Over the past few weeks, in conjunction with our Consultant Earnings Survey (TFL, 3/03), I have had the privilege of speaking with several dozen of the industry’s old-timers. These are the graybeards who have been around for more than a couple of decades and have weathered one or more previous economic downturns.These are the folks who were heavily represented in our most recent survey when the average tenure of the participants rose from 8 years to a bit over 13 years in the search and recruiting business. Although the “averages” chronicled in the survey don’t meaningfully reflect the earnings of the old-timers as shown in the aggregate, a closer look at the raw data shows that the tenured veterans scored much higher than those with fewer years in the business. The principal exception to this is for those who worked in the IT and telecom sectors and, even those fared better than many in the more stable disciplines. There is still some business in those troubled specialties for those experienced pros whose contacts had been established and nurtured with the upper crust of those industry firms.We heard from many that they’ve got more business than they can handle but, in almost every case, these are for upper level openings just one or two notches below the CEO. We also heard that these seasoned professionals have avoided HR like the plague. One likened his relations with HR as “flypaper.” “If the bureaucrats in HR spent as much time working with me to solve their talent problems as they spend in trying to circumvent or totally avoid me with their cute little tricks, their employer would be far better off,” said one practitioner.While we heard that many search and recruiting firms have downsized their own staffs during the past couple of years to pare overhead and rid themselves of mediocre performers, many old-timers have been busy hiring the best producers from those firms which have gone out of business. This was reflected in the increase of the average monthly draws paid to consultants which climbed to approximately $575 a week from the previous year’s weekly average of $450. “I don’t mind paying a bigger draw to someone who can hit the ground running and can bring a book of business with them,” one owner told us.On the subject of fee discounting, most told us that they felt little or no pressure in this area unless they were dealing with HR. This falls in line with the fact that most don’t deal with HR at the higher-level assignments. Several, however, told us that when they absolutely had to keep HR in the loop, the process almost always slowed to a crawl.Regarding guarantees, there has been an increase in replacement guarantees over the moneyback type even though replacement guarantees can be dicey and can easily be converted by judges to moneyback guarantees.As an aside, on the subject of guarantees, fewer were offering no guarantee period than the previous year but one practitioner had a rather unique proposal for those employers who insisted on longer guarantees. His normal fee schedule was 25% with a 30 day pro-rated moneyback guarantee where his pay back obligation decreased by 1/30 for every day the new hire worked. When asked to increase the guarantee period, he asked for an increase in the fee charged by 1% for every additional 30-day period. If the client wanted a 60-day guarantee, the fee increased to 26%; for 90 days it increased to 27% and so on. His reasoning (and his sales pitch) compared it to appliance or car warranties. “You automatically get a 30-day warranty. If you want longer-term protection, you have to buy an extended warranty.” He claims it has worked with many of his clients.The biggest jump from the previous year was the number of recruiting and search firms who had their own websites. Not quite so surprising was the fact that while many of the old-timers had them, very few told us that they received much business because of them. One told me, “I put up a website because it seemed like the thing to do. I initially listed open positions on it and was inundated with so many unusable resumes that I removed that feature. My success is primary due to my vast network of sources it’s taken me years to cultivate. I can’t say the website has been beneficial to me nor has it been hurtful. As far as I’m concerned, my URL is just another line of print on my letterhead one I seem to be expected to have.”Regarding membership in a franchise or a formal cooperative split network, approximately one-third of the respondents belonged to one or the other. Franchisees were a bit more noncommittal about this aspect of their affiliation than independents although all but a few of the franchisees rated their split opportunities as neutral to a minor plus. Overwhelming praise for their membership in the formalized split networks came mostly from solo practitioners. Those few who disparaged their affiliation were those