Save Time, Bill More by Reducing Risk

Apr 1, 2004

Search consultants by nature are risk takers. Whether we are owners, managers, recruiters or researchers, every time we pick up the phone, we take risks. We all know too well that the placement process can break down at any time for any reason. This costs us time, money and heartache.

Webster’s Dictionary defines “risk” as “the degree of probability of loss or injury.” Many know that the Chinese character for “risk” translates to “danger and opportunity.” By managing danger, we can find time-saving, big-earning opportunities.

Question for you:

  • If you’re a 20+ year veteran in the search or staffing business, what’s more valuable to you? Time or money?
  • For those with less than 10 years in the business, how would you answer?

The majority of veterans would probably answer: “Time.” The majority of those with less than 10 years might answer: “Money.” What do the wise veterans know?

Time is our most precious resource. Money can always be made.

Once gone, time cannot be replaced.

The same thinking should be applied to our business. How many contingency recruiters feel they make no money 98% of the time? And, that it’s in the remaining 2% where the big money is made? What if we can reduce the 98% to 90% — where we save valuable time — which increases the 2% to 10%? Doing the math, 2 to 10 is five times our earning power.

How can we apply risk management methods in our aim to make placements? Much has to do with how we manage our time to produce desired results. We’ve all heard it: Those who are well-organized and plan on a daily basis are proven to consistently outperform those who do not.

If I were to call you and ask you four simple questions, could you answer them cold?

1- How much do you plan to bill this year?

2- What’s your average placement fee?

3- How many placements a month do you need to reach your annual goal?

4- Have you written down your goals?

Think about it. The more time invested in any activity (personal or business), the more skin you have in the game. And the more risk (and potential reward) increases. This is probably the reason why, the older we get, the more risk-adverse we tend to become.

The same thinking of risk must be viewed in the placement process. I have a training program called “The Art & Science of Search: 40 Steps to Placement.” If we’re working on contingency and the process breaks down at the 38th or 39th step, we earn nothing. It’s happened to us all and it hurts (if our clients only knew!)

In my view, the search business is all about risk management: How to identify opportunities at various stages in the process, how to qualify next steps and how to ensure all goes in the direction to secure a placement.

Let’s take a closer look at how we can reduce risk in the three primary stages of the placement process: 1) Client Development 2) Recruiting 3) The “Art of the Deal.”

1) Reducing Risk in Client Development

Since 2000, my firm has become significantly more selective in the search assignments we work. In times when many a good recruiter would have reduced their standards to “work a job order,” my firm has become more discerning. In fact, since the beginning of 2003, we have turned down about 3 of 5 potential assignments because they don’t pass our criteria.

Everyone has different standards for what qualifies as a workable assignment. Some parameters we all know well. In qualifying a client;

  • How long has the position been open?
  • How many candidates have been interviewed to date?
  • When would you like the right candidate on board?

Over the past year, my firm’s criteria have become more stringent, including;

  • We won’t work a contingency assignment unless it’s an exclusive.
  • We don’t work any assignments less than 25%.
  • We don’t work for fees less than $25,000.
  • Most times we won’t begin a search unless we receive an engagement fee upfront.

Nothing speaks louder from a committed client

than sending dollars upfront.

If you’ve made more than two placements with a client, you’ve earned the right to ask for and receive engagement fees. If presented right, you might be pleasantly surprised at the outcome. Try it. This will dramatically save time, boost your billings and reduce your risk.

2) Reducing Risk in Recruiting

Ask many recruiters about how they feel about the internet. Since the advent of the web, is the search business better or worse off? Many might agree, “The Internet is a phenomenal research tool.” Others may disagree, believing it’s more challenging now because the Internet has increased risk: “Candidates and clients are harder to control.”

My firm rarely posts on-line ads. In my view, firms that do, diminish the perception of a search firm’s value. That’s not what we’re paid to do by our clients. As one of my firm’s valued clients says, “Mike, if we wanted to post on-line ads, we’d do it ourselves. We don’t need a search firm to do that.” I agree wholeheartedly.

Let’s quickly analyze a candidate received from an on-line service:

  • He/she is most likely responding to many, many postings.
  • He/she may be interested in making a career move for “low value” reasons.
  • He/she is not loyal, working with many parties.

I see big red flags in “Internet resumes.” Unless these candidates are very carefully screened and qualified for activity, there are major risks which can burn valuable time. Let HR spend their time screening these candidates who are more likely to turn down offers because they’re looking at many opportunities at the same time. Although many may have made placements with candidates received from on-line advertising, this will continue to diminish over time. And, so will your “real recruiting” skills.

