Do I Keep the Money?

Fall offs. It's a term no recruiter likes to experience, or even hear. So, my apologies in advance for using it!

It started out as a typical placement. After signing the agreement, we submitted a total of two resumes to a new client. One candidate we knew was a slam dunk fit! Over the course of six weeks or so, our candidate (let's call him 'John') had two phone and two face to face interviews. The hiring manager loved him; the corporate big wigs loved him; from Ireland to the US, HR was told "hire him, he's the one for the job."

After some low ball negotiations, a starting salary was agreed upon, and a start date of two weeks later was determined.

Then typical turned irregular. A week or so after John accepted, but prior to the start date, the hiring manager -- the report to guy -- was let go. Hmm.

The client gave great reasons for letting him go: they are moving their business in the direction which our candidate excelled, that's why they hired him, and the hiring manager lacked that background. We were told it was an even greater opportunity for John, as the director level was pretty much his for the taking.

Our candidate started as agreed.

Immediately upon becoming the client's employee, John learned things... bad things. The client had failed to disclose problems with their quality systems, to both him and us: manufactured materials had been recalled because they weren't up to snuff. Let's just say when the FDA issues warnings, it's a problem.

There were bad, deep-seated cultural problems, too. For example, the client's main customer was on site, and John asked an assistant to order lunch for them. The assistant said she didn't have the authority to do that, only top bananas could. No one had authority -- or the balls -- to do anything. Except John, who knew the trigger had to be pulled on certain things if the FDA was to be calmed, and for him to successfully perform his duties.

John tried sticking it out, but was 'let go' six weeks after starting. A fall off! :(

The very next day, the regional HR person called, and asked for the money back. He seems to be setting things up as if WE did poor work: "you only sent two candidates... he's not the same person we interviewed..."

We have since been in contact with the original hiring manager, who told us that his superiors instructed him to NOT reveal certain things to John during the interview process.

Naturally, I have gone over the fee agreement with a fine tooth comb. (Yes, we did that before signing it, too.) There is nothing about a candidate being hired for one job, and being utilized in another (the hiring manager would have been a great buffer between corporate and John). There is nothing that applies to deceptive practices. Just that in the "event the candidate's employment is voluntarily or involuntarily terminated for any reason other than workforce reduction," we have to provide a full refund.

What would YOU do, and why??

Replies are closed for this discussion.

Replies to This Discussion

Permalink Reply by Sandra McCartt on November 30, 2010 at 4:23pm

Dear Mr. Ward and anyone else who believes that siging a contract then looking for a way around it is good business.

I am an" expert" at one thing and one thing only. Doing what "I" said i would do no matter what the other party did or did not do. I can not control what someone else does only what i do. This contract is clear cut that there are no contingencies to not make a refund based on anything other than reduction in workforce. Period, paragraph. There is nothing in the contract that says that the company has to disclose it's dirty laundry or a fee will not be refunded if an employee leaves. Be real. Sure you can go to an attorney, spend some serious money, make a lot of noise and then be told that it's a simple contract. You can call someone higher up the ladder and try to justify why you should not honor your contract. I would suggest that would immediately elicit a demand letter from the company attorney with a copy of the contract that was signed attached.

If you feel that it is "laying down and dying" to honor a contract that you have signed let me assure you that i would lie down and die before i would not honor a contract that i agreed to. Only a snake would look for a way to slither out of something this clear cut. Which is part of the reason for the reputation of our industry.

I am not in the employee retention business either. I am a recruiter. My job is to research, recruit, screen, introduce, negotiate and facilitate my client being able to hire the person they feel is the best for their position. I do not make hiring decisions and I do not refund fees. I give a 90 day replacement guarantee if the employee leaves for any reason other than general lay off or closing othe business. If i am unable to replace i issue a trade credit to my client that may be used at anytime in the future on any fee in any department. In my over 30 years as a recruiter i have had one company who insisted that they would have to have a refund if the candidate left within 90 days. I declined to recruit for them. Just like the pastor who married you and your wife..i can not guarantee that you will be married this time next year or next month. Just like the attorney who represents you in court..i can not guarantee that you will win. Just like the accountant who does your accounting work..i can not guarantee that you will not have to pay the IRS or that if you do not provide me with full information you will not be audited and have to pay a penalty and interest. Your pastor, your attorney, your accountant or your doctor do not refund professional fees that you pay them for the the work they do for you. I can only guarantee you that you will have the benefit of my expertise as a professional recruiter. Because we deal with people both candidates and company employees, we often have situations that arise that none of us can foresee so to be sure that my client gets what they pay for i will replace at no additional charge and offer the same 90 day guarantee on the replacement. If i have to fill it four times to get it past the 90 day guarantee period i will do it.

