What’s wrong with “Finder’s Fees”?

NOTHING!  I think a bit less of candidates who ask me for them but I volunteer them all the time. Something along the lines of “We’ll hunt you down and send you a finder’s fee of X ,or 1/2 X if it is a split if we ever place someone you introduced us to even 5 years later. “We are trying to get to know the best people and ,while this is not much, we want to honor the time or trouble you went to to look us up”. Sometimes there is a bit more explanation involved. We have been doing this for around 15 years. It’s a well-known program in our market and it’s fun. It is also a simple matter to track origins of candidates these days.

I have nothing against other recruiters and trainers who don’t do it but calling those who do this “amateurs” is crap. Stop it.Over the years I have placed more candidates I received from my finder’s fee program than I have made splits with other recruiters…and no one I have ever paid a finder’s fee to ever solicited my client afterward.

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Dave Staats places top executives as well as implementation consultants with software companies. He also has made more placements in Artificial Intelligence than any other headhunter. His career began during the SDI (Star Wars) years and included placement of scientists in laser, stealth, and other high-tech fields. During a short hiatus from the recruiting industry in 1994 he obtained a Private Investigator's license which he keeps as a constant reminder that a headhunter is what he really is. Dave is on the Board of Directors of The Pinnacle Society and a founder of The Tennessee Recruiters Association. He has a BA from Western Illinois University. Dave also blogs at Truth, Justice & the American Way of Headhunting


6 Comments on “What’s wrong with “Finder’s Fees”?

  1. Yes, Harry made the assertion that he gets referrals from 95% of his recruiting calls by paying referral fees, where I do not pay referral fees and get referrals from about 60% of mine.

    It’s just not my style to pay, but if Harry is really getting the numbers he claims it’s obviously an effective technique.

    I’d like to see a cost vs. benefit analysis on it. I’m skeptical anytime $$ leaves my pocket. I work hard to put it there. But then I also don’t work splits with other recruiters at the moment.

    Personally, I would be much more likely to send a certificate for a nice dinner (I do this occasionally if someone really helps me out) or something along those lines than pay a referral fee.

    I don’t feel it creates the appropriate perception when we have to bribe information. My feeling is, if you really have a relationship with the candidate they should WANT to help you. I’m not a “grab and dash” recruiter. I build enduring relationships with my candidates by structuring myself as a valued career consultant rather than a one-shot wonder. So, my general position is really simple: Bribing a candidate just reinforces a “bloodthirsty” mindset in the long run. I’m a skilled recruiter – not an ATM.

    In all fairness, Harry did clarify that he does not offer them a fee up front, but does it on the back end as a type of “reward”, which is much more compatible with my style.

    -Art Pitcher

  2. Art, The people who do this with me DO want to help and they don’t focus on the money. And it is almost always so far down the line they have forgoten about it when I ask for their SSN. We even send it to charity if they feel unable to take it ethically. It’s mostly a good Karma thing for me. I don’t need a ‘cost-benefit analysis’ to know it is a good thing to pee when I get up in the AM. The benefits are obvious.
    There’s no “bribe” here. Another thing that bugs me is that one of the trainers who’s a naysayer about this still uses that totally short-sighted line when talking to candidates about money “When YOU get paid more WE get paid more.” I hate that. Talk about low class and bloodthirsty.
    I’ll bet I have more candidates who later became clients than he does…Actually, maybe I have fewer but they trust me more and they do more deals with me. I am also guessing, Art, that you do not have and have not had employees…have you?

  3. Yes Dave…. I have 8 years management experience in this industry, but fail to see how that is relevant to this discussion.

    I’m not saying your technique is awful – it is more like it’s awful for me. It’s not something I forbid, rather just something I ignore. Sure people do it and succeed – it’s not surprising. Yet, when I send someone to my insurance guy, my web design company, my printer, etc… I don’t expect $$ for the referral. Why should we train people to expect $$ from us for referrals?

    Two points I would question – you assert the people who do this with you do it because they want to, but you don’t know that because you ARE paying them. There’s no way for you to measure it – you only have your gut to go on.

    The second, you really have no way of knowing if you’re throwing away money because you’re not willing to do a realistic assessment via a cost/benefit analysis. Now – that’s your style and that’s fine, but looking realistically at the numbers is not an inferior way to do business either. Good feelings (or “Karma” as you say) has value as well, and I understand that… however my core values differ from yours in that regard. My good Karma comes from making amazing, high quality matches between my candidates and clients.

    I appreciate your email btw – I understand this is a “lively debate” and not a fight. You do this business your way, I do it mine, and the end of the day we’re both successful…. so who would think we’re fighting? 😉

    If we all did this the same there would be no way to differentiate ourselves.

    -Art Pitcher

  4. Sounds dumb, but we are all in the karma business. Some points about what works for me …

    I always say “…if you know anybody who might be good for the role, please send them my way. Lots of people do this, and I’ve been known to make them VERY glad they did …”

    This is a vague promise of financial remuneration — not an outright commitment. After all, I want to steer clear of any scenario in which $2500 gets Amazon’d to one person, when two or more people feel like they might have sourced the candidate. No good deed goes unpunished. I need to leave myself some wiggle room.

    Having said that, as an independent operator, I leverage the fact that I can make up my rules as I go along — whereas my competitor at KornFerry must comply with a (jackass) “policy” that prevents them from paying an honorarium. Within my own strict ethical boundaries, I do what works. Period.

    Needless to say, such payments keep my industry “peeps” very loyal, vocal, and vigilant. It’s the best marketing money I spend.

    Re: the 95% claim — This is unscientific, but if it’s not 95%, it’s probably >80%. I start every single cold call like this …

    Hi ____. Do you know who I am? [no] So, you have NO idea who I am? [no] Huh. You know nothing about me … [still no, though now racking their brain]. Okay. It happens. I’m Harry Joiner, and I’m a marketing headhunter specializing in ecommerce and new media. In fact, … are you online right now? … Okay, Google “marketing headhunter” … Last year I closed VP-level deals for some of America’s best loved brands, like X, Y, and Z …” Etc.

    This is like a dumb little card trick that never ceases to amaze people. And it always makes people feel like they are doing their friends a favor by introducing them to me. Remember, A-players know A-players, and B-players know C-players.

    None of this makes me smart, but it does make me a showman. And in my view, recruiting is basically theater.


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