I’ll bet if we ask 10 recruiters in the business for 3 years or less what APF means they won’t know. I started in 1985 and it was a couple years before anyone explained APF and EPF to me. It means Applicant Pays Fee. I gather there used to be a lot of business done both ways. I have read about it but never seen it. That’s probably a good thing.

My main point is that I do not understand why our whole industry has not been making major moves to get engagement fees for actual searches. Now that I have been doing sourcing on engagement only partially for 10 years and totally for 5. I just don’t understand why there isn’t a training article or seminar on doing this every time I look up. 

I am not suggesting everyone move to a totally retained practice. That’s a different business with its own set of challenges and I have come to see it as really a different service but the idea of getting some kind of engagement fee or retainer to go do some work solves SO many problems. Now that I have been doing it for a while I don’t think it is harder than what I was doing before.

The whole premise feels so much more honest for us and the clients. The ones who pay have a need or they would not pay. When they pay they now can stop asking themselves ‘Why WOULD I necessarily hear from this guy again if I didn’t pay him?’

It forces some discipline on recruiters in many areas of the process. I am forcing myself not to get into those now because I have a bunch of calls to make on a bunch of searches.

I just really want to know why EVERY trainer both paid or internal doesn’t have “The check cleared” as THE number one criterion for every job order grading scale. I KNOW not everyone will actually do it. I was in 3 years before I got my first one and 10 when I started trying all the time and 15 before it was ‘pay or not’. It is just so good to be able to ask myself “Why would I go try to find that for nothing?”

To be clear, we make contingency placements regularly. We just reserve actual sourcing for people who pay.

It’s just mystifying that this isn’t considered ‘part of the path’ instead of just something some people do.

This is the part where I should tout my VideoAudioBookSeminar but I only know 1 or 2 people who make more doing that stuff than making placements.

I am no longer pretty enough and I am too cantankerous to start down that path. Someone should though…Gotta go…closing call…

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Neil,Neil, Neil…I just have to address some parts of the comment you made on “Part 1” and I think the responses are worthy of a post instead of burial in the comments. We do all have our opinions. That doesn’t make them qualitatively equal. I believe some elements of this debate can be supported as ideals or models to the detriment of some other elements and I think the debate itself might end up being instructive for some people.

Your assumption about most recruiters having a max fee that they then discount is probably correct. That’s not because it is right. It is because they are not taught how to properly handle the whole fee aspect of what they do.

You mention statistics. I don’t see them and I don’t know what you mean by a ‘flat fee’. That usually means x number of dollars. I am advocating a static percentage fee. I just want to be clear about my argument. I do not buy the premise that this loses business if we never cut it or go above it and it is impossible to even measure statistics for it.

I guess we are in agreement that recruiters already knock $ off the price and prove that they priced it too high to begin with. That’s what I have been fighting and dealing with for years. Your instruction to keep doing this but call it something else is sophomoric at best and disingenuous to boot.
Your paragraph about being from the ‘pricing on the fly’ school is facile here. The general model that evolved at 30% evolved for a reason. We can violate that model regularly and consistently because we don’t have certain costs that some businesses have. Mostly we can work at 25% because we are efficient. I do not have statistics but I’d be willling to bet that studies would show that in the business we are in (call it the Fordyce Reader Model) that 30% is actually paid less on than 20 or 25% of all the invoices in the industry. Most of the people you are talking with probably never get enough information or never have enough knowledge to accurately judge what a given search is worth on the fly.
They should, however, know, or be working for someone who knows, what their own efforts are worth given a standard amount of information. They should accept,or turn down, jobs based on things like degree of difficulty as opposed to trying to assess those items while talking.

You just can’t have it both ways. “See my video on why to never discount your fee” in an argument on why we should discount our fees just doesn’t work. They neither complement nor compliment each other.
“and if you have to agree to a lower fee”. Neil, you never “have to”. You always can.