In my opinion the "used car salesman" here is the guy who says.."Well i know what i told you and i know what i signed but see you didn't tell me you were going to put a goat in the backseat or drive it out of town so i am not going to honor what i said i would do.

It is however very revealing when conversation starts about honoring a contract and should be noted as to who thinks there is a way around some pretty simple language. The question then becomes, would anyone do a split with someone who takes the approach that honoring a contract is lying down and dying. Not this "expert", thank you very much!

Permalink Reply by Bill Ward on November 30, 2010 at 5:17pm

Wait just a minute Jerry. I never implied that a recruiter should dishonor a signed fee agreement. What I said was that as the recruiter, you should do everything possible to resolve the issue before simply throwing in the towel. That means actually talking with the people involved with the hiring decision to discuss the situation and determine whether or not this is a search that can be filled successfully given light of the real issues. Suggesting that the client was somehow dishonest may have merit, but isn't it possible that this recruiter did not actually conduct enough due diligence on the front end? Client's aren't about to volunteer sensitive information unless they trust the recruiter and they have been made aware of why full transparency is critical to a successful hire. There is a difference between blatant dishonesty and full disclosure.

Jerry Albright said:

Excuse me Bill - but if you consider honoring your written agreement as some sort of "path of least resistance" I'm going to disagree.

My word is solid. If I've agreed to something I stand behind it. While I would certainly suggest a replacement scenario - that was not the question here. It was "do I give back the fee" which in this case includes a written agreement stating just that.

As far as great recruiters going on the offensive - that point is lost on me. "Great" recruiters know when to chalk one up to the "lessons learned" category and move on. Demanding transparency and partnership with a client who has clearly been dishonest during the process isn't the direction I would take.

Respectfully,
Jerry (Not an expert)

Permalink Reply by Bill Ward on November 30, 2010 at 5:39pm

Sandra,

Your hilarious. Obviously, both you and Jerry are taking everything I said out of context. If you actually read my post, I make it clear that what the recruiter should try to do before returning the fee is to try and work with the client to address the issues brought up by the former employee and see if in fact this was a case of poor communication and understanding of the role or if in fact, this is a situation where nobody who takes the role can be successful. As a recruiter, you owe it to yourself, your candidate and your client to address these issues to ensure you've done everything possible to ensure a successful outcome. If it's determined that this is not a win win situation, then I clearly say refund the money and revise your fee agreement to avoid this kind of thing in the future.

The "laying down and dying" comment refers to the fact that as a good recruiter, you do everything in the best interest of your client. Before simply returning the fee, take a more vested interest in what is really going on here (unless of course all you care about is the money). The client needs the role filled, you have a terrific candidate on board, but unfortunately, things have come to the surface that will make it difficult for this individual or any other person successful in the role. How does simply walking away without having open and honest dialogues with the stakeholders constitute anything but good business practice? In the end, they'll respect you for asking to be dealt in and the relationship will be elevated to a higher level or they will simply tell you to pound sand in which case, washing your hands and returning the fee is better for everyone involved.

Sandra McCartt said:

Dear Mr. Ward and anyone else who believes that siging a contract then looking for a way around it is good business.

I am an" expert" at one thing and one thing only. Doing what "I" said i would do no matter what the other party did or did not do. I can not control what someone else does only what i do. This contract is clear cut that there are no contingencies to not make a refund based on anything other than reduction in workforce. Period, paragraph. There is nothing in the contract that says that the company has to disclose it's dirty laundry or a fee will not be refunded if an employee leaves. Be real. Sure you can go to an attorney, spend some serious money, make a lot of noise and then be told that it's a simple contract. You can call someone higher up the ladder and try to justify why you should not honor your contract. I would suggest that would immediately elicit a demand letter from the company attorney with a copy of the contract that was signed attached.

