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Fee Agreements: You’re Worth it Even in Uncertain Times

by Veronica Blatt

Our guest blogger is Roman Duty of Recruiting Services International / RSI in Rushville, Indiana. RSI is a boutique executive search firm that is celebrating 50 consecutive years of business in 2020. The firm provides highly individualized recruiting services to clients on a local, regional, and international basis. The firm’s recruiting activities are focused on high-level technical search and managerial placement in many manufacturing arenas.

As recessions go, this is my first time recruiting in one because I began recruiting full time in 2012. There are many of you who have navigated recession-era challenges multiple times and I commend you for it. Even though we are entering into a period of uncertainty due to COVID-19 (the likes of which no living recruiter has experienced), I was still surprised at the number of recruiting firms whose fee agreements did them a disservice even during times of uninterrupted economic growth. Fee agreements with money-back guarantees or large replacement periods (more than 6 months) are incredibly one-sided in favor of the client, don’t allow flexibility, and can hurt cash flow.

However, I know many of you out there have long-term relationships with clients and money-back fee agreements you’re reluctant to revisit and that is understandable.

One of the biggest obstacles we face as recruiters is to get our clients to view us as partners and not just a means to an end. A fee agreement that protects and benefits both sides of the aisle is a good way to begin that partnership. In recessions, we can get complacent and simply be happy to work any job regardless of our client’s restrictive fee agreements. DON’T! The service that we provide them is not worth this risk.

In many cases, clients don’t know the lengths we go through to find the right fit. And, let’s never forget we are dealing with the most unpredictable product in any market: people. Money-back guarantees not only give recruiters little leverage they also can significantly impact cash flow. Unless you are working a fully retained search, we are already providing a service that we are not getting paid for months out. Furthermore, we are 100% commission as are most recruiting staffs. A money-back guarantee means your business has to account for the possibility that fee they paid you 30 days after the candidate started (and sometimes it’s longer than 30 days) isn’t really yours for another 60 days! On difficult, time-consuming searches the very real possibility exists that by the time you begin working a search to the time you candidate satisfies their guarantee period could literally be 6 months or longer!

As recruiters, if you are confident in your abilities, then you are worth walking away from a strict fee agreement. Even in uncertain economic times, don’t let the fear of not having roles to work on drive you. You’re worth more than you think!

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Tags: fee agreements | Posted in: Recruiting Resources

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