Every once in a while (in good times and bad) I have a conversation with a prospective client like the following which happened earlier this week.


"We are looking for a licensed mechanical engineer with heavy experience in HVAC. We will pay a 10% commission and expect a one year guarantee."
(response: Are you kidding?)

I didn't say that out loud but I did have to laugh to myself and those were my thoughts. The subject of reducing fees also came up this week in an article titled Headhunters Get The Ax on CNN Money that someone Tweeted (Thank you to whoever tweeted that). It's an interesting read showing what is currently happening to our industry.

http://money.cnn.com/2009/01/22/news/economy/headhunters/index.htm?postversion=2009012210

The comment is made in the article that, in addition to working harder and being creative, headhunters will have to drastically reduce fees. Let me be clear. REDUCING YOUR FEES IS BAD BUSINESS and THERE IS ABSOLUTELY NO REASON TO DO IT. Statistics show that the total number of jobs out there is down drastically. In addition, companies are extremely budget conscious so they are willing to pay for recruiting assistance on fewer of the positions they do have. What this means is that the jobs in which our fees make sense to the client are harder to find, there are less of them. But.....that is all that it means.

The price points (around 25% of first year salary for a contingent search) are well established and they make sense for client companies and for recruiters. Not all jobs are hard enough to fill to make the fee make sense, whether in good times or bad. If someone pays you 25% of first year salary to fill a Grocery Clerk position, God bless you but you were paid too much. However, when a client has a critical need to fill for their business and they aren't able to find that person on their own, the fee makes as much sense today as it did two years ago. $25,000 for a $100,000 candidate hits a budget. So does $20,000 and so does $15,000. It makes no sense to argue that it's worth paying $20,000 for the right person but not $25,000.

Cutting your fees will not get you more good clients. It will get you some non-client wastes of time. It will also make it harder for you to stay in business and retard the growth of your business when things recover. The comment is also made in the article that there are tons of people out there looking for any job they can find so the excellent candidate may be buried in a stack of 999 resumes. That can be true and there is a lot of work that goes into finding and bringing in the right candidate in any situation. Our services are needed to make sure our clients get the right candidate. It doesn't do them any good to theoretically be able to find them without the fee. There is as real a need for recruiters today as there is at any time, just on a smaller market.

Do we have to:

Work harder? Yes.
Be creative? Yes.
Be smarter and innovate? Yes.

Cut our fees? NOT!



Todd Kmiec
Todd Kmiec & Associates
todd@toddkmiec.com
919-883-7560

http://www.recruitingblogs.com/profile/ToddKmiec

http://www.linkedin.com/in/toddkmiec

Follow me on Twitter http://twitter.com/toddkmiec

Connect with me on Facebook http://www.facebook.com