who never used the systems properly, thought of it as a one-way street or as a place to dump candidates harvested off the Internet’s job boards.WHEN YOUR CONSULTANT LEAVES – We have always recommended that the owner or manager keep in touch with the clients of your consulting staff. They, of course, hate you for it since they’d all like to believe that they have produced such a unique relationship with their ‘clients’ that even such a simple thing as a “How is Joe doing for you?” quality assurance call can end the rapport they have. This is usually nonsense and if the bond between your consultant and the company rep is that fragile, it’s probably not worth much anyway.Eons ago, when I managed a 10-consultant office, I regularly reviewed everyone’s ‘hot sheets’ where they’d try to convince me about how much activity they had going on. On those that looked suspicious (and some that didn’t) I’d place a call to the hirer just to introduce myself as the manager and casually try to find out whether the pending ‘deal on the books’ was real or just some consultant’s pipe dream. My purpose was twofold: First, I was actually concerned about the validity of the ongoing process since cash flow from real deals was important to me. Secondly, I wanted the company reps to know that management was interested in their problem and that their connection should be with the firm and not just with the consultant. I was well aware that the connection with (and the business of) the consultant usually moves when that consultant moves to another firm or to go out on their own.It didn’t take long for my consulting staff to realize that it was a bad idea to hyperbolize on their hot sheets and exaggeration soon ended. So did more than a few careers with my firm but that’s another story.By keeping a copy of their hot sheets and a complete copy of all their daily planners, we were able to compile a fairly inclusive list of the company reps with whom they had communicated during their career with my firm. When they left, we contacted all of them. I had almost forgotten this technique until I received an Email from an office of the same franchise for which I had managed the office. I know I wasn’t supposed to receive it and probably did because my Email was in his address book, but it’s a reminder to me and, perhaps, a tip for our readers. I’ve sanitized the Email but here it is:
To our valued clients, candidates, and associates:Please be advised that Mr. (Consultant) is no longer with our firm as of the 18th of February, 2003.In order to become employed with (our firm), Mr. (Consultant) signed a contract with our firm that prohibits him from contacting and or soliciting our client companies and or candidates in any recruiting capacity for one year following his withdrawal from the company. We are hopeful that Mr. (Consultant) will honor his commitment so that additional action to protect the company will not be necessary.We want you to know that we at (our firm) value our relationship with all of you and that we wish to continue to assist you as we have in the past to the best of our abilities.Please call myself or (XXXXX) at (XXX) XXX-XXX
Over the past several years, we have written about the dozens of search, recruiting, staffing and temp firms that were snatched up by TMP Worldwide (The Monster.com folks) in their quest to become king of the hill in the employment business. They were like Pac-Man gobbling everything in its path.Unfortunately, they never had a clue as to what our business is really all about and we heard stories from many of their newly acquired employees which confirmed what we had suspected all along. Although their timing couldn’t have been worse, ours is not a business that will ever be easily consolidated. Nor will it ever become the mechanized behemoth that TMP Worldwide envisioned when it embarked upon its acquisition frenzy.I’ve always admired people with grandiose ideas. I have met an awful lot of them and looked at many of their pro-formas, replete with unrealistic assumptions and overly optimistic prognostications for their shot at becoming the Bill Gates of the employment business. I can’t remember how many invitations I’ve turned down to join their boards of directors and many of them heatedly predicted the demise of my organization because I just didn’t ‘get it.’ But from my perspective, the only one that ever really had a ghost of a chance at success was TMP Worldwide . . . and they failed at it.As I write this, the plans are underway to split the staffing and headhunting functions from the Monster activity. Their stock is down over 75% from the beginning of 2002 and the executive exodus is continuing. Monster will survive quite handily but no one is willing to predict what will happen to the spin offs. TMP Worldwide will probably become Monster Worldwide and they will be expected to continue to pour cash into the spin off operations despite the fact that the staffing/headhunting units lost very big bucks.And, by getting distance from the staffing/headhunting units, Monster will be able to attract some of the bigger staffing companies’ business who were unwilling to sign contracts with an outfit they considered to be a competitor at some level.Oh yea. Just when things couldn’t look worse, media outlets are telling jobseekers that Monster (and other job boards) might just be a spawning ground for identity theft and to beware of fake job postings and the kinds of information that they give to those claiming to be hirers.The unraveling is interesting to watch. Stay tuned.In the meantime, from our “where are the wandering folks” file, it looks like they’re busily getting a brand new franchise off and running. Global Recruiters Network, Inc. (http://www.grncorp.net/) CEO Brad Baiocchi has teamed up with several ex-MRI executives. Bob Angell (former Sr. V.P. of Franchise Sales with MRI), Jerry Hill (former head of training for MRI) and Robert Stidham (most recently a Division President with Dunhill Corporate and a former franchise salesman for MRI) along with others are hoping that the economy will pick up enough to put some wind under their optimistic wings. Several franchises have already been sold at a franchise fee of $67,500 and they are currently working on closing a number of existing independents as well as some ‘newbies’ to the business. Looks like a tall mountain to climb but if anyone can make it happen, these guys will.A survey of 323 search professionals by Execunet, reveals recruiters are forecasting a 15% increase in executive search assignments for 2003 when compared with 2002, a year in which search firms reported a 20% drop in senior-level assignments from the prior year. The five industries recruiters expect will drive much of this job growth are:1. Biotechnology/Pharmaceuticals;2. Healthcare;3. Manufacturing;4. Financial Services; and5. Consumer Products.”After enduring two consecutive years of double digit losses, it’s refreshing to see signs suggesting the executive search industry could reverse its course and grow in 2003,” says Mark Anderson, President of ExecuNet. “If the executive employment market continues to grow at the pace set in the first two months of 2003, the expectations of executives and recruiters will be fulfilled, as demand for executive talent is off to a strong start.”Although the National Association of Personnel Services annual convention in February was underattended, those who participated gave high marks to the speakers and the program. Another group, The National Association of Executive Recruiters will hold its Annual Conference April 24th thru 26th, 2003 in Chicago at the Allerton Crown Plaza. The theme of the conference is “Retaining and Developing Clients in any economic environment.” Please contact the Chairman Deborah L. Keys for additional information: 435-634-1196 or email: mailto:naerexsch@aol.comConversations with several readers indicate that candidates are becoming more reluctant to accept offers. Counteroffers are routinely being accepted as candidates frequently believe it’s better to stay with the devil you know than the devil you don’t. Now, in a twist on the sign-on bonus technique, a few practitioners have decided to offer their own version of a sign-on bonus. If a candidate is disinclined to accept an offer or is leaning towards taking a counteroffer, some recruiters are sharing a portion of the fee with the candidate who says yes. One solo practitioner told us, “I got my $70,000 candidate an offer of $90,000.His current employer countered with $90,000 and he was about to stay where he was. I offered him a $10,000 bonus a third of my fee and he took the job with my client. From my viewpoint, I got $20K which was better than the nothing I would have gotten. I’m happy. He’s happy.There are several versions of this kickback scheme making the rounds probably more than we know about. We covered inducements, kickbacks and bribes in our 9/2000 and 12/2001 issues and several readers who were obviously involved in the practice told us they preferred to call these payments ‘incentives.’ Pouring perfume on a pig doesn’t make it any less of a pig, however, if doing a deal like this is what stands between making the rent or being evicted, I suppose its understandable. Professionally though, it’s viewed by most as a real blemish on our business.As to the legalities of the deals, Attorney Jeff Allen covers these in his Placements & The Law column.I remember all the fuss over President Jimmy Carter’s comments about a national malaise during his tenure in office. When I talk to some practitioners, the same appears to be true in many segments of our industry. Steve Finkel has opined on this topic in his motivational and informative article “STAYING ‘UP’ (AND PRODUCTIVE) IN DOWN TIMES” in this issue.