If you feel that it is "laying down and dying" to honor a contract that you have signed let me assure you that i would lie down and die before i would not honor a contract that i agreed to. Only a snake would look for a way to slither out of something this clear cut. Which is part of the reason for the reputation of our industry.

I am not in the employee retention business either. I am a recruiter. My job is to research, recruit, screen, introduce, negotiate and facilitate my client being able to hire the person they feel is the best for their position. I do not make hiring decisions and I do not refund fees. I give a 90 day replacement guarantee if the employee leaves for any reason other than general lay off or closing othe business. If i am unable to replace i issue a trade credit to my client that may be used at anytime in the future on any fee in any department. In my over 30 years as a recruiter i have had one company who insisted that they would have to have a refund if the candidate left within 90 days. I declined to recruit for them. Just like the pastor who married you and your wife..i can not guarantee that you will be married this time next year or next month. Just like the attorney who represents you in court..i can not guarantee that you will win. Just like the accountant who does your accounting work..i can not guarantee that you will not have to pay the IRS or that if you do not provide me with full information you will not be audited and have to pay a penalty and interest. Your pastor, your attorney, your accountant or your doctor do not refund professional fees that you pay them for the the work they do for you. I can only guarantee you that you will have the benefit of my expertise as a professional recruiter. Because we deal with people both candidates and company employees, we often have situations that arise that none of us can foresee so to be sure that my client gets what they pay for i will replace at no additional charge and offer the same 90 day guarantee on the replacement. If i have to fill it four times to get it past the 90 day guarantee period i will do it.

In my opinion the "used car salesman" here is the guy who says.."Well i know what i told you and i know what i signed but see you didn't tell me you were going to put a goat in the backseat or drive it out of town so i am not going to honor what i said i would do.

It is however very revealing when conversation starts about honoring a contract and should be noted as to who thinks there is a way around some pretty simple language. The question then becomes, would anyone do a split with someone who takes the approach that honoring a contract is lying down and dying. Not this "expert", thank you very much!

Permalink Reply by Barbara Goldman on November 30, 2010 at 6:34pm

If possible, do not give the company a refund. Quite frankly, I'm sick and tired of companies using our services, and then not disclosing info, etc.In our contract, we have a clause that protects us in case of a deceptive hire. Since you signed their contract, you may feel stuck, but first try to talk to someone who will understand that this is not your fault.

I wish you luck. Perhaps you won't have to give the money back if you talk to the right person.

Permalink Reply by Sandra McCartt on December 1, 2010 at 12:31am

Bill,
Mia has already clearly stated that she does not want to work with this company again. I will take her word for that so the only talking that could possibly be done is to try and justify voiding her contract based on the actions of the company. Now just exactly how far do you think that conversation would go? HR has already asked for the money to be refunded so they too have obviously reviewed the contract. HR may not have done the hiring but my guess is that an HR representative signed the other line on the contract so going around the regional HR manager to a senior executive to tell him you know his company is a lying sack of shit thus you don't think you should honor your contract to refund a fee seems like an exercise in setting one's self up to hear from an attorney to me.

Unless of course to you it's all about the money ,the context of your suggestion is that Mia wants to work with them again which if you read her responses , she does not.

In my book it doesn't matter who shot John or why (fault). John is dead, bury him, pay for the funeral if you said you would and get on down the road. You didn't agree to pay for the funeral if he only died of natural causes, you agreed to pay for a funeral if he died. He did.

And let's not overlook the fact here that the company paid the fee so they obviously did not have the intention of shooting John in a few short weeks or they would not have paid it.

Permalink Reply by Navid Sabetian on December 1, 2010 at 1:04am

This seems like quite a long debate...

In my opinion you need to act in a reasonable manner rather than getting carried away with any form of emotion or take the high road that can damage your reputation.

