Fall offs. It's a term no recruiter likes to experience, or even hear. So, my apologies in advance for using it! 

It started out as a typical placement. After signing the agreement, we submitted a total of two resumes to a new client. One candidate we knew was a slam dunk fit! Over the course of six weeks or so, our candidate (let's call him 'John') had two phone and two face to face interviews. The hiring manager loved him; the corporate big wigs loved him; from Ireland to the US, HR was told "hire him, he's the one for the job."

After some low ball negotiations, a starting salary was agreed upon, and a start date of two weeks later was determined.

Then typical turned irregular. A week or so after John accepted, but prior to the start date, the hiring manager -- the report to guy -- was let go. Hmm. 

The client gave great reasons for letting him go: they are moving their business in the direction which our candidate excelled, that's why they hired him, and the hiring manager lacked that background. We were told it was an even greater opportunity for John, as the director level was pretty much his for the taking.

Our candidate started as agreed.

Immediately upon becoming the client's employee, John learned things... bad things. The client had failed to disclose problems with their quality systems, to both him and us: manufactured materials had been recalled because they weren't up to snuff. Let's just say when the FDA issues warnings, it's a problem. 

There were bad, deep-seated cultural problems, too. For example, the client's main customer was on site, and John asked an assistant to order lunch for them. The assistant said she didn't have the authority to do that, only top bananas could. No one had authority -- or the balls -- to do anything. Except John, who knew the trigger had to be pulled on certain things if the FDA was to be calmed, and for him to successfully perform his duties.

John tried sticking it out, but was 'let go' six weeks after starting. A fall off! :(

The very next day, the regional HR person called, and asked for the money back. He seems to be setting things up as if WE did poor work: "you only sent two candidates... he's not the same person we interviewed..."

We have since been in contact with the original hiring manager, who told us that his superiors instructed him to NOT reveal certain things to John during the interview process.

Naturally, I have gone over the fee agreement with a fine tooth comb. (Yes, we did that before signing it, too.) There is nothing about a candidate being hired for one job, and being utilized in another (the hiring manager would have been a great buffer between corporate and John). There is nothing that applies to deceptive practices. Just that in the "event the candidate's employment is voluntarily or involuntarily terminated for any reason other than workforce reduction," we have to provide a full refund.

What would YOU do, and why??

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You signed an agreement that said," In the event the candidate's employent is volunatarily or involuntarially terminated for any reason you would provide a full refund". Honor what you signed. This is the main reason for offering a replacement as opposed to a refund, however "any reason" would cover all the bad stuff that nobody would tell anybody ,so you signed it , you owe them their money back unless they are willing to take a replacement in lieu of a refund.
Thanks, Sandra.

Even if they accepted a replacement, I could not in good conscience place someone there.
For every pit there is a rattlesnake and for every rattlesnake there is a pit. It's just a matter of finding the right snake to hiss in the pit you have discovered.

We had a local character who liked to chase the girls around the desk. I finally placed a Hooters Lovely who wanted to leave the bright lights with him. She chased him around the desk until he called me and asked me to find her another accounting job because she wore "party clothes to the office". He paid her fee in and paid her fee out. Two wrongs do not a right make but they can be fun to watch.
This one is over. You have a written agreement telling you exactly what you need to do. So the real question is "What can I do to make this less painful next time?" ----- because if you're in recruiting - you're going to find yourself in something like this from time to time.

NEVER will I refund the entire fee paid. Never. Ever. During the first month I will either refund 75% or apply it toward the replacement.

During the next 2 months I will only apply a percentage of the fee toward replacing the hire. 2nd month it's 50% of fee paid applied toward replacement. 3rd month - 25%.

Note: • Guarantee is not valid if the candidate is terminated due to reasons outside of their professional or personal control i.e.: position eliminations, consolidations, downsizing, abrupt change in responsibilities, etc.

Sorry about this one......
Great posting. I'll talk about it on my show tomorrow if I have a chance.

