Justifying Your Fee – A Value Proposition

Almost everyone involved in selling a product or service understands that, in order to complete a sale, the potential buyer must reach a point where they believe the value (whether perceived or real) of the product or service is greater than its’ cost. In terms of our industry, our fee must be justified by the value of our service. This begs the question:

“Who establishes the value?”

The answer to this question cuts to the heart of justifying your fee. The answer is:

“The client establishes value.”

However, when establishing value, many prospects and clients, with the willing assistance of the staffing professional, do not concentrate on the most critical elements of the “value proposition.” Instead they simply look at the size of the fee in relationship to their budget, as well as certain assumptions they have regarding the scope of services to be provided by the staffing professional. In the prospect/client’s mind they are playing the “risk-return game,” trying to determine whether or not the risk they take in working with you can be rationally justified as a sound business decision.

In like fashion, the staffing professional tends to utilize persuasion techniques that focus on their ability to surface highly qualified candidates in a timely manner. Often this is attempted before a clear definition of a “highly qualified candidate” has even been established.

Although both the staffing professional and their prospect/client are addressing important elements of the “value proposition,” both parties may be missing the most important element of “value. That most critical element of value is resident in the position itself.

What value does the employer place on the work output for the position?

Not all positions on an organizational chart are created equal. Generally speaking, the greater the responsibilities of the position, the greater the position’s value to the organization.

Under certain circumstances, because someone else can easily cover the responsibilities of a position, or, because they are not critical to the successful achievement of business objectives, a position may hold a very low organizational value. Conversely, the opposite may be true, particularly when the prospect/client is considering using your services. After all, if the position has low organizational value, “why” is the prospect/client even discussing it with you?

Therefore, getting the prospect/client to concentrate on the first and most important element of the “value proposition” should be your top priority when discussing an open position.

Remember:

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Ultimately, the cost of your service must be justified by the positive impact the candidates you place have on the performance capacity of your client’s organization.

Keeping this in mind, the following are examples of questions you can ask that will help keep the focus on the most important element of the “value proposition.”

  1. “As an internal indicator, what value do you place on this position?”Although the employer may be a little confused by this question, it can serve as a good start. A little confusion may in fact be helpful as it stimulates curiosity.
  2. “What priority do you place on the work product for this position?”A good follow-up question to number one, particularly if the employer appears a little confused.

Some additional supportive script may include:

“My questions are designed to help us determine whether or not the priority you attach to this position justifies the use of my services. For most of my clients, the priority is determined by the value they place on the outcomes that must be generated through the position.

“If we decide to work together on this project, we will need to make a mutual commitment to a process that mirrors the importance of this position to your organization. Therefore, in order to be as efficient with our time as possible, the results of our initial discussion should establish a value priority for the position. Once this has been identified, we should discuss the services of my firm. From that point we can jointly determine whether or not it makes sense to take our discussion to the next level. Fair enough?”

Another strategy that supports this concept is to pose the following questions. When an opening occurs, most organizations are confronted with two questions:

“Does the value we place on this open position justify the cost of utilizing external resources to complete our search in a timely manner?”

“If we do decide to utilize an external resource to assist us in filling this position, what criteria should we use to select that resource?”

Who establishes “value?” The client does, and it is your responsibility to insure they do it properly. Unfortunately, questions about your fee may get in the way. When this happens, it is imperative that you get the prospect/client back on the “value proposition.” The following sequence of questions may be helpful.

“It’s rather unusual that you ask about my fee before we have discussed the value of this position to your organization. Why is that?”

“Your question about my fee is a fair question. Since the justification for any expenditure is the relationship of that cost to value received, perhaps it would be a better use of our time to begin with a discussion of the organizational value you attach to this position. Does that seem reasonable?”

“My fee should reflect the value you place on this position in your organizational hierarchy. Our collective objective and the process we utilize to achieve it must be focused on delivering that value. With this in mind, it may be in our best interest to discuss that value and how you measure it as a performance outcome. Does that appear to be the logical starting point?”

Obviously, you cannot predict how an employer will respond to any of these questions. However, if you fail to establish a strong link between the value an employer attaches to a position and the processes you will use to deliver that value, you will continually be challenged on your fee.

The proper use of the “value proposition” is critical to not only establishing your fee, but to insuring your approach is truly “client centered”.As always, if you have questions or comments, just let me know.

Recipient of the Harold B. Nelson Award, Terry Petra is one of our industry's leading trainers and consultants. He has successfully conducted in-house programs for hundreds of search, placement, temporary staffing firms and industry groups across the U.S., Canada, Mexico, Australia, New Zealand, Russia, England, and South Africa. To learn more about his training products and services, including PETRA ON CALL, and BUSINESS VALUATION, visit www.tpetra.com. Terry can be reached at (651) 738-8561 or click to email him.

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