Our problem begins before we even start. We have a disposition towards negotiation that sets us up to fail. Not to mention how predictable we are as an industry. We meet them in the middle; we allow them to talk us into yearlong guarantees; or even 15% fees. What are we thinking? We can’t make a living like that.So what is to be done?First, we need to change our approach. Most of us view negotiation as conflict. Conflict is something that makes us react with stress. Stress sets most of us up to fail. For many recruiters negotiation has come to mean failure, because we don’t think we can succeed. Negotiation is not an EVENT, it must become a PROCESS, one we learn to enjoy. That will give us an immediate advantage as we negotiate.Second, the classic North American goal of a “win-win” solution needs to be trashed. For many who negotiate in North America, “win-win” means one party makes the other feel like losers, or unequal partners, after which THEY suggest THEIR “win-win” terms. This negotiation technique has come to be improperly used by all but the most skilled consultative negotiators. Stop fumbling around with this approach. Stop using this trite meaningless term.Third, and finally, once we have these first two principles understood, we must stop being so predictable and start NEGOTIATING UNEXPECTEDLY.Where to begin? Even though the first edition is now more than 20 years old, I like Roger Fishers and William Ury’s Getting to YES. Of course I know not everyone is going to rush out and get the book. So let’s go back to Selling 101, the basic sales primer class.All sales people, no matter what they sell, anywhere in the world, sell only four things: Themselves, their Service (or Product), their Company, and the Fee. If we do a good job selling the first three things, then the fourth item, the Fee, in theory, should sell itself. We also know that as much as 60% of a business-to-business transaction is decided on one issue: how you sell yourself. By aggressively gathering references you can make sure you can sell yourself in a manner that is superior to your competition, because your references detail your success. With references in hand, we must then prepare pitches on Service and Company which focus on process, past success, and bottom line results to ensure an attentive prospect. This is critical.With Self, Service and Company presentations done, the fee question will now have to be addressed. Whether this happens on the phone (always our preference), or in a face-to-face client visit (which this recruiter would recommend against), what you do after the fee presentation often makes or breaks you.Of course the first step is to simply outline what your standard fee is. Next, EXPECT objections, expect negotiation. This is what SHOULD happen after your fee presentation has been made. Often recruiters are genuinely surprised when this occurs. Why? This is the buyer’s JOB. This is a normal part of THEIR process. Still, we often react with surprise as if we have somehow been insulted when they object or negotiate. Being surprised can put us in an emotional and intellectual position that puts us on the negotiation defensive.We must break this chain of events by anticipating fee objections or negotiations. We can have a significantly more confident response if we have planned, and then make, strong presentations of Self, Service and Company, which employ our references. We must understand we will almost always need to negotiate with our prospects because fee seldom sells itself.Finally, if you don’t believe in what you are selling, it is unlikely you will succeed. If you don’t believe you are worth your fee, it’s hard to sell it. You must have a fundamental faith in the price and VALUE of your service and fees, or no negotiating technique will help.Now we understand that fee negotiating is GOING to happen. It won’t be a surprise. So what’s next? We must work to make our negotiation a PROCESS versus an EVENT.Let’s think about the types of objections we might hear. I am going to choose to ignore the objection where they simply say they don’t use our services. I don’t believe them, and figure I haven’t sold myself, my service and/or my company convincingly; or I shouldn’t be wasting my effort with them because they are not a serious prospect.Three typical price objections I hear with great regularity from serious prospects are:
“We have a company-wide fee maximum of X percent or dollar amount.”
“Your competitor down the street charges X percent or dollar amount.”
“We don’t have to pay fees that high.”
How do most of us respond to those three typical objections? To these objections, and the host of permutations that are similar, we often respond in one of three typical ways. They are:
“Let me talk to my boss or manager and see what we can do.””OKAY,” or “Let’s meet in the middle at X percent or dollar amount.”
“NO,” or “We can’t do that.”
