Would You Change Your Guarantee Policy to Keep a Recruitment Client?

In a previous blog post, we addressed the most popular types of recruitment guarantees. We discussed how the recruiter agreement can vary and the role that replacements play in an agency’s guarantee policy.

But do recruiting agencies change their guarantee policy? And if they do, under what circumstances does it happen?

Once again, we’ll draw upon the results of a survey that we conducted. The survey participants were members of Top Echelon’s recruiting network. As stated before, the average recruiting tenure of a Network member is 15 years. So the Network membership is a legitimate representation of the recruiting profession.

Guarantees and guarantee policies are a very subjective topic for recruiters and agency owners. That’s because what one recruiter likes another might not like. Some recruiters offer all types of guarantees. Some hate offering guarantees and will only do so if they absolutely have to.

Changing for the clients of your recruitment agency

So it makes sense that recruiters might change their guarantee policy. They might do so for a specific search or “across the board” for all searches that they conduct. After all, recruiters and agency owners will do whatever they believe is best for their business.

That’s why we asked the following question in our survey:

“Have you ever changed the guarantees you offer in order to gain or maintain a recruitment client?”

Below are the responses to that question:

  • Yes — 29.0%
  • No — 69.4%
  • No Response — 1.6%

As you can see, roughly 1-in-3 recruiters have changed their guarantee policy at all. The majority of respondents have stuck to their current policy, regardless of the situation or circumstances. However, since the title of this blog post is “Would You Change Your Guarantee Policy to Keep a Recruitment Client,” let’s dig a little deeper, shall we?

If a recruiter answered “Yes,” we then asked them to elaborate further by commenting, and that’s exactly what they did. After analyzing their comments, two patterns emerged:

  1. Survey respondents typically extend their guarantees from 60 days to 90 days.
  2. Respondents primarily change their guarantee policy in order to secure new recruitment agency clients, as opposed to maintaining a recruitment client.

Listed below is a sampling of some of the specific comments that recruiters made:

“In some cases, we had to extend the guarantee period in order to secure the account, since other firms were giving away much longer terms.”

“If I agree to sign a client company contract specifying a different guarantee in order to take a search, I’m careful. It has to be an excellent company where the chances of a fall-off are practically zero. I don’t accept just any assignment.”

“In 16 years, I’ve had two fall-offs, so it’s an area where I’m willing to give in during [guarantee] negotiations in order to earn higher fees or get the job order over other agencies.”

“Not to maintain business, but perhaps to pick up new business. Certain aspects of our agreements are negotiable, but they have to work for both parties.”

“We approach it the same as we always have, on a case-by-case basis, depending upon the relationship with the client, the potential for additional business, etc.”

“We will give a six-month guarantee for searches where the salary is above $100K.”

Changing a guarantee policy for new recruitment agency clients

As mentioned above, recruiters primarily change their guarantee policy in order to secure new recruitment agency clients. When it comes to adding new clients for their recruitment agency, search consultants are sometimes flexible with their offerings. This is akin to “getting their foot in the door.” It is sometimes difficult for agency owners to break into a new company and start scoring job orders. Offering more value (or even more perceived value) is one way to break in and score those orders.

Judging by the answers supplied in the survey, recruiters put a high premium on adding recruitment agency clients and gaining new business. Still, they hedged their bets when doing so. They changed their guarantee policy when they believed there was a high probability for success with the search. They also felt comfortable doing so if they believed that the risk of a fall-off was negligible at best. After all, if you believe that there is almost no chance that the candidate is going to fall off, then what’s the risk involved in extending your guarantee period from 30 days to 60 days?

Changing a guarantee policy to maintain a recruitment client

On the other hand, the survey respondents indicated that they’re not in the habit of changing their guarantee policy to maintain a current recruitment client. There are likely a couple of reasons for this. First, if a recruiter is on the verge of losing a recruitment client (for whatever reason), changing their guarantee policy is probably not enough to save the client. Or to look at it another way, how many times has a client dropped a recruiting agency simply because of the guarantee that it offers? You can probably count the number of times that’s happened on one hand. Or no hands.

Second, if a client has been working with a particular agency on a steady basis, it’s likely that the company is satisfied with that agency’s level of service. That service can be summed up with one word: candidates. Recruitment agency clients want candidates. In fact, they want the best candidates. That is their primary focus. If a recruiting agency can consistently provide the best candidates, then the hiring official is less likely to care about the guarantee period. If the main reason that a company works with a recruiting agency is not the guarantee period, then the main reason that a company would not work with a recruiting agency is also NOT the guarantee period. (While that might appear to be some geometry-type voodoo speak, it is a valid statement.)

A recruiter’s guarantee policy is like everything else on their desk: a tool by which to gain more clients for their recruitment agency, make more placements, and increase their billings. It is, in essence, a tool. In the recruiting profession, there is no set way to use such tools. It’s up to every agency owner to utilize the tools at their disposal in the fashion they see fit.

Ultimately, recruiters and agency owners must do what is right for them and their business. What works for them might not work for others, and vice versa. That’s one of the great things about recruiting. There’s no single way to enjoy success. There are many paths to prosperity, and each recruiter can find their path and travel it in their own time, as they see fit.

Professional freedom: guaranteed.

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