The client has not done the right thing through hiding things and frankly when everything is working smoothly and yet either of parties does something out of ordinary, to me it rings alarm bells.

If you have in fact signed an agreement which dictates that you would provide a refund or replacement if the candidate's employment is "voluntarily or involuntarily terminated for any reason" (and any reason is the key word) then honor the agreement but be mindful of this next time you or your company signs something like this.

If you have not signed the above agreement and the agreement you have signed does entail certain terms then as long as you can demonstrate you took reasonable steps to find a suitable candidate you don't need provide refund or replacement. The deal has fallen off due to the measures that client has taken and it was beyond your responsibility and influence to do anything.

Permalink Reply by C. B. Stalling!! on December 1, 2010 at 8:03am

Refund I do not like to give them I do not even like the word. I know you did the work and you want to be paid but the first thing you need to do after you send the money in is change your contract, never sign something that says for any reason you will give a refund. Sorry

Permalink Reply by Thomas Gray on December 1, 2010 at 9:36am

I would have signed a different agreement that is specifically based upon this negotiating point.

What is my responsibility to the ultimate outcome, in other words...

1st: Let’s ask ourselves was there anything we could have done to predict in advance this particular outcome?
2nd: If we could have predicted this outcome, is there anything we could have done to prevent it?
3rd: If we could not predict it, or prevent it, was there anything we did or failed to do that caused this outcome, sins of omission or commission?

With this as the basis or a guarantee, if at anytime an employee we place is terminated for cause or leaves prematurely, we will review with the client the specific circumstances. If it is agreed between us that we (meaning the recruiter) should have been able to predict, prevent, or if there was something we failed to do to create this outcome, then we will make it right.

Permalink Reply by Timothy Yandel on December 1, 2010 at 9:59pm

I actually just provided my first full refund for a client last month and that was because the candidate fabricated his degree after I was continually getting the run around on the back ground check process. As many of you have said in the comment section, I never give a full refund, but in this case I found something out that the candidate had lied about and proactively brought it up to the client and told them even though the contract states a prorated refund is in order, I would provide a 100% refund because my reputation was on the line here and that's NOT something I want to be known for.

Fall offs are painful but you have to figure out how to get a win in any situation. Because I was honest and surprised the client with honesty and proof that I wanted a long lasting relationship instead of a one placement and run kind of deal, the client recently came back with 6 open positions for us to work on. Win.

So how do you get a win in this situation? Just refunding the money is one thing and I agree with Bill Ward that you shouldn't just lie down and die and send a check without any conversations. I think you have a chance to collaborate with this company and talk to them about fixing their issues so it's easier for you to place people there on good conscience and for them to retain people long term. Keep in mind, while you have two opinions of what's going on in the company, you don't have any from people that currently work there and can argue FOR the company... sometimes we just hear the bad things about the insides of a company, but if you get the chance to look under the hood over there I think you'll find something that will turn out to be a win for you.

The average recruiter just packs up and runs away, but the exceptional ones look to figure out a solution that works for both parties. Be exceptional and get a win. Hope that helps.

Permalink Reply by Brian Keith on December 2, 2010 at 1:06pm

It would seem that the only thing you were guilty of is accepting those terms of business. I got burned ONCE in 2001...I sent $20k back...expensive mistake...powerful lesson. Never again...

1) I'd change your fee agreement. NEVER, and I mean NEVER underwrite a client's hiring decision. They're responsible for their actions. Period. We aren't insurance agents. (oooo, I feel a blog post comin' on...lol). Look at a prorated refund if you must, but NEVER EVER return a full fee. You deserve to be compensated for your time and effort. THAT is fair and equitable...

2) At the very least I'd negotiate. You did what they hired you to do. You've got nothing to lose and everything to gain particularly if you don't intend to continue working with them. Get a real decision maker on the phone explain the circumstances (just the facts...leave feelings and conjecture out of it) share your rationale.

3) If push comes to shove, send the money back. I know it sucks but it's what YOU agreed to.

4) Chalk this up as a lesson learned and endeavor to not make the same mistake twice.

BK

Permalink Reply by Suzanne Levison on December 2, 2010 at 4:36pm