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December 2009

How Much Should You Pay When It Comes to Contingency Recruiting Fees?

Capitalist Note - I received 3 emails last week from HRC readers asking me about contingency recruiting fees, so I'm thowing you this rundown I did over at Fistful of Talent.  If you haven't found Fistful of Talent yet, check it out, then subscribe here.  It's a group of recruiters and HR/Talent pros talking about all things talent.  Additional Note - to my recruiting friends reading this post, if you demand more than 15%, just consider yourself one of the "special" recruiters.

I've been asked by some HR friends in the last month what the going rate is for a contingency search placement.  At the risk of being attacked by my FOT friends, I'm going to lay out the dance that I've seen performed countless times as I've been approached by high quality, low quality and medium quality recruiters who want a placement in our shop.

First up, don't think of it as the going rate.  If you do, you won't end up where you need to on theRainmaker company side.  As with all things, you have to think about the reality of negotiating when opening your mouth for the first time.

Here's the reality regarding contingency search fees:

-Almost every recruiter is going to say their rate is 25-30% of the first year's salary.

-You have to have a position on what you are going to pay. 

-After negotiating, the 25-30% quoted initially can usually be whittled down to 20%.  If the recruiter is playing a volume game in terms of trying to be active in as many searches as possible, you can sometimes get 15%. 

So, the recruiter says 25%, you say 15%, and you usually agree to 20%.  Welcome to the wonderful world of negotiation, where the first number is rarely the real number.  It's like buying a house...

My experience is that 20% is a pretty real number that quality recruiters will work for and will feel fairly compensates them.  Even an expert like Harry Joiner talks about 20% being a common fee.  I also think you have to be careful being a bulldog and negotiating things down further than that, because all things being equal, who is the recruiter going to give the best candidate to?  You at 15%, or a similar search at 20%

OK, maybe the candidate will go to both searches - but you can bet a smart recruiter will have a greater sense of urgency to close the candidate with the 20% as opposed to the 15%.

Final note - develop a special relationship with a recruiter you value, and you'll find yourself either taking their fee to 25%, or providing them a 30-day exclusive at the 20% rate (that means you aren't giving it to other recruiters). 

As long as you're making that decision on past results, it's a good call.  Results matter, and a positive track record should bring a premium over time.

So, they say 25%, you say 15%, and you settle for 20%.  That's been the vibe with the last 20 recruiters I've interacted with.

When Teams That Gel Make Stars Expendable....

Do you have a star system or a team system? Or a hybrid of both?

I ask because sometimes you have stars.  Then sometimes your team grows and makes the star Networks expendable, and maybe even a barrier to future success. 

Let's say you have a star, and the star performs well.  Then, you have a special project, and the star leaves the team in your company for awhile.  You know the drill, a project is too important to fail. So your company puts the star on that project and pledges to simply plow ahead with the team that remains in the core business.  The powers that be simply hope the team that remains can maintain the current market position.

Then a funny thing happens.  The team starts acting like a team and starts relying on each other and taking more responsibility, rather than simply relying on the star to make it rain.  In short, they maximize their talent and start getting results by working together.

Then, the special project ends and the star returns, except things are different now.  The team is getting similar or better results by accepting greater responsibility and working together - without the star.

Why's this on my mind? I've been following the saga of pro basketball's Houston Rockets, who have been without NBA all-stars, Tracy McGrady and Yao Ming, for most of the last two years.  You would think that means the Rockets have been dismal over the past couple of seasons, but they haven't.  They're exceeding expectations this year, and went on an improbable 22 game winning streak during the 08-09 season. 

How'd they do it without the superstars?  They put the responsibility in the hands of the role players, who had to grow as individual talents and rely heavily on each other as teammates.

You'd think with that type of talent growth, plugging the superstar back into the equation would mean the Rockets would be even better.  But talent doesn't work like that, does it?  Instead of plugging McGrady back into the team, the Rockets are balking at bringing the All-Star back into the fold, content to roll with the team approach.

