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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Open Mic: What’s your problem?

On April 24, 2012

Every week in the Ask The Headhunter Newsletter I answer one question from a reader in the traditional Q&A format. From time to time, we have an “open mic,” where you pose the questions on the fly here on the blog.

This week, I will do my best to answer any and all questions you post. As always, I welcome everyone to contribute their best advice to the questions, and to add their comments to the discussion. The more input, the better!

  • Lost your job and don’t know how to start hunting for a new one?
  • The employer wants you to do a stress interview?
  • Wondering how to deal with a headhunter who just called you?
  • They want your salary history, but you don’t want to share it?
  • Your company posted a job and you got 5,000 applicants. What now?
  • The manager made you a good offer, but HR just called to rescind it?
  • What’s your problem? Please post it and we’ll tackle it.

(You don’t have to include any identifying information.)

I’ve answered over 30,000 questions from Ask The Headhunter readers since 1995. This week I’ll answer as many as you post — and I’m sure you’ll get lots more great advice and commentary from the rest of our community. So… please ask away!

(This column was published before the comment threading feature was added to Ask The Headhunter, so my replies to questions do not appear immediately below each comment. Please scroll down in the comments and look for my reply “@commenter-name” to each question. Sorry for the inconvenience!)

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How long does the headhunter control me?

On April 9, 2012

In the April 10, 2012 Ask The Headhunter Newsletter, a job hunter asks how to cut the cord to a headhunter:

If a recruiter gives a company your resume, how long are you tied to that recruiter concerning that company?

For several reasons, I recently lost what I consider to be a great opportunity with a small company, A. I am now accepting another good position at another company, B, but not the one I really wanted. In the situation with company A the recruiter was not very helpful and virtually non-responsive when I had questions, which I am learning is not unusual. I would like to approach company A again at a later date under my own representation. (Perhaps that is not the best attitude to have going into a new position, but my long-term career goal would be better served at company A.)

Can you please tell me how long this recruiter controls my resume at company A, and at what point the company may consider me without the original recruiter’s involvement?

My Advice

People get it into their heads that headhunters have some sort of magical powers, or that they control companies and jobs. It’s not true. The headhunter may have no rights at all if you contact company A on your own. A lot depends on what kind of headhunter or recruiter you’re dealing with.

To understand how to work effectively with headhunters, it’s important to know the differences between retained and contingency headhunters, employment agencies, job shops and career management firms. Also relevant are the kinds of contracts employers and headhunters use. Perhaps most important in this case is knowing how employers routinely deal with headhunters. It’s not complicated, but if you don’t know how employers manage headhunters you’ll never be able to manage them yourself. I cover all these issues and more (including how to find headhunters and how to leverage them to negotiate the best salary offers) in How to Work with Headhunters… and how to make headhunters work for you.)

How long company A would respect the recruiter’s involvement depends on a few things.

Did the recruiter send you to an interview with the company?
If no interview took place, I think you could reapply at any time without a conflict, though I’d probably wait a few months to avoid irritating the headhunter. If you had an interview, it depends on the company’s policy and on the contract it has with the recruiter–if there is one at all.

Did the headhunter give the company your resume?
Companies usually rely on an actual interview as proof of the recruiter’s referral. If the headhunter submitted your resume but there’s no interview, the headhunter probably has no claim to you. However, if the personnel office read and tagged your resume REJECT, and you then reapply on your own, the initial rejection may be invoked and you’re toast.

I don’t think it’s ethical to go around a headhunter who introduced you to a job and a company. But if that headhunter was not able to get you in the door for an interview, then he probably has no claim on you. You could approach the company anew on your own.

How about if the headhunter got you an interview, but you were not hired? The headhunter’s contract with the employer might earn him a fee if you are hired within a certain period of time. Here’s what I’d do to test the waters. Have a friend call the company’s personnel manager to find out what the policy about headhunters is.

How to Say It:

“I’d like to ask about your headhunter policy, but I’d rather not disclose my name. If I interviewed with you through a recruiter at one time [don’t say when–the less info the better], and then I came back to apply for a job myself, would you consider me without the recruiter’s involvement? What are your rules about that?”

Don’t make this call yourself. There is no telling how the personnel manager might react, and you don’t want this to backfire. (I see nothing inappropriate or unethical about someone calling a company to ask about its policy.)

