My headhunter is competing with me!

On August 19, 2019
My headhunter is competing with me!

In the August 20, 2019 Ask The Headhunter Newsletter a reader is confused about how a headhunter operates.

Question

headhunterIs it an ethical or typical practice that a recruiting agency submits more than one person for the same position? A headhunter contacted me about a management role in information security. I went in for the interview first, and while following up with the headhunter afterwards I did a bit of a brain dump about the way it went and what their personalities were like. As I was telling the recruiter my experience, I heard her clicking away at the keyboard and instantly I was thinking who is helping whom? So I asked, are you submitting someone else, and she said yes, the agency was, but she was not personally. The information I shared was used to help the next person they sent to interview after me.

It seems there is a conflict of interest and cannibalization when you send two people for the same position.

Nick’s Reply

That’s exactly how recruiting agencies (headhunters) work. Unless this is some unusual situation where you are paying the agency a fee to get placed (Please don’t ever do that!), the agency’s customer is the employer, not you. The employer pays a fee to get a job filled.

On a typical assignment a headhunter will submit several candidates to an employer, not because the headhunter is gambling, but because the client wants several candidates from which to choose. The goal is to fill the job, not to get you a job. Even if this is an employee-fee agency, I doubt your agreement with the agency prohibits them from submitting other candidates anyway. But at your level, it’s safe to guess this is a traditional employer-fee deal.

One headhunter, several candidates

Because this is how the business works, there’s nothing unethical about it. An agency will use whatever information is available to help them get one of their candidates hired, including anything you told them during your debriefing. When you think about it this way, there’s no cannibalization or conflict of interest. The objective is to fill the job with a candidate, any candidate.

I wouldn’t hold it against the recruiter, but in the future I would refrain from telling her anything that might help another candidate from the firm to compete against you. Don’t compete with yourself or with the headhunter’s other candidates.

How the headhunter gets paid

This reminds me of a learning experience I had when I first started headhunting. It illustrates how headhunters get paid. I submitted a candidate to a company and they hired him without telling me. When I complained, they said they had received the same candidate from another search firm that was paid the fee. I was livid. My boss sat me down and explained the rules. I learned my lesson. Headhunters don’t have any exclusive control over a candidate. (See How long does the headhunter control me?)

When I confronted the candidate I had “lost,” he sheepishly admitted he’d already interviewed at the same company in another department. Did he behave unethically? I’m not sure about that, because his goal was to get a job. Did he know he was putting me in competition with another headhunter? Let’s call it an error of omission. Sure, he should have told me, but not for the reason you might think. In this case, the candidate was lucky. He might have gotten rejected for both jobs if the company realized it was interviewing him through two sources at almost the same time, because employers don’t like getting into the middle of fee fights between headhunters. If I’d started a legal battle for that fee, I would have lost — but the company’s lawyers probably would have advised that the employer stop dealing with both search firms!

I became more careful about submitting candidates, and always asked whether they’d already talked to company X.

Understand headhunters

I’d have a talk with the recruiter. Decide whether you trust her. Ask her to explain how the firm operates. If they’re going to refer you for another position, ask whether you’ll have competition from other candidates from the same firm. Keep in mind that even if you’re the headhunter’s only candidate, you’ll face competition from other candidates anyway.

There’s nothing you can do but decline the interview or avoid headhunters altogether, but why would you do that? More important, now that you’ve been rejected by that employer, and now that you know other headhunters at the agency work on similar jobs, ask about other opportunities they may be working on. Optimize your chances of getting placed by learning how headhunters work. But please remember that the agency’s business is to fill a job — not to find you one.

Additional resources

I know you’re frustrated. This is why I tell job seekers not to rely too much on headhunters! These articles might be helpful:

Headhunters find people, not jobs

Why do headhunters act like this?

If you need in-depth advice about headhunters, please check my PDF book, How to Work With Headhunters — and how to make headhunters work for you.

Hope it goes better next time!

Have you ever had a rude awakening when working with a headhunter? Do the rules of this game confuse you? What would you like to know about how headhunters operate?

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A headhunter locked me out of jobs for 6 months

On April 13, 2015

In the April 14, 2015 Ask The Headhunter Newsletter, a reader says getting referred for a job by a headhunter cost him the job — because the employer didn’t want to pay the fee.