It reminds me of the chart my friend, Josh Letourneau, shared with me last week regarding effective networks (shown to the right of this post).  Would you rather have everything going through one of two people, or a team that's flexible and can go to one of 30 people when they have a need?

The same could be said for an over-reliance on the star.

My Only Prediction for 2010....

As orginally shared at JPIE:

In 2010, at least 3 digital Gen X HR voices will rise from the CHRO suite within the Fortune 500.  Like Neo in the Matrix trilogy, two of the three voices won't believe they're "the one".  One will lead their blog with this quote and a picture of Tyler Durden dressed as a waiter: 


"We're the middle children of history, man. No purpose or place. We have no Great War. NoTyler_durden_large Great Depression. Our Great War's a spiritual war, our Great Depression is our lives. We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars. But we won't. And we're slowly learning that fact. And we're very, very pissed off. 


Within 6 months, all three will be fired as the enterprises they serve fail to comprehend the value of transparency.  2 of those will never be heard from again, until John Sumser tracks one down in Reno off of data from a Dollar General pre-paid phone card.  Sumser will interview that former Fortune 500 CHRO and make them the 100th profile in his “Top Influencers” series, noting the irony and cautionary tale.


One will rise to challenge the hegemony of David Ulrich.  She will be the one who led with the quote from Fight Club.  She’ll also have a mentor named Morpheus, just like Neo.


It is written, and so it shall be done.

Lump O' Coal: Merit Pay Spreads For Stars vs. Roleplayers...

It's Christmastime.  Shopping. Church. The Grinch.  Also - Getting your merit matrix together so you can allocate your merit increase budget (if you are one of the many companies that does annual reviews on a calendar year cycle).

What should you pay your stars by way of merit increases?  Let the hand-wringing begin!  Let's get you warmed up with this from Darcy Dees from Compensation Cafe:

"It’s easy to test and see if you really do pay for performance by comparing the total remuneration package of your top performers to that of your average performers.  If an appreciable difference doesn’t exist, you might want Mo money to reconsider how you give your rewards out.  You may even be able to reallocate funds from lower performers to fund the rewards for your top performers.  If you do differentiate pay for top performers then you should communicate that to all of your employees to encourage more effort and better results from all employees who will believe they’ll be rewarded for those efforts."

Of course, that's too simple.  You know the drill on pay-for-performance (PFP).  You do your best to ingrain the PFP fundamentals into your culture, but here's the trick - to truly pay your best performers, you have to be tough on the folks who aren't cutting it.  Is your budgeted percentage for merit increases across your company/unit 3-4%? 

For most of us, 3-4% is the standard budgeted range.  And that's where the rub is.  To give your best performers a big pop and make them feel like the special people they are, you have to take it away from a low performer.  Most of your managers aren't prepared to sit down with the lowest performing person in their groups and tell them they are getting a 1% raise - or no raise at all....

Also, what's your definition of a big pop?  What's pay for performance really mean?  How big does the percentage have to be to make a favorable impression?

It's all psychology.  My take is that if you can get someone to a 10% merit increase, that should tell them they are a raving superstar.  Of course, that would double their pay in 10 years, so it has to be linked to real results.

What's your percentage related to an increase for a star who is meaningful? 5%?  8?

What's the equivalent of a lump of coal for a low performer? My guess is that managers still dole out 3%, across the board increases to low performers so often that a 1 or 2% increase would look harsh.  Your thoughts?

Merry freaking Christmas: Here's your 1% increase. 

Hey Managers!! Stop Whining and Start Coaching...

Stop me when you've heard this one before:

1.  A Manager is not happy with Employee A's performance.Crybaby54
2.  Manager talks to you (HR Pro) about Employee A's performance.
3.  You provide counsel to manager to talk to Employee A about concerns.
4.  Manager does nothing.
5.  Review time rolls around, manager lists issues, and employee is PO'd...

