I am frequently amazed at how just at the minute I feel “writer’s block” and don’t have the slightest idea what to write about ? bang! ? I get a phone call or email from someone in the business and the flood of ideas begins. (p.s. My editor recently advised me that I tend to get on the “wordy side” from time to time ? read: always ? well, if an issue is forty years old and still unresolved, I cannot help but feel that maybe we need to explain it better, speak slowly, and use small words). So, back to the point. I received a call from a friend of mine in the contingency side of the business. He had recently received an updated agency agreement from a current client for his review and signature. Along with several paragraphs about punishments, penalties, “do not’s,” “never’s,” and “don’t you dare’s,” along with the other usual veiled threats, there was a particularly draconian clause, unique to my twenty years in the business. It would be a violation of this particular agreement to place an employee of this particular company for up to SIX MONTHS AFTER said employee had resigned or been terminated from this particular employer. In other words, even after the employee no longer works for them, no longer gets benefits from them, is no longer on the payroll, or in anyway bound by them, the company still claims the right to restrict their past employees’ ability to seek employment assistance from any agency that acts as a vendor with or for this client, regardless of their relationship with the candidate. This is not an agreement, this is a “how much do you want to do business with us” challenge with a pinch of meanness or personal frustration added. Aside from the negative aspects such a clause may have on developing good vendor relations, I have serious concerns about the legal aspects of this requirement if this restriction is not part of a pre-hire agreement with all new employees. Those who in effect would be directly or indirectly affected by the agreement must have an opportunity to review and acknowledge their awareness and acceptance of this business practice. Especially as the company is claiming the right to affect their ex-employees ability to choose career options beyond their employment, without prior notification. Past employees may feel, correctly, that the company is restricting their civil liberties without recourse, or compensation. (XYZ Corporation: We’re like a tattoo, you’re stuck with us for life!) If you want to “get even,” or even “punish” agencies for wanting to do business with you, that is your business. But at least don’t do it in such a way as to get your company involved in serious litigation, negative publicity and damage to your “recruiting reputation.” (Now, before all you agency recruiters begin to agree that “all companies have ludicrous agreements”: I have also seen some real whoppers from my friends in the third party area as well. Most agency-sponsored agreements are in effect price lists with damage waivers attached.) By the way, I asked my contingency friend what his decision would be as pertains to maintaining an existing and longstanding profitable and mutually beneficial relationship with this company. He had a simple 6-word answer: S-O-U-R-C-E. Thus ends another good relationship due to an “Agency Agreement.” It might make more sense if they were called “Declarations of War,” “Ultimatums,” or “In Your Face In Writing,” but we call them agreements. Go to you sales or accounting department and ask them if they write contracts with prospective clients or vendors with the same venom as HR/Staffing does with theirs. (Or, again, agencies with their clients.) So maybe it is time we decided to construct a real agency agreement. Something that enhances and defines the business relationship, rather than destroying and hindering it. A real business agreement, reached between two parties, to achieve mutually beneficial and profitable goals with an accepted level of “give and take” on the part of both parties. But first, some basic traditional errors to be avoided:
- Agreements do not fix issues or problems all by themselves. I have never had anyone sign a business contract who I felt needed pressure to insure performance, consistency and honestly. I have never has anyone whose professionalism I doubted change BECAUSE they signed an agreement.
- Do not add or subtract agencies or clients based on a “fixed” number of agreements you want “on file.” If you have 200 useful and helpful agencies under agreement, which consistently provide efficient and needed support, then 200 is not too many. If, on the other hand, only 10 of the 200 actually provide any level of service, you have 190 too many. If you “count your clients” based on agreements on file, I guess the only question is, how many fees did those agreements with “clients unattended to” on file generate?
- Do not use agreements to get someone off the phone or pretend you are “elevating” the relationship with a prospective client by getting an agreement on file. Agreements must be entered into seriously and with real commitment if they are too have any positive impact on your business relationship. If you throw your agreements around like confetti, do not be surprised or offended if your signers do the same.
- Develop your own agreements. Do not go down to purchasing and borrow one of theirs, or use another company’s or agency’s and delete “office furniture vendor” and insert “agency” or “client” in the empty space. In essence, few relations require the level of knowledge exchange and have the ultimate damage potential as the relationship that exists between agency and client (or visa versa.) Develop your own agreements based on the specific and unique needs of your own situation. If you do use somebody else’s agreement, at least make sure you delete their company or agency name from all the pages, otherwise you are giving away how truly unimportant this process is to you.
Now for the key elements of an Agency Agreement designed to develop and build true business relationships:
- Statement of Intent. Most business agreements contain a statement of intent so that both parties can agree to the goal of the relationship, as well as the rules and pricing strategy. It assists both parties in assessing the amount of effort they want to put into the relationship. If your corporate goal is to use agencies only in situations of extremes or needs specified based on age of position, degree of difficulty or other specific and limited situations, make it clear in your agreement. Many agencies like to have a distributed client lists, volume clients and specialty clients. It balances their business. In addition, many companies like to differentiate between their agency vendors as well. The agreement should not create a false impression on either signors part of the potential business and volume potential of the relationship. In my experience, most business disagreements start with unclear and unequal intent or expectations. This is more the result of poor communications than intent.
