Did you know that when a recruiter introduces you to a company, they are guaranteeing that you will and can perform?
Almost all contracts between recruiters and companies include a guarantee. In the case of contingent recruiters, the guarantee is in effect for a limited period of time – 90 days is common. For retained searches, the guarantee can be a year or longer.
Often, in their original, client-generated form, these guarantees are totally and 100% unconditional. If a candidate leaves or is fired for any reason whatsoever, the recruiter is held responsible. This means that if a recruiter places an advertising executive on an account on, say, February 1st and on March 1st the agency loses its biggest account and they decide to terminate the account person who was placed in February (last in, first out), even though he/she didn't work on the account that was lost, the recruiter may have to return the fee; it doesn't matter if the recruiter spent a week or a year working on the placement.
In all the years I have been recruiting with all the hundreds (if not thousands) of candidates I have placed, I have only had three or four leave of their own accord before the end of their guarantee period. I have only had one who got fired for cause, but I replaced her at no charge, even though it was shortly after the guarantee period had expired because she had misrepresented herself to both myself and the company and I accepted that responsibility.
I thought I would share with you a couple of absurd instances of client invoking the guarantee clause. Every recruiter has these stories. In fairness, the vast majority of clients handle this issue with grace, tact and fairness. But occasionally, they become intractable, often forced to do so by their finance department.
Fortunately for me, in all my years of recruiting the invoking of the guarantee has only happened a handful of times. Most of the time when a candidate leaves a company within the first few months, it has nothing to do with the recruitment job or properly screening the candidate. Generally it has to do with the job itself or issues within the company; sometimes, jobs turn out not to be as they were originally described.
I once placed a candidate at an ad agency on a major soft drink account. They told the candidate there would be “some” travel. She was an account person who loved travel and production. She was so excited to take this job on an iconic brand; they told her (and me) it would be 40-50% travel). It turned out that the account was in production at various locations about forty to forty-five weeks a year and the candidate was expected to be there, no matter where . She was a newlywed. After her first five weeks on the job she had spent exactly two nights at home. She realized that it would always be this way and they had misrepresented the job. She resigned. I replaced her, but on the second placement, I found someone who wanted to and was able to travel. The truth is that the company misrepresented the job and I should not have been held responsible, but it was a good client. It certainly would have been so much easier and more efficient if I were told the truth in the first place.
Then there is the boss who is lovely on the interview but turned from Dr. Jeckyll into Mr. Hyde once the candidate was hired. This happens with some frequency. In one case, the manager was so abusive that he even called this person’s spouse and told her that her husband was a numbskull (for no substantive reason). When I called the president of the company, his response was that the hiring manager was a necessary evil and was good with clients. He did not apologize. His attitude was that I should find someone with thicker skin. The candidate I had placed resigned after only a few weeks on the job. The agency wanted to hold me responsible; I would not refill the job. Why the client would not have told me in the first place that I needed to find a candidate who was tough and could handle a difficult boss is a mystery. The truth is always easier to deal with.
Once, I placed someone an ad agency which is now out of business. The day the candidate started work, they lost a huge account, Burger King. Two days later, on Wednesday, first thing in the morning, they called the candidate to HR and fired him, despite the fact that he did not work on that account (HR did not even bother to tell this person's manager or group head). My candidate had resigned from a good job to take this one. When I called to complain, their response to me was, “What, we should fire someone we know? Last in first out.” They had not paid me, nor did they. They made no apologies to the candidate or to me.
Once, an agency called me after about 60 days and said they were not sure the candidate was competent. I asked if they would like me to work on a replacement. They said no, not yet, but they wanted me to be on notice. The candidate remained at the company for over a year. After about 14 months they called and told me they had terminated the employee and invoked the guarantee and asked me to replace him, because they had put me on notice. You know what my response was.
And once, when I was first recruiting, a company fired an employee on the day before the guarantee period expired and invoked the guarantee. They had not yet paid. It was a very intentional act. They had the gall to ask me to replace him. I found out afterward from another former employee that this small company did this to recruiters frequently. Now this is rare, but it does happen.
I know that most human resource professionals understand that the guarantee it is mostly a crock. But the company’s corporate lawyers and some finance people make the human resources specialists bow to their will. The guarantee is often an excuse to delay payment for services rendered.
Consequently, I don’t work with companies who don’t pay within 30 days and I have inserted a clause in my contracts which basically excludes loss of business, change in management, the sale of the company and jobs and bosses who/which are not as described. Interestingly, this clause almost always gets approved.