Editor’s Corner

“How is everything going since you sold The Fordyce Letter to ERE Media?” That’s a question I get at least once a day – sometimes more.

It is going fantastically well – better than I ever imagined. As I told you last November, I had many opportunities to sell TFL, but for one reason or another, none of the suitors measured up. Only ERE Media met all the criteria I had on my checklist.

Last month, we had a change in the style and format of TFL. From my viewpoint, it was a welcome change that came about only because of the amazing talent available within the ERE family – young, vibrant, creative people with vision and a mission to continually move the ball down the field. I’m pleased with the final result and, while there will be some tweaking based on reader suggestions, it is truly a 21st-century publication. One blogger recently referred to TFL as the Ritz-Carlton of recruiting publications, and with ERE’s muscle and resources, we will get even better.

How does this impact on me personally? I am still totally responsible for the content every month. For me, that’s the “fun” part. Even better, all the back-office functions are now the responsibility of ERE’s out-standing staff in New York.

Although I still want to hear from you regarding your questions concerning the search and recruiting business (TheFordyceLetter@ aol.com), all other questions or problems regarding renewals, address changes, switching from mail to email, subscription delivery problems, etc., should go to ERE at Help@ere.net.

As most of you already know, our archives are enormous, containing over 6,000 pages of information about the business. Joyce Lain Kennedy, the legendary author of the widely syndicated column “Careers Now,” recently referred to TFL as the “undisputed treasure trove of professional information for third-party recruiters.”

But I’m surprised that more of our readers haven’t taken the time to register with ERE (staging.ere.net). Not only is it an additional free resource for information, but it is also a resource for useful information about our business as well as the HR community. The breadth and depth of their resources is truly remarkable.

There are hundreds of net-working groups based on your interests, industry/occupational specialty, or geographic region. Almost all of the applicable blogs about recruiting are available to you with a click of your mouse. ERE’s job board is the premier community of recruiting and human resources professionals on the Web.

For TFL readers, the ERE discussion element is where ERE Network members come to discuss and debate issues related to recruiting and talent management. There are special discussion groups like the ERE Network Feedback & Assistance group, or ERE’s splits board (currently free). Got a question you can’t answer? Their discussion archives are totally searchable, and odds are, it has already been covered in previous discussion groups.

InsideRecruiting offers daily news, analysis, polls, and stats you can use. Also very useful is the ERE Recruiting Directory, where you can explore recruiting products and services from hundreds of vendors in the industry.

These just scratch the surface of the awesome features and benefits of ERE Media – and one of the main reasons why I’m happy to have been acquired by them. Before the day is over, you should register at staging.ere.net. Am I pleased about the acquisition of TFL by ERE? You bet! You will be too.

Since we are not in the social work business, we expect to get paid for our efforts. In most cases, that’s not usually a problem, but judging by the number of calls and emails we receive, employers are much more enthusiastic about hiring than they are about paying your fees. Not a week goes by without a couple of readers grumbling about their inability to collect their well-earned fees.

Attorney Jeff Allen wrote a best-selling book a few years ago entitled The National Placement Law Center Fee Collection Guide, complete with citations of all the fee-avoidance cases adjudicated up to the publishing date. It has even become a great holiday gift for readers’ lawyers.

Fee avoidance has almost become a national sport amongst the HR community. There is no end to the excuses they proffer for withholding or delaying the money you earn. We were recently told by the HR chief of a major company, “No matter what the guarantee agreement is between my company and the recruiters I use, I never pay a fee for 90 days. I call it my 90-day guarantee, and although I hear many complaints about this policy, there has been no blowback from the recruiters I use.”

Probably the biggest of these is the absence of a signed agreement between recruiter and “client.” That didn’t seem to be the problem in this case, but some states require a written agreement to get paid, and others are leaning that way.

We have written about this many times before and, frankly, cannot understand why any logical-minded recruiter would spend their most precious asset – time – with a company that will not agree in writing regarding the specifics of an assignment.

Even those employers who are willing to pay a fee seem to be in a slow contest – and winning. Another large company HR professional told us their cash-management people almost forbid timely payment of bills. Money not used for bill payment is earning them a tidy sum in interest and other investments, and they feel that this “float” period is worth more to them than happy vendors, many of whom depend on quick payment to keep their doors open.

One of our readers – a million-dollar producer who prefers to remain anonymous – told us he keeps an attorney on retainer for those reluctant non-payers. He makes it crystal clear that he expects to be paid within 10 days of the placement start date, period! Any payment received after that date voids any guarantee to which he may have agreed. “On the eighth day, I call the client to tell them that they are about to lose the guarantee and inquire about the check. This usually works. On the 11th day, I email them that they have lost the guarantee. On the 32nd day, I turn the matter over to my attorney and he sends a letter gently demanding payment. This usually works and, surprisingly, after that I rarely have any future problems with that account. And I’ve never lost a client because of my process, either. Why? Because I produce! If, however, I have not been paid in 60 days, my attorney is instructed to file suit. Had only one case where the client had terminated my placement prior to that occurrence, but since they abrogated the guarantee, I got paid. I have found that with slow payers, once they know you are serious about getting their check, they can find a way to get one to you, nonsense about their normal accounting process notwithstanding. I asked one client, ‘If there was a truck at your loading dock with material crucial to your doing business, but the truck driver wouldn’t unload it without a check, do you really think there would be no way to accommodate him?’ There’s always a way around the red tape. Hiding behind bureaucratic process is pure chicken****.”