Where confusion might arise is if the headhunter (or recruiter) works for a “job shop” or “consulting firm.” These businesses will recruit and hire you, put you on their own payroll, and assign you to do work at their clients’ offices. A contract protects the recruiter from company A “poaching” you without a fee, after the recruiter made the initial introduction. And that’s as it should be. The contract probably locks you out of company A for one or more years, unless the recruiter is involved. (There’s an entire section in the aforementioned book about job shops and how to protect your options when working with them. There’s also a section that answers the question, Can I fire the headhunter?)

The best way to settle this might be to notify the headhunter that you consider his involvement with you terminated. (While this is a powerful move, it might end your relationship completely.) There’s a special How to Say It section in How to Work with Headhunters about how to handle this effectively.

Know what you’re doing when you work with headhunters. A good headhunter can boost you into the next phase of your career. An inexperienced headhunter might frustrate you by being unresponsive, and your misunderstanding of his role could cost you a great job.

Have you ever had to cut the cord to a headhunter? What happened? Were you able to “get back in the door” at a company where a headhunter failed to get you an interview (or to get you hired)?

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Don’t Get Hired, Get Acquired: Audio from Cornell workshop

On April 2, 2012

The April 3, 2012 Ask The Headhunter Newsletter is a SPECIAL AUDIO EDITION.

(This is no April Fool!)

On Sunday, April 1, I conducted a workshop for a group of Executive MBAs at Cornell’s Johnson School of Management. (These guys attend the EMBA program on weekends!) The topic was the differences between applying for a job and delivering profit to a company.

The presentation ran almost two hours, and the discussion and debate were lively. One of the key points we explored was about how we view employers and jobs when we go job hunting, and how employers view us.

  • Are you being interviewed to help a company fill out its open headcount?
  • Or are you more like a business the company is considering acquiring or merging with?

The difference in these two approaches is profound.

I don’t think anyone should behave like “the next hire.” I think every time you approach a company about working together, you should be prepared to show that you are a profit-making operation unto yourself.

Are you ready to get acquired? Please listen to this brief section of the Cornell presentation:

 

 

Now here’s an excerpt from the Answer Kit: How Can I Change Careers? (p. 9) that explains how to Create your next job, rather than just get a pre-made job:

How do you inspire a company to create a new job for you? Forget about your credentials, your history and your past jobs. They are irrelevant. If that’s what you focus on when searching for a new job, you’ll shoehorn yourself into the same kind of job you just left.

Decide where you want to work. Study your target company. Explore the problems and challenges it is facing and figure out how you can help the company tackle them profitably. Apply your skills and abilities in new ways to re-define your qualifications. Think in terms of what the company needs but doesn’t have: That’s your new job. That’s the business plan you need to present.

The job you want to create is essentially a new business. But don’t expect your target company to figure out whether this “new business” is justified. You must be ready to explain it to them. Show how you’ll deliver profit in new ways. That’s what may prompt the company create a new job just for you.

(How Can I Change Careers? isn’t just for career changers — it’s for anyone who wants to stand out from their competition.)

I think we’ll find the value in this topic in the discussion more than in what I have to say.

What does it mean to get acquired or to merge with a company?

  • How does this change the way you’d approach a new gig?
  • Does it change salary negotiations?
  • Do you even need to apply for a job — or what’s the new alternative this approach suggests?
  • Have you ever felt like you were acquired — or merged — rather than just hired?

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The First Job Interview

On March 29, 2012

In a hidden valley many thousands of years ago… “So, where do you see yourself in 50 moons’ time?”

 


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Move Over H-1B: Make way for L-1 visas

On March 28, 2012

The H-1B visa is well-known in technology circles: U.S. employers use it to hire temporary foreign workers in “specialty occupations.”

Engineers and Information Technology (IT) workers have long complained that the H-1B program takes jobs away from Americans. While H-1B requires employees to be paid the prevailing wage, some argue that employers actually pay lower salaries to H-1B workers — and that this depresses salaries across the board.

Enter L-1: A dog of a visa?

While there is a cap on the number of H-1B visas issued in the U.S., there is no cap on the L-1 visa, which has no prevailing wage requirement.

The L-1 visa is used by foreign companies for intra-company transfers of foreign employees into the U.S. L-1 workers are supposed to have “specialized knowledge” — but my dog could claim that his nose enables him to fulfill that requirement.

