How to Stop Negotiating Away Your Fees

Once you introduce yourself to an employer, the subject invariably turns to negotiating your fee. It’s as though they consider your services not worth the money. Most consultants are ready to negotiate too. Some even offer a reduction before they’re asked! They justify it by a multitude of excuses (“easy placement,” “important client,” “preferred list,” “competition,” etc.). The result is a compromised fee, a compromised consultant and a compromised placement industry.

Why do you think fees are negotiated away? Answer this one:

a. The consultant also doesn’t consider his services worth the money.

b. The consultant is in the habit of doing so.

c. The consultant doesn’t know how to negotiate properly.

d. All of the above.

Of course, the answer is “d.” But “c” is the one we’d like to eliminate. You can help if you:

1. RECOGNIZE THE HIRING AUTHORITY’S INSECURITY

We estimate that over 60% of the fee reductions prior to placement can be traced to some hiring authority trying to make themself feel or look good.

You’ve asked for it anyway . . . soliciting from an ad or a directory . . . sounding so enthusiastic about being able to place people . . . stressing that you’d like to develop a “long-term relationship.” Promising, but unable to really know whether you can deliver. You’re very vulnerable.

It doesn’t do any good for you to characterize the fee-feeler as “wrong,” “incorrect,” “inconsiderate,” “shortsighted,” “unprofessional,” and much worse. Or to state: “I’m trying to show you why you’re wrong” instead of “I understand your concern.”

I was always afraid of losing my job when I was in employment . . . If you’re not filling the rec’s, management wants to know why. If you are, you’re working yourself out of a job. And spending too much to do it.

The insecurity of the hiring authority can work for you, though. If they’re serious about hiring, you really can find them the best employee faster and with less risk than any other way. If they’re not serious, get off the phone.

2. KEEP YOUR SENSE OF PERSPECTIVE

A decade ago, one of our industry trainers noted “We just take people out of one rut and put them in another.” He’s still trying to explain he wasn’t serious. He was just putting things in perspective: We’re all just passin’ through.

If you approach the subject of fees in a rigid “client or source” way, resistance is likely. You have your bottom line, but you’re not there yet. Even the most insensitive hiring authority can sense the difference between an ally and an adversary. Instant intimidation never made a placement. Intuition, insight, intelligence, information and interviews do.

A variation of this is the negative “you wouldn’t want to pay these fees anyway” attitude. It should be obvious that if you don’t believe the fee is fair, you’ve negotiated it away before you’ve even picked up the phone.

3. DON’T BE DEFENSIVE

Adversarial situations continue longest when either party fires back in the face of a real or imagined attack.

If the best defense is a good offense (and it is), live the words I observed in How To Turn An Interview Into A Job:

Recruiters are successful because they know where the action is in the employment market. They know employers from the inside, where intramural politics and morale hide. They know who has exciting products on the boards and who is about to lose key employees. They know who promotes from within and who stifles creativity. They know who pays well and who has high turnover. They know [because] they listen.

So what if they say your fees are “outrageous”? Or says, “Everyone knows they’re negotiable”? Or, if they calls you a “headhunter”? Or something else?

Let people like us worry about making the world safe for placement. At least we’re getting paid for it.

4. FOCUS ON THE CANDIDATE

You probably never thought about it, but the hiring authority isn’t particularly interested in talking about your need to be paid the fee . . . it’s academic to them . . . “contingent.” Their need is to talk about candidates. That’s why there will be problems in collecting no matter what you do. You had to satisfy their need before they had to satisfy yours.

So clear the fee initially, use confirming letters and schedule, and assume the client loves it.

Then you can show them you were as excited about getting paid as they were about hiring someone. We have ways of dealing with fee-avoiders.

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5. NEGOTIATE DON’T DEBATE

Consultants too often forget that they’re negotiating, not debating. They start out like a lawyer with an “opening statement” about why the fee is justified, and set about to meet their “burden of proof” with brilliant oratory.

Of course, it’s inevitable that either side will spend some time debating. That’s part of explaining your position and exploring why the client has less appreciation than you for the time, skill and effort required to find qualified candidates. But most placers allow this to go from a dialogue to a monologue.

According to one of our colleagues, Henry Calero, in Negotiate The Deal You Want:

In the average situation, [debating] takes up about 50% of the time expended. When efforts to convince the other side of the rightness of your position take up more than that amount of time, you can be sure there’s trouble. It’s not explaining or exploring any more. It’s a contest — someone’s trying to win debating points.

Since you won’t be compromising your fee, there are only two items to mention:

a. Your guarantee. (Extending it — in exchange for immediate payment. )

b. An installment payment. (30, 60 and 90 days in exchange for payment in full.)

Often even these items need no compromising if you just let the hiring authority talk themself into them. The fee isn’t even due unless someone is hired, so most of the objections you hear are hypothetical comparisons to job board postings, ads, employee referrals, trade associations, public agencies, etc. Just pointing out their expense or ineffectiveness is enough. Any experienced hiring authority who keeps talking is your best salesperson.

If you hear about the problems the employer had with another consultant, smile. “Once burned, twice shy.” But “Once satisfied, twice as loyal.” That’s how we built this law practice. They refer other clients like crazy.

6. DON ‘T CAVE IN WHEN THE CLIENT IS READY TO HIRE

This is such a common trap that I’ve included it as the sixth item. There should be a sign by your coffeemaker that reads:

When you have a candidate who the client wants to hire, you are in the best negotiating position of all.

The manager in your office should become the TO (takeover) person. It’s the time to make a quick concession about something other than the fee. The time to be cooperative. But the time to make it known in writing:

If you hire our candidate, you owe the fee.

You’re on the high side of the legal seesaw for the first time since you took the JO. It makes no difference how well you climbed on. You’re there now, and it’s up to you to hold on to the handle: Full fee. Nothing less. What do you say? How about:

It’s easy . . . just don’t hire.

As a consultant, then HR manager, I know how easy it is for you to negotiate away your fees. As a placement attorney, I know following these six steps will prevent it.

More than thirty-five years ago, Jeffrey G. Allen, J.D., C.P.C. turned a decade of recruiting and human resources management into the legal specialty of placement law. Since 1975, Jeff has collected more placement fees, litigated more trade secrets cases, and assisted more placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of 24 popular books in the career field, including bestsellers How to Turn an Interview into a Job, The Complete Q&A Job Interview Book and the revolutionary Instant Interviews. As the world?s leading placement lawyer, Jeff?s experience includes: Thirty-five years of law practice specializing in representation of staffing businesses and practitioners; Author of ?The Allen Law?--the only placement information trade secrets law in the United States; Expert witness on employment and placement matters; Recruiter and staffing service office manager; Human resources manager for major employers; Certified Personnel Consultant, Certified Placement Counselor, Certified Employment Specialist and Certified Search Specialist designations; Cofounder of the national Certified Search Specialist program; Special Advisor to the American Employment Association; General Counsel to the California Association of Personnel Consultants (honorary lifetime membership conferred); Founder and Director of the National Placement Law Center; Recipient of the Staffing Industry Lifetime Achievement Award; Advisor to national, regional and state trade associations on legal, ethics and legislative matters; Author of The Placement Strategy Handbook, Placement Management, The National Placement Law Center Fee Collection Guide and The Best of Jeff Allen, published by Search Research Institute exclusively for the staffing industry; and Producer of the EMPLAW Audio Series on employment law matters. Email him at jeff@placementlaw.com.

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