My main question is: what could have been done to expose the problems when the job order was taken and during the hiring process.
Refund the money. Pass on working on anything else for this company (in other words Fire the Client) and move them from your client list to your supplier list.

Fool me once, shame on you. Fool me twice, shame on me
I'm not sure what we could have done differently... the client chose to be deceptive, and that is not something I can control, nor easily expose unless I have previous knowledge (which we, of course, did not possess). The former GM (the original hiring manager who was fired after acceptance) told us a few days ago that HIS managers instructed him to NOT be forthcoming about the problems with the FDA.

What's eating us is the fact that the candidate did not change and we did what we were supposed to do. It's the client that changed: the corporate structure, report-to person, environment, even the candidate's job description... these changed after acceptance, and before start date.

We've been in business since 1989 and this is a first for us.
I agree with everyone else, No, you don't keep the money. Contractually you are obligated to provide a refund.

Reminds me of a time in my professional career a long, long, time ago when I was in a Corporate HR position: I was hiring Inside Manual Labor positions ( Warehouse workers) and whenever an Operations Manager would let go one of my recruits before their probationary period was up, I would tell them jokingly "What did YOU do to my employee to make them a poor performer. They were perfect when I hired them!"

This illustrates what Recruiters face all the time...we can work to influence all aspects up to the Hiring decision and acceptance. However, as soon as that person starts at the new client, the situation is really out of our control. Their success is then heavily influenced by their Manager, co-workers, the Corporate environment / culture, etc.

At that point, the only protection you have is your agreement in place to mitigate those influences after the fact.

Replacement versus Refund and / or Sliding scales over time that reduce the replacement fee are really the only protection you have to protect the investment of all the work you did up front.

This is definitely a live and learn situation...
I have to go with the group on this about honoring the agreement. Unfortunately, these things are always going to happen and while I don't know the exact terms of your guarantee, I 100% agree with Jerry that 1.5 months of service before being termed does not deserve a 100% refund.
It seems like you did a good job in identifying the right candidate, that you only submitted two is irrelevant if one got hired so their argument there is pointless.
Be ready for the next time something like this happens (and it will happen) and put in a tiered guarantee related to time of service before being terminated.
Good Luck!
Refund their money and move on. Don't ever do business with them again. It sounds like a questionable place to work. If the FDA is involved, it can't be good news.
I would ignore HR at the moment and engage the people who actually made the hiring decision (that's right...HR has absolutely ZERO influence in the hiring decision). Get in touch with someone in management and have a dialogue of what is really going on and how you and the hiring team can move forward in finding an appropriate candidate. You don't work for HR, you work for the hiring manager who needs needs great people working for them to advance their own career. You need to demand transparency. You need to communicate the fact that you and the hiring authority are partners. Successful partnerships are rooted in transparency and communication. Your client needs a solid line manager and you need the business. This client has issues, so get to the bottom of what the key issues are and if they are deal killers or not. There might be a number of great people who would see this company's issues with the FDA as terrific professional challenges rather than career suicide. Great people like challenges.

Have the guts to pick up the phone and engage the leadership team at your client and offer a solution. If you determine that the company is beyond help, refund the money and move on. Make sure to revise your fee agreement to ensure your protected against similar events in the future.
I won't weigh in whether or not to pay the refund, it sounds like there is already a consensus. I will offer advice on how to better vette a company:

Listen to candidates in the market. Bad companies have lot's of future former employees actively looking. If you see an unnaturaly high number of candidates out there, beware.

Run a search on the company for employee and customer chatter. Sometimes you have to measure against the fact that the disgruntled tend to be the loudest, but look for themes.

Check average tenure of employees (present and past) using a linkedin search. If the company blows through people rapidly, you'll see the pattern there.

Check references. If you find former employees, call them and ask them about the company, their experiences, and why the left.

These are just a few things that you can do. They all involve little time investment, and can help you make a more informed decision on who to work with and who not to work with. Remember, it's your reputation on the line when you choose to represent a company as a vendor.

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