The “Degree Of Difficulty” Fee

“Sometimes we charge $3,000 for a $50K employee. Sometimes we charge $15,000 for a $40K employee.” So said a very successful specialist in sales recruiting.”We have literally dozens of sales openings from ‘household name’ companies where the maximum fee is a flat $5,000, take it or leave it. For several years, we stuck by our guns and turned this business down until we realized that, for several of these openings, $5 grand was about all they were worth since we could almost always find the successful candidate in our file cabinets.”Some of the ingredients that go into our thought process and decision on what flat fee to charge are:

  1. How picky are they about education? Some of the most accomplished salespeople are not degreed. Do they want a trophy employee or someone who has a provable track record of selling? Obviously, selling technical products may require a technical education, but often an actual degree is not necessary. The more education that is required, the higher our fee is likely to be.
  2. How competitive are the compensation packages? In the sales field, these can go from straight commission to straight salary and all permutations in between. But good salespeople who are confident in their own skills can easily determine whether a compensation package suits their needs. Generally, the higher the draw or base salary, the easier it is to attract an acceptable candidate, therefore a somewhat lower fee is charged.
  3. How good is the product to be sold? Is this a new product or an established one. Are they looking for a missionary or an order taker.
  4. Is it a new company or an old established firm with a new product? It’s easier to convince a candidate to go with IBM than Abe’s Computers.
  5. What kind of sale is it? Is it a “one-call” close or a “several-steps-to-the-order” deal? Low priced product/service or a high-end “we’ll-shop-around” type?
  6. Are they overly image conscious? If they’re looking for Joe Adonis, we’ll charge a higher fee. Not only are the “pretty people” likely to be earning more, they’re easier to place at full fee.
  7. Do we have such people in our files? If a candidate is collecting dust in our filing cabinet, we’ll probably take a lower fee. Not that we’ll tell the employer that we already have the candidate, but the reality is that it’s a factor in quoting the fee.
  8. How long have they been looking? The longer they look, the scarcer the talent pool. Higher fees for tougher openings.
  9. How much training is needed? If I can provide someone with little or no ramp up time, the fee will be higher than for someone who needs to sit through a couple of months of training to learn the product line or customer base.
  10. How easy are they to work with? Do they require resumes? Will they come to my office to interview? Do they hire quickly? Do I like them?

These factors may not work outside the sales area but this practitioner (with a major franchise specializing in sales/marketing) claims he makes more money with his variable “degree-of-difficulty” fees than before when he stuck to the more traditional 1% per $1,000 formula.

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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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