This is not the way most professionals work. Most attorneys, doctors, accountants and consultants do not spend much time or energy cutting their fees to get business if they have built practices based on providing value at a certain general rate. I dare you to go to Jeff Allen or Bob Style or Bernie Frechtman and tell them your problem, hear their rate quotes and then see what each one says when you tell them “I can’t pay that” or “The others all do it for a third less” or “That’s just too much”.

Maybe people could consider a rebate if there are truly economies of scale involved but that’s not what we are talking about.

Your unfamiliarity with the reason for banded commission plans is surprising. It is because the higher dollar levels costs less to produce so there’s more to share. That factor has nothing to do with this argument. Nothing at all. I was talking about situations where some kind of subterfuge is involved…like explaining later that 5k of a fee isn’t commissionable because it pays the research assistant and stuff like that.

Maybe some people do tell you how wonderful it is to learn to try to supposedly harmlessly deceive clients. I am sure a toilet looks like a punchbowl when people are crawling out of the desert.
The bottom line for me is that it should be clear to anyone that establishing a fee and learning how to sell it are better tactics than putting the lipstick of a fee discount on the pig of taking less than your established fee.

Even Danny Cahill might argue for a discount now and then but he damned sure won’t tell you it is better than having a price and sticking with it.

I guess I should put this on video… “We get 25% of the first year’s compensation with 1/3 down before we make a sourcing call. No one else gets a better deal. You may not appreciate that yet but you will if you become our client.”

If cutting isn’t an option it makes self-discipline easy…and it leaves nothing to try to raise later.  

Now I have to go prepare to defend myself against all those who will come back and tear me apart for doing all my business at what they’ll call a ‘discounted’ rate.

I almost put this post as a comment on an article about the ‘right way’ to discount fees. I don’t want to get in a direct public pissing contest with the author but it does deserve rebuttal. It’s almost embarrassing that people who negotiate the other side of our agreements can read articles that assume they are dumb enough to fall for old tactics like ‘mark it up and give a big discount’. Our clients deserve better than that.

I know there’s a whole school of thought that would like to re-educate me for doing all our business at 25% and I accept that. I say that first because, while I am disagreeing with that author, I know ‘my way’ isn’t necessarily the only way but it works for us and it covers our costs. Less than that doesn’t cover our costs and we choose not to build in “throwaway discount money” by claiming to work at 30% and then not getting it.

I can tell you that life has been much simpler in the past 6 years or so since we just stopped negotiating on price at all. Telling our established clients that no one gets a better deal than they do goes over very well with them and the new ones appreciate it too after they have heard it a number of times and they finally sign up. I’d rather struggle to help them understand our service is worth what we charge than struggle with the idea that they can decide that.

I am struggling a bit with this article that says never lower your fee and then explains how to do it. None of the people signing our agreements are stupid (this guarantees input from Tom Keoughan). If anyone actually thinks there’s a difference between a 30k invoice with a 40k “sticker price” and a 30k invoice with a 30k “sticker price” it would have to be a person living in an earlier age.

It took me many years to really believe what we do is worth what WE say it is. It is kind of sad now to see someone encouraging the idea that we should be telling people essentially that “We priced our product so high that we can knock off 1/3 off it and still do the job and make money.”

Just yesterday a prospective client who had hired a new HR rep told us “everyone else is charging us 18 and 20%”. She’s been there 3 months and has not paid any fees at all. Before she got there they saw several of our MPC candidates at 25%… with signed agreements…She’s just throwing out words that mean nothing. Just like the article I am referring to.

Neil, next time you hire a consultant,tell him his commission rate is 70% but that you are taking a discount that will net his commissions at an actual 50%.
Or tell your client to offer your candidate the 150k he wants to take the job and then just discount it to 130k on the check stubs.

Finally, you have not invoiced someone 30% unless you get 30%. Let’s leave this other stuff to the people who sell rugs,furniture and jewelry.