Friend and longtime practitioner C. E. “Chub” Ensminger, president, Management Recruiters of Chattanooga-North, Inc., said, “We have known each other for a lot of years, so you know very well that I am old school in a lot of ways . . . so here is the method that I instituted back in the ’80s. Due to the fact that sales managers, veeps of sales, etc., were notorious for carrying invoices around in their brief-cases, and manufacturing/plant managers would leave them in the stack of other unimportant papers for days or weeks on their desks, I decided to send the original invoice directly to the controller of the company and a copy to the hiring authority. The invoices are usually sent a week before the start date and then again on the start date; the admin calls the corporate controller to ask if the check has been sent. Our collection time from start date averages less than 17 days and has remained steady ever since. Regarding extended guarantees, I told our folks that we will be happy to extend the guarantee beyond 30 days at an increase of 5% for each additional 30 days and of course replacement only. Oddly, no takers yet in the past three years since I instituted the policy, and we never extend the guarantee otherwise. Like I said, Paul, I am old school and have never seen the necessity to change.”

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Jerry Marymont, president of Corporate Search, has a unique take on the problem: “I’ve heard that some firms would give a reduced rate for early payment. . . . This practice goes against all I believe in. So, we came up with a method to charge a little extra for late payment and it’s all thanks to our phone company, AT&T. I noticed on their monthly bill that they have the due date with a dollar amount, and then they have the late date with a higher amount due. On our fee agreement we state: ‘Past due balances shall bear interest at the maximum legal rate allowed.’ On our invoices we put the amount due and a 30-day due date. Right below that we put ‘If paid after the 30-day date, please pay . . .’ and we add an additional 1.5% to the original fee. Just like the phone company. For the most part we seem to be getting payments within 30 days. In a few in-stances, when the client was late paying, they paid the higher amount, with no questions asked. After 30 days, if the client has not paid, we send out another invoice indicating the higher amount owed and another late date with an additional 1.5% interest added. It’s not perfect, but it seems to help and we haven’t heard one complaint – yet.”

We hope none of our readers have fee-collection problems, but I recommend Jeff Allen’s Fee Collection Guide. It’ll not only help you collect those well-earned fees, but it will also assist you in avoiding the problem altogether. It can be bought at www.searchresearchinstitute.com.

Loose lips sink ships. A reader lamented that he had a search assignment for a senior-level financial position with a $50,000 fee. He located a perfect candidate, and during the conversation with the candidate, mentioned the name of the client. While he was awaiting the candidate’s résumé, the candidate asked a few friends if they knew of the company. One not only knew of them but also had a good friend working there. Guess what! The friend sent the candidate’s résumé to the friend at the client company before our reader even had a copy to send. When our reader got the résumé and sent it to the company, they refused the referral since they already had it as a freebie. Even though the candidate acknowledged in writing that our reader was the one from whom he learned the company’s name, the company said, “Sorry! No dice!”

Our reader wanted to know if he had a leg to stand on.

The answer is No. Although it is prudent to tell potential candidates as much as you safely can, on a contingency deal this is often the end result. Although this is somewhat like the “forward pass” attorney Jeff Allen warned against in last month’s issue, in this case, the rubber band around this deal just won’t stretch to include the reader in the transaction.

Our reader certainly tapped the right shoulder with this candidate, but the introduction to the client was a day late and a buck short. Perhaps he won’t get hired and he can revive the deal with another candidate, but you just never know where your next “competitor” will pop up its ugly head.

Attorney Jeff Allen said, “We call this a ‘self-sendout.’ Technically, the recruiter and client may be in ‘privity of contract’ with a valid fee agreement. However, the recruiter must be the source of the referral. Since this is a unilateral contract, it must fully perform before the fee is due.

“I see this as a causation issue. Without a referral period that imposes strict liability within the agreed time, self-sendouts are by definition not recruiter sendouts. You can drive a Mercedes truck through this tollbooth and wave as you speed through without paying.

“It is the reason that we advise against revealing client identity until (1) a list of pending employers is obtained from the candidate (preferably by email or letter), and (2) client interest has been established and documented. It goes even further – a recruiter should conceal the name of the client if possible until the sendout has been properly teed up.

“This capable recruiter made the match all right. But it can’t deputize the candidate as his agent. Even a thank-you note is more than a court would award.”

Another reader called to tell me about a $200,000+ fee he collected from a company that had become frustrated by the inability of one of the top-three retained firms to produce after many months. From the time our reader got the distress call from the disenchanted CEO until the deal was done, it was three weeks. Congratulations and a tip of the Fordyce fedora.

This is the season of association and industry trade shows, not just for recruiters but for almost any industry segment imaginable. They can be a fantastic source of information about potential clients and candidates, if you approach them properly. Several have asked how to work a trade show, so we asked attorney Jeff Allen to cover the topic in this month’s Placements & The Law column.

Paul Hawkinson is the editor of The Fordyce Letter, a publication for third-party recruiters that's part of ERE Media. He entered the personnel consulting industry in the late 1950's and began publishing for the industry in the 1970's. During his tenure as a practitioner, he personally billed over $5 million in both contingency and retainer assignments. He formed the Kimberly Organization and purchased The Fordyce Letter in 1980.

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