Negotiating the “extras”
“Negotiation is a game of chess, not checkers” – Michael Sharma Group, 2019
In a game of chess, you don’t win by simply killing the queen, in fact lots of chess games have been won by the simple pawn, with the queen sometimes being offered up as bait. Much like negotiation, the fee is often the most important piece however the negotiation can be won with a number of value-add propositions rather than stopping at just the fee.
What else is left to negotiate on though??
We’ve covered off what you pay in the last article. How about when to pay? How to pay? Who to pay? Refunds? There are many things to negotiate on, it all really depends on what is important to you. What if you pay the fee and your candidate leaves after 6 weeks!? Are you entitled to a refund?! Unless you have agreed specific rebate terms, not necessarily. Most agencies will have some sort of rebate period which averages out at between 4-8 weeks, the breakdown of which can vary. Let’s detail what that might look like and what you might be able to negotiate on:
Rebates – This is effectively your 14 day returns policy. You hire a candidate, it doesn’t work out and you “relieve them of their duties” or worse yet, they accept an offer from an interview they attended a few weeks back that have only just come back to them. This now leaves you “candidateless” and back to where you started 12 odd weeks ago. You now go back to the agency and say you want a refund. If this candidate left after 4 weeks of joining, you’ll be lucky to get 50% back, in some cases you’ll get nothing back. What can you do about this?!? You can negotiate with the agency on what is a suitable rebate period. Be rational about it though, if like Ross Gellar, you bring back a cut in half sofa and expect a full refund, you’ll likely be disappointed. In the same way, if you approached the agency a year after the candidate has left you aren’t likely to get a refund. So what is a reasonable time to expect a rebate? 12 weeks is a pretty good gauge of whether you have made the right hire, if within 3 months the candidate isn’t performing you should have figured it out really. Equally, some like to have the rebates in line with their internal probation period, which can be six months. Although your rebate period has now been extended, it will be unlikely that you will have a 100% rebate for the full length of the rebate, a good way to work out how much of the fee you get back, it’s worth dividing the fee by the length of the rebate i.e. 12 week rebate = fee/12. Candidate leaves after week 6, you get a sixth of your fee back. Remember, sometimes candidates can leave for reasons outside of your control and that of the agency, even if every avenue had been covered. This is where the free replacement clause comes in. You’re happy with the service, pleased with the process and delivery from the agency, but appreciate that on this occasion it just didn’t work out. In this scenario, rather than a financial rebate, discuss the free replacement element.
REC:SMART TIP: Negotiations are give and take, don’t expect a reduced fee, rebates of 6 months and the shirt off someone’s back. You will need to be flexible too.
Payment terms – This is normally one the procurement or finance guys love. Personally, I don’t believe payment terms should go beyond 14 days however this can be a good way for you to ensure you get the aftercare from your agency. Most agencies will keep in touch, especially the ones who are looking to build long term relationships. If you’ve opted for a more transactional relationship with your agency, you might want to consider increasing your payment terms to 28 days or 30 days from date of invoice, this way the agency will stay in touch and provide aftercare to the candidate until the invoice has been paid. It’s also beneficial to you because it’s keeps cash in your bank for a little longer. Try not to get silly with it though, if you’re looking for 60-day payment terms, from month end, that could be 90 days before the agency get paid and will likely end with a big fat no!
Future business – This is an interesting one. If you think you will be recruiting more frequently in future, you dangle a carrot on a stick to the agency and ask them to be more flexible on the basis that you will give them future roles. Likelihood is they will want some sort of timeline and indication of what the future business will be before they offer some movement. Lots of recruitment in your eyes might be 3 hires in the next 12 months. To the agency, they might be working on three roles for a single client in a month, see how the two examples are wildly different? Be specific, tell the Recruiter how many vacancies you are likely to have, in which departments, what are the likely salaries, how quickly is that recruitment going to happen. Chances are the fee structure will stay the same for this piece of recruitment, but you can get a reduction on future business. Consider some sort of tiered system where if you spend a certain amount on recruitment your fee, rebates, payment terms automatically adjust to the next level.
“good compromise is when both parties are dissatisfied, and I think that’s what we have here” – Henry Clay
It’s always easy to lose sight of why you’re in negotiation in the first place, don’t forget that you want the agency to see the value in the assignment. Having the deck weighted in your favour won’t necessarily bring you favoured results, there should be a way for both parties to be equally dissatisfied (or satisfied if you’re a glass half full kind of person), the end goal is to make sure that you hire the best talent for the vacancy. In a world full of Donald Trump’s, try to be an Akon
Hopefully this should give you some more firepower in your arsenal to be able to walk away happy from a negotiation.
As always, we are on hand to discuss any of the points in more detail or answer questions you may have on any of the published articles so far.