To Negotiate Or Not To Negotiate…

Jan 4, 2011

The deal is nearly closed. The references and background checks are done. You have thoroughly pre-closed your candidate and have been given the authority to accept on their behalf when the caller ID flashes your client’s number. You answer the phone euphorically with one hand, your calculator in the other, deciding what you will buy with your gigantic commission check when you answer the call…

And it starts with those six dreaded words: WE NEED TO NEGOTIATE THE FEE.

Your mind starts racing; how can this be? It’s the end of the process – why is this coming up now?

DON’T PANIC! This happens to the best of us…even when we have a signed fee agreement in place.

Take a deep breath, and…

Evaluate the situation:

  1. Did the search fundamentally change during the process? For example, did they hire someone at a lower salary range or in a different role than the search parameters first specified? Needs and wants evolve throughout the process and you want to be mindful of how your agreements are written. Do they address the exact job title and salary range or is there room for interpretation on the client’s side?
  2. Has the client’s business position changed since initiating the search? Hopefully your fee agreements cover change of ownership or structure in the client company but if they don’t you might want think about including language that will hold the agreement through such restructuring.
  3. What is the real reason this is coming up now?

The most common reactions might include:

  • “What are you talking about? We have a signed agreement in place!”
  • “We are at the end of the process and I have provided you the candidate you intend to hire based on the engagement letter you signed, correct? Tell me, what part of the service did I fail to provide?”
  • “In what way do we need to negotiate?”

A less defensive, consultative approach sounds like:

  • “Tell me, how can I help? What’s happening?”

This response will reward you with a more complete answer.

We’ve all heard these common reasons people want to negotiate fees at the last minute, but just in case for the newbies:

  • The C-level executive has a friend that s/he can bring in…but s/he likes your person best…but s/he doesn’t want to pay such a high fee.
  • We found the person in our database.
  • It’s between your candidate and another and yours is top choice but their fee is half yours.
  • The person who signed your agreement was not ultimately authorized to do so.
  • We’ve lost a big client/contract and will see a decline in our revenue because of it.
  • Since this person is unemployed we want to bring them on temp to hire rather than direct hire.

Since none of these has anything to do with you or your service, here’s some ammunition for your polite response arsenal:

  • “I can certainly understand your situation, however, we have an agreement in place, and I have worked honorably under that arrangement and will continue to honor it, including the guarantee portion, non disclosure, and non compete (if applicable).”
  • “My competition’s fee and services are not within my area of control.”
  • “I can empathize with unexpected changes in our constantly evolving business climate, but the work has been done and the candidate is ready to accept. Perhaps we can negotiate differently on a future search to accommodate your budgetary changes.”
  • “People are more committed to the job if you are committed to them. Bringing them on as a temp may not stop the interviewing process for them and it will be very unfortunate if they leave your company for another job after a couple of weeks.”

How you handle these situations says a lot about you as a recruiter.  When you’re able to position yourself as a consultative partner, you’re able to work from a place of mutual trust for the future.  Showing some kind of understanding, flexibility, and empathy goes a long way when you’re developing a long-term relationship.

this article is from the December 2010 print Fordyce Letter. To subscribe and receive a monthly print issue, please go to our Subscription Services page.

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