that good..and offering to penalize ourselves for the inability to control everything is just dumb.
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Sandra
great points - let's also mention that if one is going to hold even the internal accountable for turnover - that should mean that the Recruiter should have full access - weekly meetings with all of their hires /recruits (not much time for recruiting) for performance reviews, and of course reviews of what is going on in the office.
If the manager is the biggest Jerk from hell, as proclaimed by all employees that the jerk oversees, then You the recruiter (internal or external) now have full ability to pull the Donald Trump and say - You are Fired!
You get to fore-go head counts when your hires are stressed because they are over worked, under paid, because the company decided to go into cut back modes, and have less people complete more work in less time.. Okay.. I can go on, but hopefully you can get my drift.
Of course, being an external Recruiter, there is no way we should be accountable for the going ons w/in a department, office, or corporation.. but at the same time, I don't see how even an Internal RECRUITER can be held accountable for the same. Especially when H.R will not allow them to be part of the continual employment process. The part that happens AFTER the candidate has been hired
Oh, Yeah. Not only a Cheap Date, but our fee, is 100 Percent TAX DEDUCTIBLE!!!!!!!!
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.
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Permalink Reply by Peter Ceccarelli on -
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.
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We can use the tax deduction for our clients as our Recruiting Service is an Employment Expense, and 100 Percent tax deductible. It provides the same type of tax deduction as say our company posting a job on Monster, or the newspaper.
Sandra McCartt said:If Cat Mama of Cat Daddy as the case may be, wants to hold her/his internals accountable for retention by tying part of their bonus (that means additional comp to me) to retention that falls into the catagory of NOMDB. None of my damn business. It's their railroad and they can blow the whistle anyway they want to, i prefer a different train.
We can't use the tax deductible argument however, payroll and benefits and bonuses are a business expense just like professional fees or contract fees what ever line item they want to put us on it's the same kind of expense for tax purposes. Good thought but i can't sell that one.
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Permalink Reply by Jerry Albright on -
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.
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Sandra,
I am sorry, but what do you mean fees and payroll expense? are you speaking of oranges when I am speaking of Apples? meaning you are speaking of staffing? meaning the issue of JOINT/CO employment? Of which I am NOT speaking?
When a company pays me a fee, say 15K for a candidate that I made a direct placement, of which I received 15K - then my Client who paid me the fee, of 15K can claim that 15k Fee as a Recruiting Fee and make it a 100 Percent employment tax deduction - simple, end of story..
Jerry, a company can utilize our fees as an "employment" services expense - or even as an employment services "tool" -- or however they want to see fit, but the fact is, the client doesn't pay my payroll or employees.. (that Is OUR personal expense) - thus for our Client, it is a 100 percent tax deduction, the same as if there were using Monster or other tools for employment purposes.
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