Question

I applied for a job on Indeed.com at a medical facility. A person called representing herself as working for the facility. She did a five-minute pre-screening interview, and set me up for a phone interview with an HR representative. The short version of this long story is that the organization wanted to hire me, but wasn’t able to because of a recruiting fee of $12,000.

I’ve been informed that this recruiting company has put a six-month “lock” on my name. Is this legal? This kind of thing has never happened to me before. I’m appalled that they can get away with it! Do I need to contact the state attorney general’s office? I never signed any documents stating any agreement for them to represent me. Please help!

Nick’s Reply

This is a deep crack in the law that you’ve fallen into. Employment agencies and third party recruiters (a.k.a. headhunters) are not regulated everywhere. The recruiter has submitted your resume as one of her referrals — and if the employer hires you as a result of that referral, it may owe the recruiter a fee.

(Of course, the recruiter serves a purpose. Without her, you may not have gotten the interviews with this employer. But her intervention should not cost you a job!)

I’d do two things.

Get the facts first

Call the employer’s HR office. Don’t tell them what happened. Just ask whether they have a contract with that recruiter.

My guess is they do not, but the recruiter’s referral may be interpreted by the employer as an obligation to pay a fee to hire you. That’s the crack in the law.

Recruiters will sometimes find and use resumes like yours as an entree to a company they don’t have a contract with. They will threaten the employer with a lawsuit to collect a fee, because they were the source of the referral. This may not stand up in court, but the easy way out for the employer is not to hire you. So you lose. My guess is that’s what’s going on here. The loose interpretation of the law might be that if the hospital hires you within six months of the referral, it owes the fee. After that, there’s no fee. That’s what the “lock” refers to.

But all this is questionable. What recruiters like this one bank on is an HR department’s unwillingness to risk legal action — which is silly.

What’s important for you to realize is that — I’m sorry to say — you are at least partly responsible for all this:

Have you ever put your resume on an online job board? Then you may have slimed yourself because anyone who has access to that resume can do exactly what that troublesome headhunter did with your implied blessing. You’d have a hard time convincing a judge or jury that the headhunter did anything wrong if your resume is already widely available.

Excerpted from How to Work With Headhunters… and how to make headhunters work for you, p. 114.

Use regulatory powers

The second thing I’d do is call your state’s department of commerce. Find out whether the recruiter is licensed. Not all states require licensing. If yours does, and she’s not, she’s out of luck. I’d explain that to the employer — and I’d turn her in to the authorities..

Of course, it’s possible the recruiter has a contract with the hospital. In that case, what the lock means is the hospital has agreed to pay a referral fee for up to six months after a referral is made. Thus the lock is not on your name, but on the employer. You are not bound by a contract you are not a party to.

But here’s the risk you face, and it’s significant: If this recruiter circulates your resume to lots of employers, under her letterhead, such referrals may be construed by those employers as an obligation to pay a fee to hire you — even if you later apply directly. A good headhunter or recruiter would never refer you to any employer without your knowledge or consent. An unsavory recruiter will plaster your resume all over kingdom come — under her letterhead.

There are two sections of How to Work With Headhunters… and how to make headhunters work for you that you’ll find helpful in the future. “How should I judge a headhunter?”, pp. 26-27, defines a set of standards that good headhunters adhere to. “How should I qualify a headhunter?”, pp. 28-33, goes into great detail about how you can separate the good headhunters from the unsavory ones.

Some of the book is about how to protect yourself, but most of it is about how to leverage headhunters and recruiters to your advantage.

Assert yourself & protect yourself

I would immediately send the recruiter a certified letter, with a return receipt, stating that she is not to refer you to any employers, and demanding that she notify you what companies she may have already referred you to. Again, recruiters like this one bank on people not fighting them legally. It can be a nasty game.

Depending on what you learn, you may want to contact your state’s department of labor and employment. Explain what happened and ask their advice. If the recruiter misrepresented herself as an employer, I’d consider filing a complaint of consumer fraud and possibly identity theft, citing the recruiter’s misrepresentations, and for her failure to tell you that it would cost a fee to hire you.

Much depends on whether the employer is willing to stand up to the recruiter. I doubt the employer or the recruiter would want to see an article in the newspaper about a job seeker in a tough market finding out he got screwed out of a job because of all this.

I’d love to know what you learn and decide to do. This is a murky situation because much depends on who did what, and on whether the employer has a contract with the recruiter.