All three responses are inappropriate at this point in the negotiation process. The first means I am headhunter peon and can’t even do my own negotiations. The second means I don’t believe in my service and would have given you an even larger discount if only you had asked. The third suggests I am a tactless negotiator and can only think to respond by walking away from your objections by saying “no.” Those who get into a debate by “overcoming objections” with a string of somewhat accusatory questions and responses, hoping to wear the buyer down into an agreement, seldom position themselves better.Instead, we must throw all the above out the window. We must continue our negotiation as a PROCESS. My process begins with an attempt to disarm their price objection by turning the focus back to the “Self” and “Service” portions of the presentation, and their VALUE, with this type of a response:
“I would like to consider what you’ve suggested, and I would like to get back to you on a specific price after we’ve had a chance to crunch the numbers and look at the ROI. After crunching the numbers, looking at what this partnership will require, and examining the ROI, we can make sure we’re able to do this work successfully while remaining a successful, profitable and competitive organization. So while we’re on the phone (while we are together) let’s focus on your needs, our capabilities and the partnership potential that exists. After evaluating your requirements and process, we can develop a game plan for creating a mutually beneficial partnership with one another.”
It is my experience that a prospect will respond in one of two ways. One group of prospects will insist on the resolution of price before investing any additional time with you. They will make no additional investment of time or energy with you until the price is determined. These are PRICE buyers, and I prefer not to do business with them, if at all possible. That doesn’t mean I don’t, it just isn’t the type of client to rely upon to build a strong and thriving business.The second group is the group of buyers I am after. They will continue to listen, they will continue to invest in learning how to partner with you, and they will make a final decision on you and your service based on the VALUE offered, of which price is just one component. I refer to this group as VALUE buyers. This is the group I covet as business partners. They treat me as a partner, want me as a partner, and they find the consultative knowledge I have important to their success, and the success and development of their entire organization.This approach makes negotiation a PROCESS that is going to take more than one interaction to conclude. Perfect! Now, before I “crunch the numbers,” and determine the “ROI” and call them back with my fee quote, I nurture our interaction by sending some additional references; by sharing my standard contract with the fee numbers blank; or by emailing blind resumes of existing (or past) candidates, so they can see what I can potentially bring to the process. I never do these all at once. I want us to take small confident steps forward to foster continued interaction, and thus learning about each other. From them I might ask to review blind resumes of two or three of the best hires recently added to staff; company literature, samples or promotional material for potential candidates to review; the job descriptions for positions they might want us to fill; and/or a blank company application if they use one. All items designed to continue our interaction together as we get to know one another.Additionally, I strongly encourage a client visit, if I am not already on one. The goal is to engage prospects in a PROCESS of investing in you, to help you succeed for them. The more they invest in you upfront, the more likely it is that their need is enough that perceived VALUE, versus specific PRICE, is the reason they will partner with you and use your services.Once this PROCESS is initiated, you will need to specifically address price. I tend to bring it up after following up on one or two of the above issues. I never want to call and make money the sole reason for my call. For example, I might call back and say,
“I have had a chance to review the resumes of those three most recent hires you shared with us, have you had a chance to review the blind resumes we shared with you?” As we work through these items, almost as an afterthought I will add, “Oh, before I forget, we have crunched the numbers and looked at the ROI to complete this search (project) and the fee we would like to propose for this project is _______.”
