I had the opportunity recently to listen to industry trainer Bill Radin talk on the subject of why recruiting fees are nonrefundable. I agree with Bill 100% on this topic and have often wondered WHY independent recruiters offer “money back” if a placement doesn’t work out.
Bill’s points are valid:
- An employee is a person, not a piece of merchandise. If you buy a widget and the widget is defective, it makes sense for the manufacturer to guarantee the performance of its product.
- There is a limit to the kinds of things that can be guaranteed. Bill comments, rightly, that he can guarantee to follow applicable employment laws during the selection process, but he can’t guarantee the future performance of a person. I would add that he also can’t guarantee that his client will live up to their end of the agreement – that the work will actually be what was promised, etc. Bottom line: you can’t control other people, only your own actions.
- The money that is paid to independent recruiters, many of whom work on a contingency basis, covers real costs for real time and real work. Just because the placement didn’t work out, doesn’t mean the recruiter’s professional activities didn’t take place.
Clients have been conditioned to think that recruiters are obligated to provide a money-back guarantee. I disagree strongly. And just because “everyone else is doing it” doesn’t make it a smart decision. Remember what your mother said about your friends who would jump off a bridge?
If your clients insist on a money-back guarantee it shows they aren’t willing to share the risk with you. Maybe they don’t truly value your service. Maybe they don’t want to invest in a long-term strategic partnership. Maybe they aren’t as committed to a successful outcome.
Bill suggests a non-refundable advance deposit for clients who can’t get past the idea of a guarantee. At least that way, he argues, the costs for your activities are covered. I think it’s a great strategy.
If you’re an independent recruiter who offers refunds, why do you do it? If you don’t offer refunds, what other strategies have you found successful?