- Expiration Dates. All agreements should have an expiration date to insure at least an annual review of the value of the agreement and the need to continue or upgrade it. (More about this further down.) This also insures that both parties are aware that all glory can be fleeting if not maintained. I value most those things I can lose.
- Service Standards. both parties agree to established processes and service standards and have an established quarterly review to examine results and trends. There is also a “911” process when a particular issue may place a potential placement in jeopardy. Some may feel this is a lot of work, but if you are looking to build business relationships, improve performances, and make your agency/client, or, client/agency relationship work with “zero” effort, we may have discovered the root cause of your problem! Some of those process issues could include:
- The duration a resume should be “unresolved” after an authorized submission
- The time allowed after an interview before a decision or a response is to be made, by either candidate or company
- Level of expected involvement of agency in process after of submission of a resume
- Preferred communications process
- Agency policy, or corporate policy on routine contact and follow up on issues other than particular openings or candidates
- Qualified Signers. The signers for both parties should be at least “officers” of their respective companies, if not actual vice presidents. Both companies must be committed to building deep business relationships or the process is doomed to failure. Those senior signers of the agreement should also review all issues pertaining to failures with the agreements, or issues requiring arbitration. If those involved in the daily issues know the same executives responsible for designing and authorizing the business relationship will review their actions, seriously, then both parties may make it work. Again, a lot of extra work, sure! But I thought the goal was to make the process work. If the bosses don’t care, nobody cares.
- Candidate Source Regulations. One of the oldest battles in the agency/client relationship is resume source conflict. Can you think of a better place to establish guidelines and requirements than in the agreement?
- Establish guidelines on specific submittals vs. random submittals.
- Establish right to review process to insure resumes are not already in “active process.”
- Establish the guidelines for the definition of “active process” or “pre-existing and active contact.”
- Develop Agreement Levels. Not all relationships require the same understandings and commitments. The age and success of a vendor-client relationship should carry some benefit. All clients and all vendors should not necessarily derive harm, or benefit, based on the negative or positive acts of others. Each should be allowed to develop an unique relationship within the confines of a uniform agreement that allows for greater business access based on the age and success of the relationship:
- Candidate Vendor: For a period of the first 180 days, the number and type of positions and level of penetration an agency is allowed into a company is limited. After 180 days, the hiring managers’ comments on the resumes submitted and the interaction with the agency recruiters, and the HR/staffing professionals is reviewed, as are comments submitted by the agency. Based on this review, and an established arbitration process if there are disputes, the decision is made if the relationship should develop further. If not, the process can be terminated or authorized to continue for another period of 180 days.
- Established Vendor: After an initial successful 180 days, the client vendor relationship is covered by the expanded standard agreement. The relationship is reviewed annually and the current relationship can be upgraded or downgraded, based on the continued performance, or lack thereof of the agency (or visa versa on the part of the agency). But if this is to be an agreement, the company must be willing to submit itself to a review of its own practices when judging the vendor’s performance (again, or visa versa).
- Preferred Vendor: After a required one year as “Established Vendor,” this represents the highest level of acceptance and the highest fee potential. Among other perks could be admission to monthly staff planning meetings, access to an internal website, and participation in company meetings and social events. This is an established business partner, based on the requirements spelled out in the agency agreement. Treat them accordingly.
- Probationary Vendor: An established vendor who has an employee act in bad faith, or, may have acted in bad faith as a vendor in error and not as part of policy. However, neither party can come up with a “compensation agreement.” The relationship is placed on hold for a period of 90 days. At that time they return as a “Candidate Vendor” and the relationship can be rebuilt.
The issues that can and should be included in your agency agreements, or client agreements, do not have to conform to any other agreement or resolve any other issues, other than those that affect you the most. Before you write your new agreement, get together with your staff, agency recruiters and/or corporate recruiters. Get together with your better clients and/or your better agency vendors and review the highlights of your relationship and codify those elements into your agreement. Determine what has not worked, determine why, and resolve those issues with well-thought-out policies and procedures, developed and written with a desire to “fix” and not merely to “punish.” An agreement, is first and foremost, an act of good faith between two or more parties who want to develop and expand a relationship based on mutual concessions and enlightened self-interest with commonsense rules and regulations designed to facilitate and explain rather than humble or punish. No contract can perpetually conceal ill intent or protect you from the consequences of that intent when eventually and inevitability discovered. In my life I have discovered that the difference between something done poorly, adequately, or well is based less on the effort involved than on the initial intent. Doing an agreement well is not harder, it just requires a desire to agree ? hence the name “agreement.” Have a great day recruiting!