Tuesday, March 22, 2011

Direct-hire Placement Fees NOT Based on "Percent of Starting Base Salary"

I read in a reprint of a Reader's Digest story this blub/quote:  Rule # "21. “Be careful if a headhunter is negotiating for you.  You may want an extra week of paid time off and [would rather] be willing to sacrifice salary, [in order to get the time off] but he (she) [the recruiter] is negotiating hardest for what hits his (her) commission.” – an HR professional in New York City.  That was taken from a story called the top "22 Secrets HR Won’t Tell You About Getting a Job," that was posted on Shine - the "Manage Your Life" blog hosted by Yahoo.com  I hope I have provided for proper attribution for the source of that quote.

But the point is (about a recruiter doing what is best for the recruiter, and not necessarily what's best for the candidate) is a good one.  That is one of the reasons a few years I ago I began toying with the idea of a quoting placement fees to clients for a fixed dollar amount.  Such as $X,000.00, or $X,500.00 - with X being a single digit.  You get the idea.  For entry-level paralegal positions - a direct hire fee could be $2,500 or on up to $9,500 for an experienced paralegal.  But I wanted to get my clients to stop thinking in terms of "x percent per every thousand dollars of base salary."  That seems antiquated and arbitrary.  In fact - it would be fun (but time consuming) to go back and see who invented that placement fee equation and when.

In my book, the placement fee is a dollar amount - that is really all you can take to the bank.  It is the $ sign, not the % sign that matters.  And the percentage scale slides based on base salary.  So if the search effort by the recruiter is the same, then why not take that "moving target" (the sliding fee) and nail it down to a flat, fixed figure, quoted to the client up front.  When I do, I think clients are 1. surprised by this (me quoting a flat, fixed dollar amount fee) and 2. they like knowing exactly how to budget for the fee at a fixed and known amount in advance of filling the position, and 3. the client becomes curious about why no one else in the placement field is doing this.

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