Today's Class - Sourcing Risks and Rates

Yesterday I received a call from a woman who asked me what the "going rates" were these days on contingent* search. I asked her specifically what was she being asked to do. She told me she was being asked to:

Phone-source security clearanced workers
Contact them and present the opportunity
Profile them and get their resumes if she could
Set up a "second call" with the "recruiter" who would then "take over" and "close" the deal
She also mentioned somewhere, in the rush of job duties that she was explaining, that she would be "background checking" these individuals

She reported that the recruiter's comp was 20% on a minimum salary of $80,000. Most of the salaries were in the $120,000 range.

"At least half," I retorted.

Silence on the other end and then a pensive. "That's what I was thinking, too. At least half."

"I'd ask for more though," I added.

"How much more?" she asked.

"Ask for 60%,maybe 70% and settle at 50%. That's how I'd handle it."

"To tell you the truth I was thinking a 60/40 split," she confessed.

"Then go for it," I encouraged. "Nothing's going to happen unless you put the merchandise on the shelf. Contingency is like the real estate business and a good lister is worth far more than a good seller in that industry. In order to be sold something has to "exist" and the person bringing the inventory** deserves more, in my estimation, than the one "filling" the order. Security clearance is one of the hardest things to work in. There are all kinds of open job orders out there if you look - anyone can bring those "in" on a contingency basis. There's not much trick to that!"

What would you have said?

*Contingent search is when you get paid when the hire is made. Not before and not if it isn't made.
**Inventory in real estate is, in general, the property being sold. The golden rule is that it must be "priced right" but other factors apply as well (condition, location, attributes). All these have application to the recruiting industry.

THIS is the subject for today's MagicMethod Phone Sourcing Classroom Chat. Come here at noon EST to participate!

Replies to This Discussion

Permalink Reply by Robin Gillman on February 26, 2009 at 3:31pm

I guess the big question here is, "Who is the "recruiter"? There are really two sides to recruiting, the front end and the back end, even more so in contract recruitment. On the front end, the account manager has to find the client (a little more difficult in this economy unless it is an established account), build a relationship with the client, negotiate a contract and present the candidates. Then of course there is the backend where the recruiter sources the candidate, screens, recruits the candidate, and reference checks the candidate.

So my question to this woman would be if she is doing the recruiter back end part, who is doing the front end and who is this "recruiter" who is going to close the deal? Is this the corporate client, who has the final say or the account side recruiter/account manager managing the front end? If this is the client, it sounds as if she is doing more than half. Also, does she have a contract with this company and has she developed a relationship with them? Usually with permanent placements, this would be considered a split at least, so she would get half of the fee.

Personally, I would go with a contract hourly rate. There is less money to be made perhaps, but less risk also.

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