There’s nothing a recruiter likes better than placing a candidate. Well, there might be one thing—collecting your recruiting fee for placing that candidate.
Professionals who have been in the industry for any length of time probably have at least one “horror story” about not being able to collect their recruitment fee from a client. (Or at the very least, not being able to collect the fee in a reasonable amount of time.)
Let’s face it: there are some employers that do NOT want to pay recruiter fee or the candidates they hire. Even if a hiring manager acknowledges that they should pay the fee, they’re not exactly rushing to do so. They’re capable of dragging their feet when it comes to the fee just as much as they drag their feet on making a hiring decision.
So the focus of this blog post is not to address what to do if a client has not paid the recruiting fee and has no intention of doing so. That’s a situation for another blog post. And quite possibly for a lawyer that specializes in placement law.
Collecting the recruiting fee more quickly
No, the focus of this blog post is to address things that you can do to hasten the process. In other words, in an ideal world, your client would pay the recruiter fee quickly. They, of course, typically do not. So what can you do to motivate or convince your client to pay it more quickly than usual?
There are some factors that are (largely) out of your control. For instance, you have a guarantee period that dictates the client will not cut a check until after the guarantee period is over. Now of course, you could offer a guarantee that does not include that stipulation. Or you could offer no guarantee period at all.
However, the vast majority of independent recruiters offer some kind of guarantee to their clients. We at Top Echelon have conducted recruiting polls and surveys regarding guarantees during the last several years, the results of which validate this statement. So after taking the guarantee period into consideration, what can you do to collect your recruitment fee more quickly?
Below are three strategic steps for collecting your recruiting fee:
#1—Always have a signed fee agreement.
Yes, I may be stating the obvious, but sometimes the obvious must be stated. After all, you can’t expect a client to pay your fee if they don’t expect to pay your fee or if they haven’t indicated (in writing) that they will pay it. There may be some recruiters who are willing to work a search without a signed fee agreement, but that’s a perfect example of “flying by the seat of your pants.” Other recruiters, though, might refer to it as sheer lunacy.
Always have a signed fee agreement in place. Make sure that the recruiter fee is included in the fee agreement and that the parameters for paying said fee are explicitly spelled out. That way, you can point back to the agreement and say, “See? See this? Pay me.” (You might want to rephrase that slightly, but you get the idea.)
#2—Be strategic when negotiating your fee or fee percentage.
There will come a time when clients want to negotiate your fee or your fee percentage. Now, the decision to do this is a very individual one for recruiters. Some will absolutely NOT negotiate their fees, while others are more flexible in their approach. Additional factors include the relationship that the recruiter has with the client and the history they have together.
Using the axiom of “Never give up something without getting something in return,” below are a few ways to be strategic in the negotiation of your fee:
- Lowering your fee percentage, but only for a recruitment agency exclusivity agreement. For example, instead of 25% for one search, your fee percentage is 20% for three exclusive searches. Since the client is making a commitment to multiple searches, that almost guarantees you will be paid in a timely fashion.
- Lowering your fee (say, to a flat fee), but once again, only for an exclusive search assignment. Or for multiple search assignments if they are all exclusive. The idea is to agree to your client’s request . . . but only if they give you one or more exclusive searches. Once again, this all but guarantees that you will be paid.
- Lowering your fee or fee percentage, but only if payment is remitted within a certain time frame. Considering how long it usually takes for clients to pay recruiting fees, this certain time frame is usually between 10 to 15 business days.
- Lowering your fee or fee percentage, but only if you’re being tasked with helping to hire an entirely new department or if you’re helping a start-up or new company build their organization. In situations like that, it could make sense to sacrifice a portion of your recruitment fee.
#3—Justify your fee with VALUE.
Ultimately, clients don’t pay your recruiting fee for no reason or just because you say they should pay it. As we’ve mentioned, there are some hiring managers and HR personnel that look for any way to NOT pay the fee of an agency recruiter.
That’s why you must make sure that your recruiting agency provides the level of value necessary to justify the recruiting fee in the mind of the hiring manager. In other words, the hiring manager should always want to pay your fee. And they should always want to pay it because they know the value you provide and they want to keep receiving that value.
So what does this value consist of? First and foremost, it consists of candidates. If you always provide A-level candidates that the hiring manager can not find on their own, then they will always pay your recruitment fees and give you more job orders. Talent rules in this current market. If you have access to it, then you have what employers want the most.
Second, you should also serve as a hiring consultant and provide advice and information outside of just making placements. (Although placements are pretty great, we have to agree.) This could include market intelligence and employment and hiring trends. Basically, anything that makes the job and the life of the hiring manager easier.
The best way to collect your recruiting fee from clients? By consistently providing the value that proves your agency deserves the fee. And deserves to have it as quickly as possible.
Top Echelon offers a free monthly webinar as part of its Recruiter Coaching Series. After the webinars are over, we post the recorded version of the webinars on our website. These webinars touch upon a variety of recruiter-related topics. These topics deal with both candidates and clients. As always, our goal with these webinars (and corresponding videos) is to help recruiters make more placements.
Industry trainer Michael Gionta has a webinar video on the Top Echelon website that can help recruiters collect more fees and increase their production. The title of that video is “How to Double Your Placements AND Your Revenue in 121 Days or Less!”
In addition to training and webinars, Top Echelon offers other recruitment solutions. These solutions include the following:
- Big Biller applicant tracking system
- Top Echelon recruiting network
- Top Echelon Contracting recruitment back office
For more information about Top Echelon and the products and services that it offers, visit the Top Echelon website by clicking here.