Use of the L-1 visa is growing, in part because the definition of “specialized knowledge” makes it easier to abuse.

Leading work to other countries?

Computerworld reports in an article, Charting H-1B users, as attention shifts to L-1, that, according to the Economic Policy Institute (EPI), L-1 could start resulting in significant job losses for Americans. EPI warns of “offshore outsourcing firms whose business model is to first hire L-1 workers to learn the work done by Americans, then to transfer that work overseas.”

Says an EPI analyst: “The L-1 program was not intended to function in this way. Nevertheless, this blatant misuse of the program is legally permissible. As a result, the program is operating at the expense of American workers.”

The issue: The U.S. government is considering changing the definition of “specialized knowledge,” and EPI is warning that the new definition could cause new, more extensive job losses. Are American jobs being led out of the country on L-1 leashes? I mean, L-1 visas?

Meanwhile, foreign companies that want to transfer more of their employees to work in their U.S. facilities complain about the restrictions.

Have you encountered L-1? Is it the new H-1B?

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Business Cards: What do Asians know?

On March 26, 2012

In the March 27, 2012 Ask The Headhunter Newsletter, a business owner defends business cards:

I just read an article in the L.A. Times that says Passing out business cards is quickly becoming passe. Instead, I’m supposed to “bump” my phone with someone else’s to trade contact information. If cards are optional, then so are new clients and referrals. The end of that article points out that in the world’s fastest growing market, Asia, you’d better have a card because it’s crucial. I run a successful small business and I think anyone who doesn’t carry business cards is naive. Do you use business cards?

My Advice

Hmmm… what do Asians know that the rest of us don’t?

I run an online publishing business, and “digital” is an enormous part of my work and life. If there’s a way to do something more effectively or efficiently, I take advantage of it. Sometimes, digital technology enables us to do things we could never do without it — like publishing this newsletter and my books.

But I do carry business cards, and I don’t intend to give them up. Guess I’m good to go to Asia.

Last week I gave a presentation, and afterwards I had a cup of coffee with one of the attendees — who is a potential client. She asked me for a business card. Suppose I’d told her, “I don’t use business cards. Find my e-mail address on my website.” I’d have broken the pace of our discussion. It would not have helped.

I do a lot of business online and I don’t always meet my clients, so there’s not always a chance to use a business card. But for those in-person meetings and work sessions, cards are a necessity. I’ve encountered some people who don’t have a card to share, and sometimes — not always — this sends a bad signal. I quickly assess whether the person has a viable business, or is just knocking around, trying to get lucky. It affects how I judge them. Is that fair? I don’t think that matters. I know other business people who react the same way. Cards are cheap; so’s a simple website. If you’re too cheap to have both, you may not be worth talking to.

But there are lots of subtle benefits to cards. Some people are in too much of a hurry to recognize them.

If you want to encourage someone to talk to you again, it’s easy to offer your card. Asking for their e-mail address or getting them to jot down yours is a bit more awkward. (Not all phones “bump.”) Contrary to what that article suggests, cards are not all tossed in the trash. I have a large digital contact list, but I also have a well-organized box of cards that I refer to often.

I can write a note on the back of a card, to personalize the memory someone has of me. And when they give me their card, I can jot a note on theirs, too. I could do it on my Droid, but so what? That card stays on my desk for a while and reminds me of the person. If the information is only in my phone, I won’t see it until I have reason to search for it.

A university professor is quoted in that article: “It’s time-consuming to organize business cards — and not portable.” That’s pretty naive. New contacts earn their way into my phone. Many start out as cards. If I need them more than once or twice, I add them to my digital list.

One last reason cards are good: Design. A person’s card tells me as much about their brand as their website does. Do they care how they come off?

What’s most unfortunate about the article is its self-righteous tone. It pits “under-30” and “young and Web-savvy people” against… who? Over-thirty and Web-ignorant people? Gimme a break.

The real punch line in the article reveals how gratuitous it is. “Firms that do business abroad, particularly in Asia, have found printed business cards to be crucial to corporate culture and ritual there.” In one of the fastest-growing markets, cards are crucial. Did someone miss a bigger point when writing this article?

Why come off like a clueless dork? Carry cards as well as one of those digital communication thingies, what do you call it? A smartpod? A pad thingy. You know what I mean — here, I’ll write it down on my card for you… Call me. We’ll do lunch.

