The 12-Month, Pro-Rated Candidate Guarantee

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Feb 11, 2015
Editor’s note: The following is an Ask Barb classic.

Dear Barb:

You once referred to an extended guarantee, can you elaborate on that for me. We have clients wanting a six month guarantee, which we are not willing to consider. I would love your thoughts on this topic.

George, IL

Dear George:

Years ago I wanted to eliminate the guarantee all together. My thoughts were that it is impossible for us to guarantee the success of our candidates when we don’t supervise them. Well that idea went over like a lead balloon. I then held a brainstorming session with some of my best clients. I was tired of feeling like “Let’s make a deal” when a candidate would quit on the 92nd day of a 90 day guarantee. If it was with a key account, I honored the guarantee.

That is when I came up with my 12-month prorated, replacement guarantee. This is not for everyone, especially if you have lots of fall-offs, which we didn’t. Each month of employment is valued at 1/12 of my total fee. If a candidates leaves after 6 months and my fee was $25,000 we will replace them for 50% of the fee or $12,500. If they leave after 9 months, we would replace them for $18,750. If they left after only 2 months, we would replace the candidate for $4,167.

When we have a fall-off we always made a fee, often ¼, or ½ or ¾ of our full fee, yet the client could not obtain those rates with any of our competitors. If we could not surface viable candidates within 30 days, we presented the client with a letter of credit for the outstanding value of the guaranteed fee. We did not want to spend all of our time replacing a needle in a haystack search. We have had this guarantee for over 10 years and it has become a win/win.

Barbara J. Bruno, CPC, CTS

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