Why There's No Guarantee on Contingency Searches

The best guarantee a company can receive is when a firm works on a contingency basis. If we are not successful in our search work, then the customer pays nothing.

Contingency work is the ultimate service guarantee because we accept all the financial risks and we absorb the cost of the lost hours, telephone bills, postage, support staff and administrative time.

Statistics indicate that the average recruiter invests between $9K -$12K on every search. Even when we have located the candidates you want to see, we absorb losses resulting from multiple firms working on the same assignment, internal referrals, social media, internal promotions, applicants on company websites, job board posting, hiring freezes and other potential deal breakers. Who could ask for a better guarantee than that?

Most of our clients think we sell people. We don't. What we do sell is a service that locates, screens and presents candidates for our client's evaluation. We cannot guarantee that which we do not sell. We sell a recruiting and referral service which is guaranteed by our contingency arrangement. We cannot guarantee the client's hiring decision, work environment, orientation, training and management abilities. If we don't perform, the client doesn't pay. Sometimes we do perform, but the client still doesn't pay because of freezes, approvals, dual referrals,etc.

Here are two areas in which our clients receive monetary value from our services:

1.) During the recruiting process we save time and money by doing the endless task of finding the right candidate while our clients' managers and others involved in the process are paying attention to their business.

2.) Our clients make money from our efforts based on the money generated for the corporation by the people we place there. Corporations expect a four to five times return on the salary they are paying. The salary is based on the ability of the position to return money to the company, not the person.

Our involvement with the candidate is only during the recruitment process. Once the client has made a hiring decision, they have indicated to us that our service has been successfully rendered. After that point, we cannot be held responsible for the retention of one of their employees. If we are going to be linked with the candidate after he or she becomes an employee, then we should be paid for the employee's performance as opposed to an agreement which has us pay for that employee's non-performance.

We are either irrevocably linked to that employee, or we are not. If I am linked to, and financially responsible for this candidate's performance, then I will guarantee him for a period of one year. At the end of that year and on every succeeding anniversary date, you send me another check for the fee you have paid which will represent my portion of my candidate's successful performance. 

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Tags: Agency Recruiting

Comment by PAUL FOREL on March 31, 2014 at 8:38pm

Edward,

"Our involvement with the candidate is only during the recruitment process. Once the client has made a hiring decision, they have indicated to us that our service has been successfully rendered. After that point, we cannot be held responsible for the retention of one of their employees."

So you don't provide a 'Guarantee', typically 30/60/90 days?

Comment by Edward N. Woycenko on April 1, 2014 at 9:07am

Paul,

When I send this document to a prospective client, all talk of a guarantee usually comes to an end.  Usually agreements favor the creator of the document, which makes most company fee agreements totally favor the company.  I have never had a company come up with a logical argument to the reasoning behind this no guarantee policy.  I have had companies insist on a guarantee, which leads to a different conversation as to what is important, hiring the right person, or guaranteeing their decision. If the guarantee is that important to the company, then they need to put skin in the game and the conversation should move to an engagement fee discussion which has the company share the risk.  

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