Today’s guest blogger is Wilson Cole. He is the CEO of BackdoorHires.com and Adams, Evens & Ross, the nation’s largest credit and collections agency designed exclusively for the staffing and recruiting industry. In 2008 he was inducted into INC Magazine’s, “INC 500” for being the CEO of Adams, Evens & Ross, the 307th fastest-growing privately held company in America. Adams, Evens, & Ross has helped more than 3,000 staffing and recruiting firms recover more than $1 billion in past-due debt and is an NPAworldwide Endorsed Program. Read his post below to learn how to prevent backdoor hires.
At some point, every staffing and recruiting firm will have to deal with the trouble of tracking backdoor hires. For those who have not encountered the term yet, backdoor hires are the candidates that a client employs without the knowledge of their staffing or recruiting company. A client does so when they believe that they do not owe a fee for certain reasons, or they just want to avoid payment. It is not ideal, but it is a reality that recruiters have to face.
Some clients can be more difficult to approach than others so, before you become a victim of backdoor hires or before you begin tracking, you need to recheck a few things to raise your chances of collection.
To help you out, we’ve compiled the top 5 things that you need to do to prevent backdoor hires or to make your collection less complicated. Some of these things are often overlooked but each one is equally important.
1. Secure a signed contract
In our opinion, a signed contract should be a basic requirement for business dealings, but 50% of the accounts that come to us as backdoor hires do not have a signed contract. The recruiter may have been too trusting or simply unorganized, but whatever reasons they may have, not having a signed contract weakens their position.
2. Have a 12-month possessory period from the last presentation
A possessory period is an agreement between the hiring company and the agency that, if the client hires the candidate within a certain time frame, they owe a fee.
A 12-month possessory period provides a safety net because anything less is simply too short. It is also important to mention that the count should begin from the last and not the initial presentation of the candidate.
3. Do a name-clearing provision
For niche industries where everybody knows everybody, it is highly possible that the client and candidate may have encountered each other before the presentation. Lay it out in the agreement that, if the client has interviewed the candidate within the last 30 days, they will inform you in writing within a 24-hour name-clearing provision, so they won’t be able to use this as an excuse in the future.
4. Know the affiliates of the company
It is not unlikely that your client will refer your candidates to an affiliate company or a different division so, it’s best to know the affiliates, branches, or subsidiaries of the company that you’re dealing with. State in your contract that if the parent company refers the candidate to an affiliate and they get hired, said client will still be liable for the hiring fee.
Never forget to have the contract signed by the parent company, because an unsigned contract weakens your case before it even begins.
5. Know who you are dealing with
You might think this is basic but you would be amazed by how many times we have dealt with scenarios where the indicated business name of the client does not match their legal name.
Be careful with every detail, down to the exact punctuation marks, of your client’s business name on the contract because a slight mistake may invalidate your right to collect.
Every staffing and recruiting company will encounter a problematic client sooner or later. As you conduct your business, remember that it is important to check every part of your contract including the signature, possessory period, the inclusion of a name-clearing provision, the exact business name of your client, and if you have stated the liability they shoulder if an affiliate hires your candidate through their referral.
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