16 July 2014

Do your clients really know what you do for them?

The recruitment industry is an easy and constant target for the cynics and critics of our sector. ‘Body shop merchants', ‘charlatans' and ‘rip off artists' are probably some of the more printable labels hung on us. Why does this happen? Unmet or mismanaged customer expectations would be a reasonable summary of the many complaints some people make about recruiters.
 
I can also think of another reason. If you were a client, consider how you might view the services of your trusted recruitment consultant if you received the second invoice rather than the first one, as shown below.

Placement Invoice - Version 1
 
Try Hard Recruiting
100 Dead End Street
Failingfast Valley VIC 3333
Terry Tough
Director
Clientland Industries
32 Hard Place
Never Satisfied VIC 3333
 
Placement of Bill Gates (Director of IT), start date 6 July 2009
$22,500
Plus GST
$2,250
Total
$24,750
Terms 14 days



Placement Invoice - Version 2
 
High Achievers Recruiting
1000 Placement Drive
Successors Hill VIC 3333
Terry Tough
Director
Clientland Industries
32 Hard Place
Never Satisfied VIC 3333
 
Taking assignment brief from client and providing consulting advice re job responsibilities, market salary and selection criteria
1 hour
Writing assignment brief
30 minutes
Writing and posting internet/print media job ad
1 hour
Writing specific competency-based interview template
1 hour
Searching internal candidate database
2 hours
Screening inbound ad response
4 hours
Preliminary telephone interviews (17 candidates)
3 hours
Outbound candidate sourcing calls to personal referral network
2 hours
Face-to-face interviews of 8 internal short-listed candidates
10 hours
Preliminary reference checks for 3 client short-listed candidates
1 hour
Arranging 1st round interviews
30 minutes
Pre-briefing short-listed candidates before client interview
1 hour
Candidate and client debriefing after 1st round interviews
1 hour
Arranging 2nd round interviews
30 minutes
Candidate and client debriefing after 2nd round interviews
1 hour
Arranging and debriefing from 3rd/final interview
30 minutes
Final reference checks (x 3)
2 hours
Managing and negotiating offer with client and candidate
1 hour
Feedback to all unsuccessful candidates who were interviewed
1 hour
Feedback to unsuccessful candidates who were not interviewed
2 hours
Communication with client and candidate prior to start date
1 hour
Inclusive of placement services yet to be provided (time estimated): Communication with candidate and client throughout Probation Period, including one on-site visit
2 hours
Total hours of recruitment services provided
39 hours
Not included in the above are tasks completed (or hours worked) by administration and other support staff
 
Total for your Investment
$22,500
Plus GST 
$  2,250
Amount Due
$24,750
 
Terms:  14 days from date of invoice
 
Please note
If payment is received after 14 days from date of invoice, the 3 month replacement guarantee becomes null and void. If the client chooses not to provide formal written feedback to the candidate about the candidate's performance during the probation period, together with an opportunity for the candidate to respond to any noted shortcomings or concerns, the replacement guarantee becomes null and void.


How are your invoices helping your clients understand the value of using a skilled, professional external recruiter?
 
How can a client truly understand all the things you do, professionally, thoroughly and behind the scenes to arrange the ‘happy marriage' between themselves and the ideal candidate, unless you communicate your service delivery explicitly?
 
Lawyers have invoiced their clients like this since the beginning of time - why haven't recruiters caught up yet?
 
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11 comments:

  1. Excellent article Ross, and so true.... Recruitment is one of the few sectors that does the majority of its work for FREE and we are only paid upon success (save for the elusive retainers).... its an interesting idea to break down invoices in such a manner, perhaps it may be wise to take it a step further and quote in our ToB the percentage charge allocated to each part of the process with a total for the full service.
    Would make it much harder for hiring manager to ask for the expected a discount.... "Ok Mr Client, which part of the process would you like me to skip?"

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  2. Thanks for your feedback, Paul and please feel free to use this blog as a template if you want to change the detail on your company's invoices.

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  3. Hi Ross, I agree that transparency and visibility is critical.
    I also believe that if the invoice above also complimented awesome reporting and informative updates it'll be well received whether its brief or the more expansive format.
    What I feel is missing from your invoice is demonstrating the REAL VALUE all recruitment businesses have in managing existing talent pools, adding value to clients employment brands and things like successfully relaunching failed campaigns. As an industry how do we price/value intuition, gut feel, networks, market knowledge?
    Reading your expanded sample invoice a client may still read "2 hours of database checking" and not see the countless hours, days and years of effort that has gone into being talent managers in our markets. I think its worth MUCH MUCH MORE than that.
    I think this has potential to encourages employers to multi-list with recruiters and recruiters to race against each other as they gamble on being the successful recruiter. Usually after the "just calling to see if you have anyone on your books" call.
    I don't feel any recruiters should gamble with getting paid or, as you suggest, struggle to get fairly paid.
    I believe partnering with clients, tailoring solutions, agreeing the parameters up front and then delivering (or over-delivering) is the key to getting paid respectfully every time.
    Great blog Ross.

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    Replies
    1. I agree, Mason. Indirectly there are many more hours involved (doing the things you identify above) in delivering the result than are detailed above. I hope that's what a client appreciates in an agency recruiter who is a genuine business partner to,and with, them.

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  4. Will clients not get the calculator out and see that services provided work out at $634.61 per hour? Annualised this is $1.3M. That would buy in a decent internal recruiter. Anything that is difficult to quantify is easier to charge more for. I am more for the above in terms of a verbal explanation as opposed to such a detailed invoice.

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    Replies
    1. An annualised salary (or even an hourly rate) for one placement is irrelevant - I have never had, or heard of, a client make such a calculation. If there were a large number of placements, then maybe. Remember that almost all external recruiters are paid according to an output, not inputs. If any client made such a calculation I would ask whether they are happy to pay me the same hourly rate when they don't hire a candidate through me.

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  5. Ross, could you explain how this might work in more practical terms, when there are 2 or 3 agencies all working on the same vacancy?

    Thanks.

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  6. This comment has been removed by the author.

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  7. Frankly, Mitch, I don't think it would work because the 'resume race' takes over which is not a thorough or professional (or advisable) recruitment process. Many of the steps above would be not completed or done on a surface level (eg how many recruiters, recruiting a contingent, multi-listed job, would invite already-registered candidates back for a job-specific face-to-face interview? Zero, I suspect). Therefore this invoice format would probably not be advisable.

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  8. $600+ per hour for a 20 year old recruiter who stumbles across a good CV via a SEEK ad, compared to $300 to post the same ad ourselves and a few hours work to get the job done and promote our own brand better - you're kidding yourself Ross and if this invoice was sent to us it would be the last assignment you would ever work. A certain degree of reality needs to be taken into consideration with how much agencies want to charge clients and no wonder more clients just choose to do it ourselves.

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  9. Err, that's not what I am suggesting Frank. If said twenty year old had done such a thing to earn such a fee (unlikely, I would suggest) then this would not be the invoice I would advise sending. I hope it's obvious that this is an invoice you would send if it genuinely represents all the work that was done to complete the assignment and have the job filled. If clients perceive that they don't receive value from their recruitment agency then they should go and recruit for themselves and test their perception with the market.

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