An experienced recruiter who has enjoyed considerable success over the last few years called me recently to discuss a developing problem he was having with one of his best clients. The circumstances, as he related them to me, were similar to those encountered by many recruiters who, when dealing with an established account, suddenly have a new player added to their client’s hiring team. Here was the situation.
Over the last two years the recruiter had established himself as the primary source for top-level management talent with this client. During that time he had placed eight senior level sales and operations executives in their company. One of his latest placements was a sales manager who quickly established himself as a top performer for this client. In fact, because of the growth in business generated by this new manager, the senior VP asked the recruiter to find another top performer to serve as a peer with the newly hired sales manager. This was the beginning of the problem.
The newly hired sales manager was now going to serve as the lead person on the hiring team. Although he would not be making the actual hiring decision, he would be responsible for the preliminary screening process. Up to that point, the recruiter had worked directly with the VP while HR primarily served an administrative function.
While reviewing the position description and the selection criteria with the newly hired sales manager, the recruiter was asked about his fee. He explained that it would be twenty five percent of the first year’s compensation, including base salary and projected incentives. The sales manager expressed surprise that the fee was not strictly a percentage of the base salary. He informed the recruiter that he had a discussion with the HR Manager and they both agreed that the fee should be calculated off of the base salary alone.
The recruiter then explained to the sales manager that all of the fees for his previous placements with the company, including for this sales manager, were based on the newly hired employee’s projected first year’s compensation. Upon hearing this, the sales manager stated that he knew of several other recruiters who would base their fee strictly on the base salary. Notwithstanding this argument, the recruiter reiterated his past success in locating outstanding performers for the company. They agreed to talk again the next day. It was at this point the recruiter contacted me.
He wanted to know if he missed anything in the fee discussion with the sales manager or if there was something else that could be done to reinforce his positioning on the fee. After complimenting him for not compromising his fee, I suggested he call the sales manager and “make it personal.” After completing the opening comments of the call, I recommended he ask the following questions.
“Yesterday you expressed concern over the fact that my fee is calculated as a percentage of the total, first year’s compensation. Was your concern based on formula or justification?”
By asking this question you cut to the heart of the employer’s concern. If they are concerned with the formula for computing the fee, as it appears in this example (a percentage of the total first year’s compensation), you can always restructure the formula while maintaining the integrity of your fee. For example, you might agree to utilize the candidate’s earnings record over the past 12 months as the basis on which to calculate your fee. With a little creativity, your options for developing a fee formula are almost limitless. The specific formula has nothing to do with the size of your fee.
However, in most cases, as it ultimately was to prove with this client, the concern appears to be the “formula” when, in fact, it is the justification. The true concern is the size of the fee. In other words, how can they justify paying such a large fee?
This is precisely the point where you “make it personal.” With the circumstances presented by this recruiter, I suggested he say the following:
“Ultimately, the only true justification for the fee is the value the newly hired employee brings to the company. During your employment with this company, have you brought a level of value that justifies the investment they made in you by paying my fee?”
When you consider the possible range of responses to this question, they are very limited unless the employee is prepared to admit they cannot value justify their employment with the company.
The next day, the recruiter followed my suggestions, albeit using his own words and “made it personal” by asking the sales manager the key questions. After careful reflection, the sales manager stated he never considered the size of the fee on the basis of the value justification. Armed with this new perspective, he reconsidered his position and agreed to pay a fee based on total first year’s compensation. The problem was resolved.
Remember
When dealing with a fee objection, your first goal should be to determine with your client whether the problem revolves around the formula for computing the fee (structure) or the justification for paying the fee (value)?
In the situation outlined in this article, the recruiter had placed the sales manager with his client. However, the same approach could have been successfully used even if he had not placed him. Whether you are dealing with the ultimate decision maker, an intermediary or a Human Resource Manager, you can always “make it personal” by asking the question:
“During your tenure with this company, have you contributed a value that would justify to them this level of investment (size of the fee) in you?”
With this approach, you may not always gain a positive response but you will succeed in focusing the client’s attention on the most important consideration regarding your fee, i.e., the value of having a qualified employee performing successfully in the position.
Bottom line, when you “make it personal” you make it real. This is precisely why it works. It’s not a trick or fancy play on words. Rather, it brings the reality of value to the forefront, right where it belongs.
As always, if you have questions or comments just let me know.