Do you use business cards? Are they on the way out? What do Asians know that the rest of us don’t? Do biz cards offer anything that digital doesn’t? Post a comment… or write me a letter…

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Should I disclose my salary history?

On March 19, 2012

In the March 20, 2012 Ask The Headhunter Newsletter, a reader worries that disclosing salary history to an employer is not a good idea…

What’s the best way to deal with an interviewer who wants to know my salary history and salary requirements? While I know employers always ask this, I feel it takes away from my edge when I divulge that information.

My Advice

You’re absolutely right — to a point. When you show your salary cards at the wrong time, your negotiating edge disappears. When employers ask for salary requirements, they usually follow up quickly with a question about your salary history. Then they use your last salary to limit any offer they make. And that’s why you need to take control of the discussion.

You should avoid disclosing your salary history, while expressing your desired salary as a range you can justify and defend. The best way to negotiate a good salary deal is to demonstrate that you’re worth it.

Salary history is confidential.

In my opinion, discussing salary history is a no-no. It’s no one’s business. Some employers will object, but keeping your past salary confidential is pure common sense because it directly affects your ability to negotiate. Although an employer may suggest that your old salary is a good indicator of your value, the truth is that it’s up to her to make an independent assessment of your value to her business.

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Your salary is nobody’s business. Disclosing it can cost you a big raise.

Learn to say NO firmly and with authority when employers demand your salary history — to make them say YES to the best possible offer.

It’s all in my new PDF book:

Keep Your Salary Under Wraps

BONUS: I’m throwing in a special mp3 download, from my recent workshop at Cornell’s Johnson School of Management.

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ORDER NOW! Get a BONUS mp3 download!

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Don’t cap the job offer.

Employers claim otherwise, but once they know your salary history, they’re likely to use it to limit any job offer they make to you. They offer myriad excuses for why they need to know your salary, but I’ve never heard a legitimate one. (My favorite: “It’s the policy!” Gimme a break.) If they want to make sure you’re “in the right ballpark,” ask them what the salary range on the job is. If they continue to press you, ask yourself whether they’d disclose the boss’s salary — or anyone else’s salary in the department. Makes no sense, does it? Don’t help an employer cap the job offer by retreating to your old salary before you even begin to negotiate.

Talk profit.

Turn any salary question around and ask what exactly the employer wants you to accomplish for her business. Then be ready to show how you will deliver. If this sounds like a lot to prepare in advance, it is. If you can’t do it, then you have no business in the interview.

Know what you want.

It’s legitimate for an employer to ask what you want, as long as it’s couched in a larger discussion about how you will contribute to the bottom line. As we said above, the more value you can contribute to the work, the more you’re worth. There’s no way to provide a desired range until you know what the job entails and what the expectations are — and that requires thoughtful discussion about the manager’s business objectives and how you will fit into them.

Salary negotiations can be challenging. But it’s easier to negotiate the right deal when you’ve demonstrated good faith — and firmness — by keeping your salary history private, by demonstrating your worth, and by sharing your goals with the employer.

How to handle demands for your salary history is such a hot topic on Ask The Headhunter that I wrote a 27-page Answer Kit that teaches how to say NO politely and with authority, so you can prove you’re worth more: Keep Your Salary Under Wraps!

How do you protect your ability to negotiate the best salary? Should employers demand your salary history? Should you disclose it?

Don’t miss these other Ask The Headhunter Answer Kits:

How to Work With Headhunters

How Can I Change Careers

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Should I give equity to entice a new hire?

On March 12, 2012

In the March 13, 2012 Ask The Headhunter Newsletter, the owner of a start-up business asks whether it’s smart to give equity to a new hire:

After years of frustration with the way many professional services firms treat their clients, I decided to launch my own business. I have had modest success in my first six months and I am considering adding an employee. The individual that I am interested in has expressed concern about the added risk of working for a small company. He wants me to give him an equity stake to offset the risk, but I don’t want to give away too much too early, considering the competitive nature of the marketplace and my own business vision. What would you recommend?

Here’s the short version of my advice:

(For the entire column, you need to subscribe to the free newsletter. Don’t miss another edition!)

My Advice

There are two kinds of people in your start-up world, other than clients: employees and investors. You can’t fill a job with an investor. You must fill it with an employee.

Now, I’m a big believer in sharing profits with good employees. And I think it’s a great idea to make employees owners to a reasonable extent, commensurate with their commitment to the business. That’s what profit-sharing plans are about.

