One of the best ways to find out what recruiters are doing . . . is to ask recruiters what they’re doing. And that’s exactly what Top Echelon did with the topic of recruiter guarantees. The method of discovery? A survey, of course!
All of the questions in this survey were related to recruitment guarantee clauses. The truth be told, the survey participants were members of Top Echelon’s recruiting network. That fact alone means that they’re “grizzled veterans” of the profession. That’s because the average recruiting tenure of a Network member is 15 years.
As a result, surveying the Network membership is an excellent way to get a representative sampling of all agency recruiters. (In case you’re wondering, corporate recruiters were NOT part of this survey.) Network recruiters have the experience necessary to provide answers that are both demographically accurate and keenly insightful.
Recruitment guarantee: to be or not to be?
The first question that we asked was a rather simple one:
Do you offer guarantees to your clients regarding placed candidates?
As you can see, the answers to that question were lopsided:
Most recruiters offer a guarantee of some type. Only a small percentage offer no recruitment guarantee clause at all. Whether or not recruiters should offer a guarantee has been the subject of debate within the profession. Some believe that since the employer ultimately makes the hiring decision, the recruiter should not be “on the hook” for that decision.
Regardless of the validity of that argument, recruitment guarantees still rule the day. No matter how much a recruiter may disagree with the concept, they more than likely still offer one to their clients in one form or another. One possible reason: because if they don’t offer one, then their client may decide to find a recruiting agency that DOES offer one. And there are obviously plenty that do.
Speaking of the forms that guarantees take, let’s move to the next leg of our journey.
Recruitment agency guarantee period
The next question in our survey was this one:
What is the standard time frame for your recruitment agency guarantee period?
Of course, only the recruiters who offer a guarantee of some type answered this question. Those answers were more spread out:
- 30 days—20.3%
- 45 days—1.9%
- 60 days—20.0%
- 90 days—44.9%
- 180 days—2.4%
- 1 year—2.3%
- No responses—2.5%
As you can see above, the most popular answer when it came to the recruitment agency guarantee period was the 90-day variety. That answer claimed 44.9% of the vote. The answer “30 days” was a distant second at 20.3%, with “60 days” right behind at 20%. A 90-day recruitment guarantee clause is as close to an industry standard as exists within the profession.
How the recruiter agreement can vary
For the “Other” responses (5.7%), here is a sampling of some of the specific reasons that recruiters chose that answer:
- Depends on fee arrangement
- 90 days prorated monthly
- Ranges from 30 to 90 days
- 180 days if under 100K, and one year if over 100K
- 90 days prorated on ENGAGED SEARCHES ONLY (emphasis theirs)
In addition, those recruiters who responded to the survey also included some interesting comments regarding how they view and offer guarantees. Some of those comments are listed below:
- “I will refund if the case is justified in my opinion. No guarantee unless the company allows me to chose who they hire.”
- “Clients are pushing for longer and longer guarantees.”
- “When pushed to the wall, we will offer a 30-day replacement guarantee only.”
- “I pretty much sign whatever a client wants, since in 25+ years, I have only had two fall-offs within a guarantee period. Toughest guarantee I have been asked to sign has been six months, 50% refund with 100% refund if candidate leaves within 90 days.”
The replacement guarantee in recruitment
Now that we’ve explored the time frame involved with these recruiter guarantees, how about the types of standard refund policies that recruiters offer with their guarantees? That brings us to the next question in our survey:
“What is your standard refund policy?”
The answers to that question are listed below:
- Full refund/money back—8.4%
- Replacement/no money back—61.4%
- Pro-rated refund—17.6%
- No response—1.7%
What’s interesting with the responses to this question is that the majority of recruiters (61.4%) chose “replacement/no money back.” So for six out of 10 recruiters, their guarantee is that if their candidate falls off, then they’ll find a replacement. However, they will NOT return the money that they’ve already received.
Next was a “pro-rated refund” at 17.6%. That means the client will receive some of the placement fee back, but not all of it. After all, the candidate did perform work for a certain amount of time. (Even if they didn’t make it to the recruitment agency guarantee period.)
In third place were the “Other” responses.” Here is a sampling of the specific reasons that recruiters chose that answer:
- 30 days to find a replacement; if none found, full refund
- Some version of all three
- Once I am paid, I do not refund any money.
- Full [refund] within 90 days and prorated over 12 months
Next was “full refund/money back” at a paltry 8.4%. Recruiters are simply not in the habit of issuing full refunds of their fees in the case of a fall-off. Some recruiters do, but the vast majority do not.
Recruitment contract agreement preferences
The results of this survey further illustrate the fact that when it comes to guarantees in a recruitment contract agreement, recruiters use varying approaches. This applies both to the type of recruitment guarantee and the length of the guarantee.
Some recruiters will not offer a guarantee, much less a refund, under any circumstances, end of story. Meanwhile, other search consultants will sign whatever recruitment guarantee agreement their clients want, and that’s been standard practice for them for many years.
This underscores the flexibility that exists in the recruiting profession. There is no set “right” or “wrong” when it comes to a recruitment guarantee clause. Independent agency owners are allowed to possess their own preferences and to act upon them. In short, they’re free to run their business the way they want to run it. (That’s where the “independent” part comes in.)
And based upon the results of this survey, the bottom line is that independent, third-party recruiters would rather find a replacement candidate than refund their placement fee.