How did I do?  Ever dealt with that one?  Ever wonder why managers don't coach effectively?  A past study from Chief Learning Officer goes soft and suggests that managers deal with a lot of "stuff" related to coaching:

"One-third of supervisors find coaching employees is too time-consuming, according to a survey of 710 North American managers by global consultants BlessingWhite. The new study, “The Coaching Conundrum 2008,” is based on input from 2,000 employees and managers in 17 countries and explores a range of issues including coaching’s prevalence and effectiveness.

Managers who participated in the study noted the top challenges they face in coaching employees who report to them, said BlessingWhite’s coaching practice leader Cathy Earley.

What is the biggest challenge you face in coaching others? (Responses of North American managers)

  • I don’t have all the answers. - 30 percent
  • It takes too long. - 29 percent
  • I have too many direct reports. - 16 percent
  • I don’t see the results of my effort. - 10 percent
  • I am not sure where to start. - 9 percent
  • I am not comfortable having coaching discussions. - 4 percent
  • I don’t like to coach. - 1 percent

You're kidding me right?  This survey should be called the "Ways We Can Allow Managers to Rationalize Their Way Out of Doing Their Job" study.  The last time I saw this many rationalizations, Ron Artest was explaining all the reasons he couldn't stop himself from going into the stands to savagely beat a fan in Detroit.

Seriously - "I don't have all the answers?"  Join the club, sparky.  "It takes too long?"  So does that 90 minute lunch you take at Applebee's every Thursday.  "I don't know where to start"?  How about looking your employee in the eyes and making a statement about what you've observed that's bothering you, then letting them respond?

There's only one thing on the list above that's chronically underreported, and that's "I am not comfortable having coaching discussions".  Everything else is a symptom/excuse.  Coaching is hard because it's CONFRONTATION.  It's tough, it takes nerves of steel, and you have to practice.

Still, it's your job.  If you or a manager you know is less than comfortable with coaching, find a simple coaching tool, conduct some training and be involved as the managers get some live practice with the tool you've implemented.

And stop whining about why you don't coach. 

Note to Those Wishing to Turbocharge Career Search: Use the Word "Titantic" on Your Way Out in Print...

To spunk up your job search, sometimes you gotta let it all hang out.  Opinions, like deep expertise in a single industry with little transferability to other sectors, have a way of making you MORE valuable to a FRACTION of potential employers. 

I knew within about 3 months of starting this blog that the opinions rendered here would make me unemployable to a lot of the HR community, and that's OK.  Lots of people who would normally hire me just couldn't risk taking on the liabilityTitanic that is my habit of writing HR/Talent opinion 5 days a week.  For example, I probably can't get hired at a community bank or an insurance provider.

But as mentioned at the jump, there is a flip side.  State strong opinions and display skills with new tools, and even though lots of people can't touch you, there's always a small segment of companies that finds you more attractive as a result.

Take the case of Chris Faust writing at the Huffington Post, who was just laid off at USA Today:

"Today is the last day that I'll walk through USA TODAY's glass and marble lobby, itself a monument to flusher times.

I've been laid off from my dream job, and I'm not going to lie. It sucks. I enjoyed almost everything about my immediate world there, from my globe-trotting reporters to my creative production team to my hard-working and open-minded boss. My group was tight, and we laughed and learned from each other every day.

But what bothers me the most is what my firing represented. See, I've been learning all the tricks that a modern multi-platform journalist is supposed to know. In the past 22 months, I've blogged, tweeted, shot photos and videos, and handled speaking engagements. I edited my section, managed my high-personality staff and then in my spare time, I wrote cover stories - something that very few other editors at USA TODAY do. I hustled and I cajoled and I ended up out on my ass anyway.

So to the managers who made this decision, in less than 140 characters I tell you: Good luck steering the Titanic. And thanks for the head start. Now I'm really going to run"

Let's take a look at the boxscore for those of you scoring from home:

-1 - Calls her former business the "Titantic".  Probably costs her some looks from traditional print media, which she seems done with anyway.

-1 - Basically called her team high maintenance. Honest but catty.