But employees must earn their way into ownership of the business. It’s simply not good management practice to give away ownership of your company before you know what you’re getting in return. If this individual were bringing you new clients or some kind of intellectual property to enhance the value of your company, then and only then would I consider giving him equity from the outset.

If you hire an employee whose contributions become a true investment and a key part of your business, then at some point sharing some equity may be a key to your long-term success.

You can test this candidate’s motivations. Try this:

How to Say It
…(Sorry, this part is only in the newsletter… Don’t miss next week’s edition. Sign up now. It’s free!)…

…This person is clearly looking for security and potential riches without making a solid investment.

I’d find another candidate, or someone who wants to invest in your business as a partner. Take a look around: Even jobs with big, stable companies are risky. There is no such thing as job security.

In the future, I would look for candidates who want to add value to your business and to make you more successful — not ones that want you to protect them from risk. Talk about jobs and salary to potential employees. Talk about investment and risk to investors. But don’t confuse the two.

Does your company offer equity to new hires? Have you ever accepted equity to join a start-up? How did it work out? I’d like to hear what you have to say about the risks of start-ups — and the joys of taking risks!

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Internal recruiting: Is it poaching?

On March 5, 2012

In the March 6, 2012 Ask The Headhunter Newsletter, a manager wonders why employers prohibit internal recruiting but let their best workers get recruited by the competition:

In [last week’s edition] a manager asked about hiring from within the company. I hire internally all the time, and my company’s own employees have been some of my very best hires. While it may be frowned on in some places, here we can request internal references, talk with an employee’s current manager, and check performance reviews. No doubt some companies make it difficult to hire internally even while they talk big about career development and growth! That’s not how to keep your best people. How can managers in companies like this change the rules?

Here’s the short version of my advice:

(For the entire column, you need to subscribe to the free newsletter. Don’t miss another edition!)

My Advice

It’s a dirty little secret that many companies discourage managers from recruiting internally. Oh, they promote “career growth” as long as an employee initiates the contact. (See JHBWA.) But for a manager to recruit an employee from another department? That’s a no-no!

Should managers be permitted to headhunt internally? Absolutely. While some would abuse the privilege, I think that in any healthy company managers and employees would find a balance. Not encouraging internal mobility only hurts a company.

I’ll tell you a story about how the enormity of this problem came home to me.

A Fortune 50 financial services company hired me to teach recruiters in their HR department to recruit like headhunters. After putting them through an intensive program on how to identify and actively pursue the best people for a job, it dawned on the recruiting manager that the best candidates were often already working somewhere else in the company.

That should be no surprise in any large company. If the company is successful, of course some of the best people in the industry already work there.

It was easy for me to convince the manager that the company needed to create an internal headhunting function, to recruit internal people from one department to another — legally.

She wanted to be the internal headhunter, and I helped her sell the concept to management because the company was losing a lot of its best people to the competition. Meanwhile, exciting internal jobs were going begging. The company was paying headhunters like me huge fees to recruit outside the company, when great candidates were right under management’s nose.

Since managers were not permitted to poach employees from one another — they had to wait for employees to come to them — setting up an internal headhunter with freedom to recruit with no-holds-barred seemed to be a good solution. They realized this was preferable to losing their best people to external headhunters.

As soon as they kicked off the project, the company’s managers freaked. Everyone wanted to hire internally, but too many managers objected to having their employees hunted. So the project was cancelled.

Long a target of headhunters, the company continued to bleed talent. To top it off, the HR recruiter who started the internal headhunting project got so disillusioned that she left.

Of course managers don’t want their talent poached by other managers. But it happens every day. The question is, does the board of directors want its talent poached by other companies — after investing a lot of money to cultivate that talent? In many companies, the geniuses in HR like to refer to people as a resource. But until HR recognizes that people are an investment, the ROI (return on investment) will accrue to the company that recruits them. Internal headhunters, anyone?

I think managers can help stem the loss of good employees by working together to create responsible internal recruiting practices. Hire an internal headhunter, and protect your company’s ROI. Pretending no one is poaching your best people from outside is a losing proposition.

Does your company recruit internally? Or does management play games about who must approach whom? And, if you’re a manager, what does this mean to you? What do you think about poaching, stealing, and recruiting your own company’s employees!

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