Jeff on Call: Where Is the Leverage in My Fees?

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Q: I read one of your articles on “Does Arranging Interview = Placement Fee?” I’m reading the book SEARCH AND PLACEMENT by Larry Nobles. He talks about the marketing cold call in which we present a qualified candidate to a company when we don’t know if they have openings. I understand the whole point is to get a search assignment, but if they like the candidate I’m presenting and want to interview that person, when should I mention the fee? After I suggest we set up an interview or before? Should I say something like, “Great, I’ll fax over our client agreement and you can give me a couple of good interview dates”? The book talks about closing on a search assignment but says nothing about what to say besides “Let’s set up an interview,” when they happen to want to meet the person I’m calling about.

Thank you,
Kenneth Stallworth

Dear Ken,

I’m honored to answer this question because it mentions Larry Nobles.

Larry died a decade ago from inoperable brain cancer. I remember talking with Fordyce Founding Father Paul Hawkinson after Larry visited him in St. Louis, knowing it would be for the last time. A few hours after dropping him off at the airport, Paul received the call.

Larry was among the few extraordinary people who keep our industry placing. His techniques, his delivery, and his “desk-up” knowledge were superb. He was a great guy, as unpretentious as he was wise. Larry still lives through his work that he shared so generously during his life. You can still buy his classic books at www.larrynobles.com.

So speaking for this angel on high, here’s my reply:

Your greatest leverage exists at one point, and one point only. It’s just after you present — and just before you identify — a candidate the client thinks she wants to hire.

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Note there are two phases to the referral:

1. Present, and
2. Identify.

If you haven’t fully cleared your fee in writing prior to identifying the candidate, you’ve lost your leverage — and given away your stock in trade.

Best wishes for collecting your well-earned fees. Clearing and documenting them before the sendout is the key!

***

To participate in future Q&As, email jeff@placementlaw.com. Keep in mind you should always consult with your own attorney. Nothing contained herein should be construed as legal advice. It is for your information only.

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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8 Comments on “Jeff on Call: Where Is the Leverage in My Fees?

  1. Amen to everything Jeff said here. Both about Larry and this process. I hope to add something without implying it should have already been here. I think since the people who write about these things ‘just know’ what I am going to mention and the newer people who read them don’t see this often because we don’t always mention it, those newer people are conditioned to think this all happens in one call.

    I am sure Jeff will agree it sometimes takes weeks and a number of calls and emails to make sure we are ‘presenting’ to both the person who will want the candidate and the person who has authority to ‘bless’ the fee and that they often are not the same person.

    I always (for the past 10 years or so) document this exactly as Jeff suggests but I really don’t remember the last time it all happened in one day, let alone one call.

  2. Personally, I never lift a finger for a company until I have a signed contract. I tend not to do much MPCing. When I do it’s to companies that I’ve worked with before and already have a fairly recent signed contract on file.

    Tom Keoughan
    http://www.toyjobs.com

  3. I might sort of agree with that…We only MPC people who came to us as a result of finger-lifting for engaged clients. We might do that (make the presentation) a couple times a month. Probably results in 2 or 3 new contracts a year.

    Personally, I don’t want to go through all the stuff I put myself through to negotiate a contract at all unless I think we are actually going to be putting money in the bank.

  4. Jeff thanks for answering my question. Dave thanks for mentioning the one call close thing. I come from a telemarketing background where you make 125 calls a day and get sent home with no pay for the day if you don’t make at least one sale every hour your on the phone. I’ve had to adjust to it not being a one call close. When you say MPC you mean Marketing Potential Candidate right? I’m new to the business of recruiting so when I’m trying to get business in your professional opinion Dave and Tom would it be better to Market Candidates or market my services. I’ve only been doing this for about two months and the main thing I struggle with is finding out who is the hiring authority. I always thought that was H.R. but I’m finding out that is not the case.

  5. Kenneth, I need to blather about something so I’ll answer this on my blog in a bit…Might even use it for the next Pinnacle Perspectives but that won’t be out until November of we do…

  6. Good morning to you all. I joined the community today and am excited at being exposed to the huge amount of knowledge here. While I’ve been in the market for nearly 20 years, there’s always something new to learn and hopefully, to share.

    This is a great question, but I have a different viewpoint on candidate marketing. I think as soon as you approach a client with a candidate, irrespective of where you are in the conversation, you have lost fee leverage. You’re now talking to someone about a candidate you have access to right now. You dont have to go out and find that individual – as a recruiter, your cost in finding that individual has already been incurred. I’ve had many conversations when I’ve trained recruiters on this topic.

    Typically, when marketing a candidate, it is done to prospects I have no agreement with and I’m more interested in using that candidate as leverage to build a relationship with that client rather than using the fee. In many respects, I use it as a loss-leader (when I say ‘loss’, I’m talking about providing them access to this candidate at a redued rate to show faith, openess and the business awareness to provide a win-win – maybe I should say ‘reduction-leader). Charging 30% for something where the heavy lifting of finding the candidate has already been done is I believe, insulting the intelligence of the prospect. For candidates you market, you need client access, not high fees. The relationship with the candidate develops postively and the prospect appreciates your honesty and candor. Should the candidate be hired, you can use your matching skills with limited company knowledge as the leverage to agree terms for subsequent searches.

    I appreciate this goes against the grain, so would appreciate your comments!

  7. Douglas, you only lose fee leverage when you give it away. There are those who would and even should castigate my firm for doing work at 25% and only 25%. It’s a fair price and we just decided to live with it even years before I started this firm in 2002. Our reasoning goes like this. It is 25% or it is free. It is not 30 it is not 20, it is not 24… it is 25% period. If I do a search it is 25% with an engagement fee. I don’t do heavy lifting unless I am paid to.

    If I have the candidate it is 25% and you don’t get contact info on the candidate until /unless we sign our separate contingent agreement which is ONLY for that single person.

    Sure…the search is done. If this is someone your company needs then you should consider it a bargain that it is already done and you can hire the candidate now.

    Their spurious argument that you evidently buy into that it is worth less because you already have it is one I am happy to walk away from.

    Just keep doing this over and over in the same space with good candidates every time and you’ll be come known as the people who won’t mess with them on pricing or be messed with on pricing. They all end up appreciating that once they’re a client no one else gets a better deal than they do.

    No, this isn’t the only way that works but I think it is the only way I’ll ever do it anymore.

    The truth works so well that I am going to copy this to the blog my clients sometimes read as well. Thanks for bringing it up!

  8. Hey Ken,

    I think it is beneficial to market Most Placeable Candidates until you have grown your business and knowledge enough so that you have reached a point where you can really sell your expertise.

    I rarely do MPC Marketing unless a candidate pops up that I know one of my existing clients is usually looking for even if they are not specifically looking at that time. I probably do only about 5 a year but that probably results in 3 or 4 placements. I only go to the MPC hoop when I perceive it to be a layup. Of course, I have 28 years on these courts so my perception is pretty good.

    Since your just starting out you would probably find one of Danny Cahill’s “Rookie Retreats” invaluable in getting jump started.

    Welcome Aboard,
    Tom Keoughan
    http://www.toyjobs.com

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