Sometimes It’s Just Fun

October 16, 2009

I made it ‘top down so it’d be easier… It’s ok if headhunters want to skip straight to the punchline. Oh and for what it’s worth he was posted for 1 week before he realized it’s not what guys like him should do.

Dave Says:
I found out recently that a friend from the late 80’s that I lost track of ,Dr. Supra Computra, is now a DARPA PM. We have been meaning to catch up at some point anyhow…but since it is purely social ‘how ya been’ kind of thing I keep putting it off and she’s probably too busy to remember.
If you knew her background (AI MIT etc.) you’d know why I think it’d be a good idea for all three of us to have me see if she has any ideas for places for me to introduce you. I don’t imagine you’d have a problem with that but I always like to check.

Joe Says:
Interesting! I’d always be happy to meet a DARPA PM. I’d be especially interested in meeting that particular DARPA PM given the programs she has oversight of. You’re quite right – it’s just the sort of stuff I’m interested in.

However, there’s one area of sensitivity – her area of responsibility might even be *too* close to my current work! My boss attended an industry day for one of her current programs (REDACTED) just yesterday, and I expect we’ll be responding. I’m not sure how to handle that since the proposal is out, with all the restrictions that usually entails. But I expect a purely social meeting might be OK…?

Dave Says:
Exactly why I wanted to ask first. To be clear…this would just be ME asking ABOUT you. Saying to the PM “What would you do with this guy if you were me?” So the ‘risk’ if you even want to call it that, would just be that your boss or whoever could find out that some headhunter was asking about you. I doubt that would happen and it probably would tend more to make you shine than to tarnish you
Also, 99% of the time DARPA people, even friends, say they can’t make those kinds of referrals.
Just to be careful I’ll start by doing it ‘blind’. Background but no name or contact. And finally, this is a total nothing compared to his possibly seeing info on a job board…

Joe Says:
No problem. Didn’t think it would be an issue, just wanted to throw it out there. My concern was actually for her, given the various convoluted rules that exist concerning contact between gov and contractors when a proposal is active.
You’re right about my risk of being on Monster – that was a calculated risk. I figured that since our HR department has never successfully forwarded me a useful resume for us to hire, what’s the chances they’ll find mine?

Dave Says:

That’s classic! I am going to use it in my blog. No names ,of course…

Every once in a while I just have to say what I believe is real. Now and then someone even ‘gets’ it. This is real except for the name.

Dave,I appreciate that making contacts is a big part of your job, so I understand why you are pursuing this, but the only reason I would consider using a headhunter is if I found myself out of a job and my own network of friends and colleagues failed to find me a suitable opportunity. I’ll keep your contact information in case I find myself in that situation.Thanks,Jim

Thanks Jim, I appreciate that it might seem presumptuous or arrogant or some other bad kind of thing to point this out…but I’ll say it anyhow because I think that regardless of whether we interact in the future this might somehow help you…it’s also information I think would help everyone have more accurate expectations when dealing with headhunters.

First, the only way someone can ‘use’ a headhunter is to pay him to find someone to hire. Candidates can communicate with us but they can’t ‘use’ us to find new positions. I realize even some other recruiters might make you think otherwise but this is just a fact.

If you were to get to know me I’d be part of that network. I’d be the only part of that network that is focused on telling you about situations that had elements better than what you now have. The least likely time for me to place someone is when you are jobless. My clients pay me to introduce them to talented people who are merely willing to evaluate them. We pass along unemployed people for free.
If you become a hiring manager please give me a call then. I’ll be the headhunter sending you good top talent instead of the one sending people the whole world is interviewing.

I am guessing I might have just earned myself out of being part of your network of friends and colleagues but I’d recommend you find someone else for the role of ‘the headhunter I know’ for the same reason it’s good to know a mechanic, a PC tech, a surgeon and a guy with a nice big boat.

No hard feelings here. Sorry if I have created any for you. Sincerely, Dave.