Keep this in mind: None of these agencies or recruiters work for you. Their client is always the employer. They have no contractual obligation to you, or you to them. Yet many such firms will use phrases like, “We will represent you…” They do not represent you. The employer pays them, and their fiduciary duty is to the employer. But it’s an odd business, because they can imply that they represent you — with the result that employers might lock you out of jobs due to the fee they’d have to pay.

Finally, remember that posting your resume or profile online makes it easy for anyone to “refer” you to an employer and to claim a fee. You can fight this, of course — but good luck, because employers are more likely to protect themselves than fight to hire you.

Has a recruiter or headhunter ever cost you a job? What would you do if you were the job hunter in this week’s Q&A?

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Can an employer charge you for quitting?

On April 30, 2012

In the May 1, 2012 Ask The Headhunter Newsletter, an employer is out $6,000 when a new hire found through an agency jumps ship after 15 days. Can the employer charge the next employee for quitting?

We recently hired an employee using an agency through which he was temping for us. We paid the temp agency a fee of $6,000 (20%) of the person’s salary. After 45 days, the new employee resigned to move out of state. The temp agency says that he was here for more than 15 days, so they are not going to do anything about their fee.

We have a policy for encouraging continuing education. If an employee in good standing wants to take a course or go back to school at night or weekends, we will pay 70% of the costs, providing successful completion of the courses. If the employee leaves before two years, the employee must reimburse our company for the education expenses.

Because of this disagreeable experience with the agency, we are contemplating a similar policy: “If you leave before your second anniversary, you will need to reimburse some portion of the headhunter fee.”

What are your thoughts on this approach? It would make us feel more confident about using a placement service. Thank you in advance for your thoughts.

My Advice

Suppose you hired that employee without an agency’s involvement, and he quit after 45 days. Would you require him to refund part of the salary you paid him?

Of course not. Yet that’s what you’d be asking someone to do if you hired him through an agency: To pay you back out of their salary. Did you pay a fee to the employee so he’d come work for you? Of course not. So there’s nothing for the employee to refund.

(I’m not a lawyer, but my guess is it would be illegal for you to take back salary because someone quit a job.)

The agency, on the other hand, earned a fee for finding an employee for you. It’s up to you to work out a reasonable contract and financial arrangement with the agency, for the work it does for you (recruiting). The underlying problem is that you as the employer make the hiring decision — not the agency. The agency’s job is to deliver viable candidates. It’s duty ends there, or after some agreed-upon guarantee period. I don’t think any agency would guarantee a placement for two years, one year, or even six months.

I don’t like your idea at all because you’re making the employee responsible for your contract with the agency.

So what are your options as an employer? Let’s start with typical placement agreements, though of course they vary greatly. Commonly, a headhunter’s (or recruiter’s, or agency’s) fee is about 20% of the employee’s starting salary. Please note: The fee is not deducted from the employee’s pay. It’s merely calculated based on that salary. So it’s an additional cost to the employer. Employers that routinely use external recruiters usually budget for such fees. Negotiate the best fee you can.

It’s common for temporary placement agency agreements to permit you to change from “temp to hire” — that is, to hire the temp permanently. The fees and any guarantee period should be spelled out in the contract. To control your costs, you might negotiate a permanent placement fee that is progressively lower based on how long you’ve already been paying temp fees to the agency for that particular employee.

Whether it’s a temp agency or a headhunter you’re working with, the contract usually includes a guarantee period. Many recruiting firms offer guarantees for between 30-90 days. (Some offer no guarantee at all.) If the new hire “falls off” in that time, the agency will either replace the hire, or refund a prorated portion of the fee, or the fee is refunded completely. I’ve never heard of a 15-day guarantee period. It seems too short to be meaningful. But if that’s what you agreed to, it was your choice.

You might be able to negotiate a more aggressive refund guarantee with recruiters. Please keep in mind that it’s pretty unusual for a new hire to leave so quickly. (If it happens to you often, then you’ve got another problem!) Check a recruiter’s (or agency’s) references: Do they have a reputation for placements quitting early?

I want to caution you about charging placement fees back to your employees. If it’s not illegal, I think it’s unethical. It comes out of the employee’s salary, but (unlike education) the employee gets nothing in the bargain. I suggest you work this out with your agency or headhunter instead.

Has an employer ever charged you to quit your job? If you’re an employer, have you ever recovered a placement fee from a departing employee? Headhunters: How do you handle “fall offs?” How long is the typical “guarantee” on a placement?

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