‘Recently clients have been increasingly insisting that if a candidate is on their system - whether they been there for 6 months or 6 years they have ownership of the candidate. There have been a number of times recently when I have sent through a candidate that is on their system and they refuse to pay the recruitment fee. I would like to walk away from these clients but they are some of the biggest in the industry and I can't afford to.'
Frankly, I think what Ben describes is outrageous client behaviour, although sadly all too common.
It's a lazy rip-off. And that's being kind.
The client is attempting to null the recruiters' terms of business simply by saying ‘we have that candidate registered with us so your referral of that candidate doesn't count'.
Here's the client thinking implicit in this attitude:
a. It doesn't matter if we haven't spoken to the candidate about this job
b. It doesn't matter if we haven't ever spoken to the candidate
c. It doesn't matter how long ago the candidate's details were registered on our database
d. It doesn't matter how we acquired the candidate's details
e. You cannot view my database to check what I am saying is true
f. I don't care how much effort you invested and skill you displayed to find this candidate or get them interested in our job, they are already on our database!
Your chance of generating a profitable stream of fee income from these sorts of clients is low. If you do manage to generate a fee it's unlikely to be a fee that makes up for all the work you have done to refer all the other candidates that the client has subsequently claimed as ‘theirs'.
The biggest problem, apart from the lack of adequate financial return for your skill and effort, is that there is no incentive for the client to do anything different.
Just imagine it for a minute; the client has an urgent vacancy but a shortage of time and a poorly constructed or inadequately maintained database of candidates collected over the years. They also have a recruitment budget that is inadequate for the consistent payment of agency fees.
What is the client tempted to do?
I am guessing something like this goes through the mind of the client:
'I'll email out this job spec to five agencies who I know have good databases and invoice on a success-only basis. I'll tell them it's urgent and I need a shortlist of three candidates within 24 hours.
Knowing how agencies always send one or two extra candidates, I should get about 20 resumes by the end of tomorrow. I'll match them against our database and claim all those candidates who I can find on our database as our candidates.
I'll then interview the best 3 or 4 of ‘our' candidates and hopefully find a candidate worth hiring.
You beauty! Minimum time investment by me, I fill the job quickly and no recruitment fee. I cannot believe recruitment agencies do all this for free!
And if any agency complains then I'll just threaten to never use them again. That should put them back in their box.'
Now that's doing a disservice to the many reputable and ethical corporate recruiters out there but unfortunately there are many corporate recruiters, for whatever reason, who decide to take the easy option and proceed down the path that has frustrated Ben, and many other recruiters like him.
One thing's for sure - nothing will change unless you take a stand.
Clearly, the corporate recruiter is on a very good thing at the moment and is highly unlikely to give up their free-loading behavior of their own volition.
Here are some suggestions about how you might tackle this issue with any client who is refusing to acknowledge payment of a fee due to the ‘they're on our database' defence:
1. Sack them as a client and spend your time finding more ethical and profitable clients
2. Insert a clause into your organisation's terms of business to explicitly state that the ‘on our database' defence in no way negates the obligation to pay your agency a fee for any ethically referred candidate who is hired by the client.
3. Ask the client to confirm (ideally in writing) that they have already considered all their ‘internal database' candidates and as a result any candidate you refer who is then hired, triggers a fee regardless of whether they are subsequently ‘found' on the client's database after being referred.
4. Include in your terms of business a special clause noting that all candidates that you refer are subject to a ‘service' (not placement) fee of, say, $10,000 plus GST that is applicable if a referred candidate is subsequently ‘claimed' by the client as ‘theirs' and hired. No guarantee applies to this fee.
5. Go over the head of your client and write a letter/email to your client's direct boss (or even the CEO) stating your concern and dissatisfaction about that type of practice and ask for their intervention to put a stop to the ‘they're on our database' defence being used by representatives of their organisation.
Number 5 above, would obviously be your last roll of the dice because in the (strong) likelihood that you fail to receive the outcome you are seeking then your client is going to know about your ‘going over their head' approach and dump you.
But at that point what have you really got to lose?
Just don't do nothing This only perpetuates and normalises this increasingly common corporate behavior that I find unethical and a lazy rip-off.
What are you going to do about it?