Of course, what all of you want to know is what FEE we quote. Before I tell you what we quote, it is important to see how we have worked through this PROCESS. Remember, we presented SELF, SERVICE, and COMPANY. When price was finally discussed, we stated our standard fee and expected a price objection or some negotiation. We then attempt to disarm that negotiation with an acknowledgment of what was stated, followed by a promise to investigate price and return a quote. We are looking to see if the buyer responds as a PRICE or VALUE buyer. Especially if they are a VALUE buyer, we engage them in a PROCESS where we invest a little time and energy in each other before our partnership gels. Only then do we get back to them with a specific fee quote.This is vastly different from the negotiation most recruiters do. My process requires a few phone calls or emails, or both, giving me additional opportunities to build rapport, and to understand my prospect and what they consider as the keys to a successful partnership with a recruiter. This PROCESS aligns me, more often than not, with buyers who consider VALUE, at least at some level, more important than just PRICE. But even a VALUE buyer will need to know what it is going to cost. When we do finally present a specific fee proposal, we find prospects have one of three standard replies to whatever price we quote. They are:
“Let me talk to my HR Director or Department Manager””OKAY,””NO,” or “We can’t do that”
Look familiar? It should because this process has turned the tables, and we find the ball in our court to make the next move. We are now in the position to determine if this is business we want. Is this just a PRICE buyer pretending? Is this the true decision maker or do we need to be selling to someone else? We can determine if we will get an appropriate return on our investment for the work required. It is a beautiful thing, this process.But just what price do I quote them? I NEGOTIATE UNEXPECTEDLY. After crunching the numbers I will usually give them a FLAT FEE for the search, based on the salary range that is typical for the search they have open, typically taking 6-8% off my standard fee at a salary near the 2/3rds point in their salary range.Do what?For example, on a $45k-$55k search, my standard fee would be 30%. The 2/3rds point in the salary range is about $52k. The standard fee for that starting salary is $15,600. After taking off 8% from that $15,600 standard fee total, or $1248, the flat fee I would propose would be $15,600 less $1248 or $14,352. I would go on to tell my client that as long as the hire was made at a starting salary between $45k and $56k, the fee would remain $14,352. Even if they did hire at 56k, my fee dollars are still 25.6% of the starting salary. If they hire at 49k, my fee is 29.3% of the starting salary. These are numbers that I can live with.Notice that none of my numbers are a percent of salary after my initial presentation of the standard fee. I ardently suggest moving away from that predictable business model. That way you have more options than 30%, 25%, 20% and 15% fees we have made so common. Are there no numbers in between? Also note that none of my numbers are round numbers. I never end a price proposal number in 5, 9 or 0. Quotes ending in 5, 9 or 0 look random and don’t suggest that I actually “crunched the numbers.” I learned this practice of negotiating unexpectedly from Barbara Marchetti years ago, and it works. It works wonders.Buyers are often so concerned with how I came up with my price, that they don’t object any further. Additionally, I have found that if I give them a bit over $1000 off, and make sure they know this, I cross some sort of psychological barrier as to what a “lot of money” is for most buyers, and they think I am giving them a fair deal. Regularly the first question I get when I make a fee quote is “How did you come up with that?”My response?
“After looking at the ROI we need to be a successful, profitable and competitive organization, and the investment required to make sure we complete your project successfully, successfully enough to earn your letter of reference, we determined your quote. It is my hope that we can now get this in writing and get to the work at hand to solve this hiring need, as we continue to develop a mutually beneficial partnership.”
I can’t tell you this works all the time. But it works often, AND gives me integrity while teaching me more about my prospect than I would have learned by simply agreeing to their terms. It’s a better approach than giving them the standard fee objection rebuttals, which merely turns into a useless debate, and it is also far superior than agreeing to meet them in the middle between my 30% fee, their 20% fee cap, only to reach a 25% fee which they were aiming for all along. Taking these approaches I learn NOTHING about them. Plus, this PROCESS is FUN, and much more educational, with more rapport building opportunities, than the TYPICAL industry models.Maybe that, in the end, is the real key. By working this PROCESS, engaging them with an investment of their time, information and energy in my services, before quoting them a price, then NOT using round numbers when I do quote a price, I get fewer objections, and more “OKAY”s. It is an unexpected approach, and that gives me an edge. An edge that allows me to focus on doing what I prefer doing: Recruiting and completing searches in an attempt to build lasting client relationships. Isn’t that where you’d rather spend your time?Copyright ? 2002-2003, Jeff Skrentny & Jefferson Group Consulting