+1 - Ballsy enough to call her former business the Titantic.  Shock and Awe, even if it's obvious.  Mission Accomplished..

+2 - Talks about using the new skills for 22 months in a traditional media business, signaling she's a player in the new media game.  Holla!

+1 - In a weird kind of way, there's a couple of traditional outlets that probably already have calls in to her - because she's put herself out there as having 22 months doing new media the right way in one of the biggest outlets around.

I've got it as a +2 overall in the game of making yourself more valuable to fewer people as a way of finding your dream job. 

What's your score? For Chris or yourself?

3 Big Ways to Look Engaged/Passionate When You Have to Watch the Clock...

You know, as a VP of HR, I'm pretty black and white when it comes to considering whether someone is engaged in what they do for a living.  Like most of you, I like to see someone passionate about what they do, and I think I know the signs of a clock watcher.

Which brings us to the rub of that perspective.  You've got a company (big or small), and it's going to beClockwatcher comprised of team members in various stages of life and work/life circumstances.  It's easy to look engaged when you can spend 60-80 hours a week on the job and simply outwork people. 

Of course, many folks can't simply choose to outwork their co-workers for whatever it is they value on the job - whether it's the next promotion, more money or the public professions of "why can't you be more like Bobby" from their boss.  As Debbie Brown commented in a recent engagement piece at the Capitalist, people who have to pick up the kids face a dubious choice:

"The only exception I take is the passionate parent that has little one to pick up that has day care deadlines with hefty financial penalties by the minute. I have seen these passionate workers get very stressed when they want to plow ahead at the office, yet have no choice but to watch the clock- and frankly are torn- let's give those folks a shout out- these are great people too!"

Debbie's observations are absolutely correct, yet I've never seen someone who didn't outwork others emerge with the tag as "most engaged" in any workgroup.  No, it's almost always the grinder who puts in extra time (and hopefully adds extra value) who is viewed as the most engaged.

So, what's a working mom or dad to do?  If you've got to pick up the kids at 5:15pm every day but want to be viewed as a hard-working player with the tag of "most engaged", I humbly offer these 3 simple suggesstions:

1.  Have a big win in the hopper at all times (1 is plenty) and deliver on it. The day job is what you get paid to do.  Everyone expects that.  Stars get the day job stuff done but are always working on "game changers" - things that, if executed, can make a real difference to the business.  They get the stuff you expect done, but always have a game changer in the hopper.  You leave at 5pm every day, that's fine.  Where's your game changer coming from?  How are you going to find time to work on it?

2.  Tether thyself and use thy tether.  You've got a blackberry or an iPhone that's connected to email.  Use it.  You don't have to wear it out, but if you refuse to use it after hours out of principle, you're creating your own prison (shout out to Creed). Don't want to use the tether?  That's OK, but you allow others to define you on their terms.

3.  Keep the balls in the air when you aren't there.  So you have to leave at 5pm every day, but you keep email flowing after hours with your blackberry/iPhone.  Good job, but it's not enough.  If you want to be viewed as engaged, you've got to counter the suck ups who can stay until 8pm.  To do that, not only do you need to use your tether after hours, but you need to keep the flow going when you're on vacation. 

I know, it sucks. But I didn't say you weren't world class at what you do just because you leave at 5pm.  I said that if the world defines you as non-engaged because of that, you've got to do things differently to make sure you don't get stereotyped. 

The Key to Employee Engagement - Don't Hire Clock Watchers

I've been accused by others of being a workaholic.  Need proof?  Check out the comments to my past post on the wisdom of using an Out-Of-Office reply, where I was taken to task by those appalled that I dared to work on my blackberry while standing in a 60-minute line at Disney.   Trust me, peeps, standing in line at Disney isn't quality time with the nuclear family.  It's a taxing whinefest we would all be well advised to ignore through advanced technology.

