Our guest blogger is Pam Robison of J. Gifford Inc. in Tulsa, Oklahoma. J. Gifford Inc. is a small, quality conscious firm providing highly individualized recruiting services to clients on a local, regional, national and international basis. The firm’s recruiting activities are focused on professional, technical and managerial placement, as well as contractor and international staffing for clients. Pam is currently Chair-Elect of the NPAworldwide Board of Directors. In this post, she discusses candidate fall-offs and how refunds and replacements are impacted.
Helping your client hire the right candidate is crucial, and every recruiter puts a lot of effort into finding the ideal employee. However, sometimes things go differently than planned, and candidate fall-offs occur before the guarantee period ends. Knowing how to handle refunds and replacements is crucial in such a situation.
The Importance of Clear Agreements for Candidate Fall-Offs
It is important to have a signed agreement in place with a client before a recruiting search begins. It is also critical to disclose your guarantee terms with any firms assisting you with a search so that they know what they’re agreeing to in the event of a fall-off. By having clear agreements, understanding the guarantee period, and being transparent with clients, recruiters can minimize the risk of disputes and maintain a positive relationship with their clients. Generic wording like ’30 days’ is unclear and cannot be safely assumed.
Understanding the Guarantee Period
A guarantee (or warranty) period is a specific time frame. This period varies from one organization to another, but 30, 60, and 90-day guarantee periods are common among recruiters. If the candidate falls off before this period ends, it may trigger a refund or replacement. Stay in contact with candidates to make sure you know if they are not pleased with their new position. Work with hiring managers to remove those things that are causing the threat of a fall-off.
Split Placement Partners, Candidate Fall-Offs, and Guarantees
If partnering with another firm for a split placement, it is critical to alert them immediately in the event of a fall-off so they can fulfill their obligations under the guaranteed terms. If it took 3 months to find the ideal candidate, you should prep your client to get ready for the wait if you are replacing the candidate. Not likely that your partner can locate ideal candidate number two in a matter of days or weeks. It is OK for you to work it at the same time as your split partner and if either of you find the right candidate, consider it a deal that was saved from a refund. If a refund will be required, your partner needed to know that before the deal was done. If you feel you need to offer a refund even though your terms were for a replacement, then that is out of your account and not the split partner’s side. You made that call to save or satisfy the client. Your partner had no control over your change of heart.If you belong to a formal split placement organization, make sure you understand the rules surrounding this. In NPAworldwide, everyone is required to share their standard guarantee terms and must overtly state if there is a moneyback guarantee. Posted jobs must include the fee and guarantee terms for that role, as sometimes there are variances from a firm’s ‘standard’ guarantee.
Types of Refunds and Replacements
Depending on the agreement with the client, recruiters can offer different types of refunds and replacements. The most common options include a pro-rated refund (deduction from the fee based on the number of days the candidate worked), replacement with another candidate, or a credit that can be applied to a future search. Each option has its advantages and disadvantages. Remember, you did the work. You found a candidate or even a short list of multiple candidates. You cannot undo the work you have done because of the fall-off so a full refund is excessive; try to hold some amount of the fee for the work already done. An accountant or lawyer would not refund a full fee if their client needed their help for an audit or a trial ended in hung jury and a retrial was called. You did the work; a replacement is better than a refund, a credit is better than a cash refund, and a refund should rarely be for 100% of the fee.
How to Handle Refunds
Refunds are relatively straightforward to handle. Once the candidate falls off, the recruiter can refund the client per the terms stipulated in the recruiting agreement. In NPAworldwide, both partners are required to participate in the refund. If you are the candidate recruiter, make sure you don’t spend that money before the end of the guarantee period. If you are the job recruiter, you may want to consider setting the funds in an escrow account until the guarantee period is satisfied.
How to Handle Replacements
The recruiter should understand why the candidate fell off and address any potential issues before starting a new search. It’s crucial to communicate with the client about the steps taken to ensure another fall-off doesn’t happen.In our network, the job recruiter must give the original split placement partner the first crack at finding a replacement candidate. It’s not realistic to extend that “first chance” indefinitely, so members need to talk through how much time is reasonable, what are the client’s expectations, and a reminder that if the original partner can’t find a replacement (or isn’t interested in trying), they may need to refund their portion of the fee.
Candidate fall-offs are never a desired outcome. Having good written communication can help protect everyone and mitigate the sting.