We all know the advantages of working with recruited candidates:

  • Control. (A higher probability you are the only one working with the candidate.)
  • Relationship. (Candidates will share information, since no competing interests.)
  • Value. (Candidates are usually the higher performers.)

In my experience, there is no substitute to “real recruiting” in maximizing earning potential. Getting on the phone, researching, calling prospective candidates and networking effectively.

“Real recruiting” requires higher level skills and more time investment.

Over the long run, this is where we save valuable time,

earn significantly more money and reduce risk.

Shrewd clients can eyeball a resume and see on paper whether a candidate was recruited. This is partly what we’re being paid for. It is also a key factor in whether we receive repeat business.

3) Reducing Risk in the “Art of the Deal”

What industry trainers preach and wise veterans know is that there’s one certain path to billing more in less time. And that is reducing risk in the placement process.

The “Art of the Deal” starts at the point when we have arranged an interview for client to meet candidate. It’s our job to drive the process and coach both parties to placement.

As many know well, there are key “leverage points” in the process that, if handled correctly, can significantly increase placement probability. The main ones are:

  • Before the 1st interview: Coaching candidate and client.
  • Before the 2nd interview: Setting up expectations.
  • Before an offer is made: Maintaining control.

Those who have seen my training know that I place great emphasis on the beginning of the placement process. From the start, I’m interested in the motivation of both parties. How strong of a need does the client have to fill an open position? How “bad” does a candidate want to make a career move to my client? If I don’t get a sense that these are strong indicators (at least a 7 or 8 out of 10), then I cut my losses and go on to the next. In my experience, this saves valuable time and reduces risk.

What are the signs that you have an interested client or candidate?

Nothing speaks louder than action (i.e. response from people.)

“Action signs” include:

  • After you leave a voice message, your call is returned promptly.
  • After you send an email, your message is returned in a timely manner.
  • You ask a client or candidate to get back to you at a specified time and they do.

Gauging and managing motivation throughout is critical to achieving placement success. Through the process, if a candidate or client has changed their motivation, then it’s important to have a “heart-to-heart” talk immediately. If you can’t realign motivation and “desire” has shifted because of external factors out of your control, then it’s best to cut your losses and go on to the next. The path to take from this point is to leverage the relationships you’ve built and the time you’ve invested to move toward placement.

If a client cuts the cord on a search you’re actively working, find out the reasons why, ask what hiring needs there will be in the near future and ask for an internal referral to another hiring manager who has staffing needs. You’ve earned the “right of referral.”

On the candidate side, it’s important to ask on an ongoing basis, “Has anything changed since the last time we spoke?” If a candidate does an unexpected about face while in the interview process, find out the reasons why. If for unforeseen circumstances, have a “heart-to-heart” talk, cut your losses and move on.

If motivation is not strong, don’t pull the candidate through the process.

They’ll break your heart every time.

Instead, save valuable time by leveraging the relationship you’ve built and ask for referrals. Who else does the candidate know who may be qualified for the position? What positions are open with his current employer and who is the hiring manager? Again, you’ve earned the “right of referral.” In addition, you’ll earn great respect from your client by conveying the reasons why this candidate is no longer available.

In summary, reducing risk throughout the placement process is paramount to saving time and billing more, especially for those working on contingency. In the beginning, the methods by which clients are developed and candidates are recruited will have a great impact on your ability to control risk. Always strive for exclusivity.

You may think you have a great client, but if they’re working with more than two recruiting firms, beware. You may think you have a top tier candidate, but if he/she has applied to more than two companies and/or is working with more than two recruiting firms, beware. In the Internet age, we must screen rigorously upfront for both candidate and client activity to reduce risk.

How to guarantee exclusivity? On the client side, receive engagement fees. On the candidate side, receive a signed “exclusive candidate agreement” in which your firm has the sole advantage to work with a candidate for a specified period of time.

Like a great American once said, “I have a dream.” My dream is that all recruiting firms receive engagement fees before starting searches. That we don’t discount fees and are paid our true value.

Imagine what would happen in our industry and to our profession, if we collectively started working this way. In my view, it starts with developing great client relationships. If you’d like my firm’s “Great Client Checklist” email me at and I’ll send it to you.

Get articles like this
in your inbox
Subscribe to our mailing list and get interesting articles about talent acquisition emailed weekly!