Is your recruiter filling your open position but also poaching your people at the same time?

The world of Executive Search and Recruiting has so many working parts to it that people do not really understand what we do and how we are compensated. Below are the three types of firm models and fee structures.

Retained Search: like a lawyer with 30% to 33% of the estimated full fee due upfront. When you are retained by a Client, the Recruitment Firm works exclusively with that client on a specific search assignment.

Contingent Search: they are like bounty hunters who only get paid if they fill the search. Usually if a Company does not want to commit to a Retained Search Firm, then they will hire either one or more firms to work on the same position. It usually ends up making the candidates wonder why so many people are contacting them for the same job and has the numerous search firms frantically trying to submit candidates as quickly as possible. It's like the wild west.

Engaged Search: this is where the Client pays an upfront fee anywhere from $5,000 to $20,000 and the remainder of the fee is paid after the firm successfully fills the position. Engaged and Retained are the preferred models in the industry by most firms. But you have to earn your stripes to be able to command retainers and engagement fees.

Our search firm would never poach from us. Yes, they would, and they do.

You have a critical opening that has to be filled. You use Recruitment Firm, lets call them Karson Search. They find you some candidates, you interview them, hire one and pay the Recruiters their $45,000 fee. Unbeknownst to you, 6 months later, that same candidate quits. You really do not know why, but he instantaneously has another role and your faithful search firm is right there to refill that very position (again). They will charge you another $45,000 to back-fill the position and also get another $45,000 fee for placing your 6 month employee with their other client. Double whammy for them. And they don't blink an unethical eye. Just business as usual. But some of us are in this industry because we love what it stands for and the people who dedicate their talent for the betterment of our environment.

Solar/Renewables is such a small niche, we all know each other, or of each other. There is one degree of separation. We gather at conferences and networking events 2-3 times a year. It feels like an extended family. Especially since I have been in Renewables for nearly 12 years (equal to 60 years in other industries) and have seen people rise up the ranks from a Solar Installer I placed with a Client in 2014 who is now a Senior VP of Operations. All of us in this industry have been riding the Solar Coaster together. Above is the biggest event in our industry, SPI. My firm always has a booth but the funnest part of the conference is seeing all of our candidates and clients and catching up with one another like a family reunion you want to go to!

Poaching could cost you $100M

One of my Clients is a $500,000,000 Construction Company. I was working with their CEO and he ended up hiring one of my candidates “Bob” who was to lead and scale a small division doing about $5,000,000 annually in sales. In 3 years time, Bob took their sales from $5,000,000 to over $140,000,000 a 2700% increase. My client was very happy with me and with Bob who is still there going on 6 years. 

What if this same Client hired Karson Search instead? Bob would most likely be poached after 6 months and Karson Search puts him in another company. And they don’t care what kind of company. Any company that will pay them a fee. They can convince Bob that this is the chance of a lifetime. There is a generation of Recruiters just like Karson Search who were trained on old school pressure closing tactics. Those tactics are still working on trusting candidates today. Candidates should never feel pressured by a Recruiter. We work for the Client, yes, but we have to ensure that this is the next logical step in the candidate's career and make sure it is a fit. We even talk to their husbands or wives about it. Especially when there is relocation involved to make sure everyone is on board.

Yesterday I had someone call me interested finding a new position because the solar company in New Orleans just laid him off after only 5 months on the job. I asked him if he worked with a search firm. I knew who the firm was even before he told me and I was right. This poor candidate put his trust in these Recruiters and left a great job to join this "up and coming" company in New Orleans and now has no job and a gap on his resume. He also has to explain to future potential employers why he only worked at this company for 5 months. And that will likely be held against him. Yes, the company was not doing well, but why didn't this candidate ask to see the books or do more due diligence on the company before he left a solid position for promises of glory? It is like gambling being a candidate with these types of unethical firms and unfortunately the candidates are the ones who usually lose.

Attention CEO’s, VP’s, and HR they do this under your nose as a 'Veiled Secret' mission. Would it be worth $100M to you to take precautions and mitigate any risk of this happening to you? I think most would say yes.

Have your legal division put the below clauses in your recruitment contracts. If they won’t sign it, do not work with that firm.

1.      Poaching Clause: Require recruiters to sign a five-year, firm-wide recruiting prohibition from the time of the most recent payment. Truly ethical firms will have no problem with it.

2.      Consequences for Violating the Poaching Clause: That firm will have to refund the exact amount of the last fee you paid them.

3.      Candidate Guarantee Period: Big surprise, Karson Search pushes for a 60-day guarantee. So, you pay $45,000 to them and in 2 months that candidate leaves, that is your own tough luck. Depending on the role, here are where your guarantees should be; base salary of $80,000-$175,000, 6-month guarantee. Anything over the $200,000 range, ask for a 1-year guarantee. Don’t waiver on this. Demand it.

4.      Ask candidates you interview about your Recruiting Firm: When you hire a search firm, that firm is your ambassador, they represent you and your organization. What if they rarely call candidates back, ignore their emails? Well they connect this unprofessional behavior with your company, and it makes you look bad. Ask your candidates if their Recruiter is responsive or ask about their processes and tell them to be honest and that it will not affect their candidacy. You will be surprised and shocked at some of the things you hear.

5.      Google them! Whoever the Recruiter is, google their name “Tracy Davis Recruiter Complaints.” Get the name of the firm and google them; “Karson Search Lawsuits” or “Karson Search Complaints” and if there is anything negative about them, you will see it. Just like I vet companies on their culture, revenues, past performance, feedback from people who have worked there before I agree to recruit for them, companies should absolutely vet their recruiting firm. They are the face of your company.

Another precaution you can take is when hiring a firm is ask them who their clients are. They will happily tell you since they don’t know what you will do with that information. If one day one of your employee suddenly leaves and is hired into your Recruiter’s other Client company, you may want to investigate further. They most likely had a hand in it.

Many of us got into Recruitment for the love of people, not the money. If you do what you love, the money follows. If you hustle companies out of money and ruin people’s careers, eventually you will be found out and exposed.

In my industry I am always pitted against other firms to compete for a retained search assignment. Being a former competitive gymnast, competition drives me even harder to win especially since the other firms are always male owned search firms. Nothing against men, but recruiting is still a boys club no matter what anyone says.

To level the playing field, I tell the potential Client to talk to numerous firms and request each firm send them an initial proposal within 24 hours. I give the Client an outline of what the proposal should contain and submit mine as well. The contents of the proposal will show if Recruiters are qualified to work on the search assignment or expose them if they are not. Many firms will refuse to do it. There is your first clue to take that firm off of your list.

Carina Whitham is the President of Whitham Group Executive Search, a Retained Recruitment firm with offices in the San Francisco Bay Area, London, and Manila. Whitham focuses on Renewable Energy and Construction Recruiting and Executive Search. Our team leads the implementation, strategy,and recruitment for companies such as Engie, ConEdison, CertainTeed, Kitchell, Panasonic, Port of San Diego, Samsung, Schneider Electric, PetersenDean and many more.

Carina has been in Recruitment and Human Resources for 15 years and appeared in an exclusive article in The Suit Magazine, featured in an article by the US Small Business Administration as an example of a Success Story and bootstrapping her firm, she has received professional recognition from the San Francisco Business Times in “People on the Move” and named the top Renewable Energy Recruiter in the Industry by Solar Power International. Carina speaks at industry events giving key insight to recruitment strategies for Companies and how to navigate this current labor market. For more information, please go to www.WhithamGroup.com