More important to the question of my work habits, and yours, is the question of engagment.  Seth Godin penned a piece way back that I thought was brilliant.   The thesis is that being a workaholic isn't defined by hours, but rather by attitude:

"A workaholic lives on fear. It's fear that drives him to show up all the time. The best Employees_standingdefense, apparently, is a good attendance record.

A new class of jobs (and workers) is creating a different sort of worker, though. This is the person who works out of passion and curiosity, not fear.

The passionate worker doesn't show up because she's afraid of getting in trouble, she shows up because it's a hobby that pays. The passionate worker is busy blogging on vacation... because posting that thought and seeing the feedback it generates is actually more fun than sitting on the beach for another hour. The passionate worker tweaks a site design after dinner because, hey, it's a lot more fun than watching TV.

It was hard to imagine someone being passionate about mining coal or scrubbing dishes. But the new face of work, at least for some people, opens up the possibility that work is the thing (much of the time) that you'd most like to do. Designing jobs like that is obviously smart. Finding one is brilliant."

We should all be fortunate enough to be so engaged in our jobs/careers that we actively seek opportunities to learn, regardless of time/location. 

This blog is a good example of working with curiosity.  Do I have to do it?  Nope.  Do I want to do it?  Absolutely, especially when I get reactions and thoughts from others I can learn from as a result.  That's where the power of engagement really comes into play.  It makes you want to work on the craft, and go back for more.

I know people who naturally bring that passion to their work.  I know another group of people who are rigid about the hours they work.  The interesting thing is that few of the individuals who are rigid about their hours are passionate about their work. 

Can people who watch the clock be engaged employees?  Or is engagement an intrinsic quality that some people have and others don't?

My take?  The naturally curious are always more apt to dream and be engaged, regardless of the job.  The rest of the crowd better work OT to find a job that matches their strengths, because if not placed in a perfect situation, they'll become clock watchers.

And once that happens, there's little that the employer can do to change engagement levels.

Look inward, clock watchers of America. 

LinkedIn Request from Recruiters to HR - I'm Done Saying No...

In the beginning, there was Monster and life was good.  The people posted their jobs, the candidates came and the leaders picked the best people from a digital crop of hundreds.  Print ads and the administration required to process paper was dead and the people were happy and fat, even if they did little to distinguish themselves from the crowd or live by the creed.

Then, the skies darkened.  The attention span of the harvest was fragmented by a plague called "social media".  The people continued to go to Monster for the yield they expected, only to find the vine increasingly barren. Like the nomads who had HESTON-THE-TEN-COMMANDMENTS come before them, the flock was forced to move to various lands, some of which were named "LinkedIn", "Facebook" and a loose confederation of states known only as "niche job boards".

One tribe of people committed resources to tilling the land within the state known as LinkedIn.  Initial harvests were positive, then as it always does, evil appeared.  The evil brought an invitation. Weary of invitations from sources of evil, the people quickly passed the word across the tribe: "Don't accept invitations from the evil". 

In the end, the call to avoid invitations from evil fell on deaf ears, since one member of the tribe was weak (isn't there always at least one, if not more?) and evil now had access to the entire flock, like a virus being passed via your company doorknob.  And the leaders were resigned to shepherding their flock with evil among them.



The People: Companies who need talent

Leaders: HR pros responsible for recruiting and candidate flow

the Creed: the pledge to build a better company for employees, resulting in a recruiting edge via a strong employment brand

Evil: 3rd Party Recruiters who seek to develop candidate flow via LinkedIn, and could take your employees via a connection with you on LinkedIn

the Invitation: an invite from a 3rd party recruiter to an HR pro.  The HR pro happens to be connected to all employees in the company.

the weak member of the tribe: Any employee in your company (HR or otherwise) with a large LinkedIn network, who connects to the 3rd party recruiter, resulting in the recruiter having access to the names.  You can't stop it.

FOOTNOTE: Most smart HR pros were and are weary of connecting with 3rd party recruiters who might steal their talent via LinkedIn.  After all, it's like your digital Rolodex you're giving them access to.  Me? I'm over it and have been for awhile.  All it takes is for one heavily connected employee inside your company to accept that invitation, and the access to a smart recruiter via 1st, 2nd and 3rd degree connections is granted.  Whether you grant them access or not really doesn't matter.  So I accept most of them these days, and you might as well, too.  Put your resources into the Creed. 

PS - If you're a 3rd party recruiter and you block me from viewing your connections, you're still categorized as evil.

Are Committees in Your Company Ever a Good Idea?

Committees.  Are they ever a good idea in your company? Sounds like a good excuse to make a decision to me, but hey, I'm just a type A, for-profit capitalist trying to make a dollar out of 15 cents.  People much smarter than me think they're a good idea, and I'm not talking about the non-profit down the street. 

Would it suprise you if I told you that Cisco has more than 60 committees to help run the tech giant?Committees

First, here's a general description of what's going on at Cisco from Harvard Business:

"An article in the Wall Street Journal last week about a radical organizational experiment at Cisco Systems kicked off a fierce debate on this topic. The article described how Cisco has moved from a traditional top-down hierarchical structure to a more amorphous structure build around close to 60 different committees.

At the top of the organization sits an "Operating Committee" of 16 top executives, including Chief Executive Officer John Chambers. Twelve "Councils" with an average of 14 senior leaders report to that committee. Close to 50 "Boards" with an average of 14 less senior leaders report to the Councils (except for four Boards that report directly to the Operating Committee).

The more amorphous structure allows Cisco to bring together leaders from across its business to tackle critical problems, such as selling to small businesses. Of course, all these committees take time — It is not uncommon for top Cisco executives to serve on 10 or more committees and spend 30% of their time dealing with the issues raised there. Cisco said as it adds more businesses, it plans to expand the number of people who participate in these meetings from 750 senior employees to about 3,000. Mr. Chambers said part of his goal is to make employees rethink how they work and what they work on. The new management structure "makes everyone uncomfortable, including the CEO," he said.

Dig into what's available on the Cisco move to committees, and you'll find that much of the justification is to decentralize decision making and make the company more nimble, especially related to the need to keep growth rolling via acquisitions.  I've heard the need to keep moving fast described by others as the "zero strategy" strategy, which is meant to indicate that speed matters more than anything else at Cisco.  Of course, for those of us who look at committee structures as mechanisms that slow rather than facilitate progress, it's hard to believe the move could work.  This snippet from the Wall Street Journal would suggest the old committee profile is alive and well at Cisco, and it has nothing to do with speed:

"In late 2007...H-P started promoting a warranty for its switches that provides free upgrades and support. Under Cisco's new structure, a decision about how to respond to H-P's offering was delayed as it worked its way through multiple committees, these people said. Cisco didn't match H-P's promotion until this April [2009], and during that period Cisco's market share fell."

Whoops!  Could there be another reason for the move to committees, one that would be tied to an absolute in the business world, say, perhaps, power?  Funny you should ask that.  Here's a take on an alternative reason for the move to committees by CEO Chambers from BusinessWeek:

"Some people wonder if Chambers' strategy is being driven by ego as well as by Cisco's needs. Two former executives say Cisco's council-based approach, whatever its intended purpose, is an effective way for Chambers to consolidate power. Diluting authority by spreading it across committees may prevent any one person from gaining too much control. Sources also say that Cisco executives considered heirs apparent have rarely lasted at the company for long. "Being No. 2 at Cisco has not been a long-term assignment," says one former mid-level executive.

A Cisco spokesman dismisses any suggestion that ego plays a role in Cisco's strategy as "nonsense. John Chambers and Cisco's entire leadership are focused on driving Cisco's growth and business results." Chambers admits the council structure is unusual but argues it's the only way a company Cisco's size can move as fast as it needs to. He says the councils work and help identify talent throughout the company."

Ah, committees to consolidate power and prevent the rise of "the successor", ala Neo from the Matrix.  Now, that's a reason to have 60 committees I could believe.  It'll be interesting to watch how committees work at Cisco over the next couple of years.