What is a recruitment guarantee and why you should understand it?

July 18, 2022 ROARK

You just paid a recruiting firm $75,000 for the hire of your next CFO. You're very excited. Everything's going great. And then on a Friday afternoon late, you get the call. The CFO wants to leave. What do you do? Today, we're here to talk to you about the different guarantees that you should be looking for from recruiting services and executive search firms.

Recruiting agencies and replacement guarantees

So, first of all, it's important to know that most executive search or recruiting companies will at least offer some type of guarantee. And it's really important because that guarantee protects your investment. It's like an insurance policy for your hire. And you need to make sure that you have that. Because if you don't, that scenario I just told you about becomes a very bad day, right?

It also ensures that you get the best possible talent for your needs because if you're hiring a recruiting firm and they have a guarantee, they're obviously going to want to make sure they do a good job because they don't want to have to do the same job twice for the same amount of money.

What to look for in a guarantee

So it's very important to understand though, cause these guarantees can vary as to what you're actually getting.

Time Period

The most important thing to look for when you're looking at a guarantee is the time period. So from a time period perspective, Top Echelon actually published a study and the three most common timeframes for replacement guarantees are 30 days, 60 days and 90 days. These actually accounted for over 85% of the replacement guarantees that are out there from recruiting firms, 90 days being the most popular.

And it's very interesting as you look at this, there's only roughly 2.5 percent that offered 180 days, and 2.5 percent approximately offered a year guarantee. So only 5 percent of the recruiting firms are really standing by their placements, especially at these executive levels. And I think it's really important when you look at these guarantees, you have to look at the period of time as it relates to the position.

If you're hiring a specialist in the AR or AP specialist, it tends not to take as long a time. So 90 days tends to be a more realistic time period. But if you're hiring a controller or CFO.A controller, you probably need six months, maybe a year. A CFO you definitely need a year because they're so strategic in what they're doing takes a while to be able to deploy throughout the organization.

So make sure that you're looking at the period as well as the fit with the position.

Type of Guarantee

There are all sorts of types of guarantees in recruiting.

First, what we see the most is a replacement of the position at no cost. For instance, if an individual leaves the company on their own or they weren't the right fit, the recruiting firm will find a professional for you at no additional cost.

We also see full refunds, even though these are very rare out in the industry, for the recruiting fees that were paid. Most recruiting firms do not want to do that just simply because they put in so much time, effort, and money, especially on a contingency basis. And then it becomes very difficult to offer this.

Another is a prorated refund guarantee that are sometimes offered, which is based on the time that the individual is there and refunds are prorated based on that time. Finally is a prorated replacement guarantee, which is based on a new fee, but discounts based on how long that person was at your company.


Exclusions or Conditions of the Guarantee

Another factor that you should consider when reviewing a guarantee is to make sure you're looking at (and understanding) the exclusions or the conditions of the guarantee.

Most recruitment agencies or companies won't do a replacement if it's a restructure as it's not the same position. Because obviously, you're hiring the company to find that position initially. So if you wanted to say, hire a CFO (and it was found), but now with the restructure you no longer need a CFO and want to replace it with a staff accountant. This is an example of a change in conditions based on restructuring.

And then conditions like sexual harassment or discrimination or a hostile work environment. Those are important to understand because your recruiting firms - if those issues are coming up- should be very wary of putting people back into those positions. You'll also want to understand how you navigate those with the recruiting firms if issues like these do happen. Hopefully, you never see those.

HubSpot Video


Number of replacements

And then the next question is how many professionals can be replaced? The thing that's kind of interesting that I look at is if a recruiting firm is like, Hey, I'll do as many as you want. That's kind of scary to me personally because if they're doing a good job, they should not be doing replacements.

It just provides the wrong motivation. So don't be wary if you're recruiting from actually it goes back to restricts the number of replacements. You're going to understand that their reputation is on the line as well. So they're going to be looking at doing a better job and more focused job versus someone that has, as many as you want is going to be just bringing people at you.

Then you also want to understand how quickly the firm will work with you to replace the professional. Especially in today's day and age, we've got companies that call us and they worked with a firm and they're going, gosh, I'm not getting anybody. At ROARK, we find ourselves today talking great about our competition and the fact that it takes a while to do things correctly.

And so you're not going to get someone right away, typically, especially if you're going through a major search. But the question becomes, what can that firm do to help you in the meantime, to be able to help you bridge that gap while completing the search.

ROARK Quality Guarantee

Now let's talk about what ROARK does for a guarantee. And I think the first important thing is to look at the philosophy. Most companies offer a replacement guarantee. They're already saying, Hey, we're going to replace somebody.

ROARK's philosophy is we offer a quality guarantee and it's a little bit of wording difference, but it's a very important mindset difference.

Our guarantee is around the quality of the person that you were looking for and our ability to fulfill that. And as a consulting firm, we do executive search, but we do that as a consulting service. We really take a lot of pride in being able to help you weed those issues out ahead of time. So you have a quality professional to be able to fit your business needs.

We have three different levels of recruiting services that we do.

Executive Search

So first is our executive searches. So these are for professionals that earn $150,000 or more, which is typically your CFO, your VP of Finance, and your Controller. So we really believe that it's important to align the position with the guarantee.

One Year Quality Guarantee

And these people tend to take about a year in order to figure it out. You might be able to figure it out in six months, but I would focus more on the year time period.

Because again, our philosophy is we want you to have the time to evaluate and get the right person in there. Retention is the responsibility of the company but our responsibility is to make sure we have the right professional.

And if not, we do want to put the right professional in there for you because we have this crazy philosophy that if our customers are happy and our professionals are happy, it leads to more business and we do the right things and they tend to refer us. So that's really the mindset where ROARK comes from as we do this.

For executive searches, it's a full-year guarantee. So that puts us in that top two and a half percent, according to Echelon, of the guarantees that are out there. And we're really excited to be able to do that.

Now we ask for exclusivity for the search so that we can take the time to do it, right. That's a very key element of not having to exercise your guarantee is to give your firm the time to do it right. But the nice thing is, is that we do it on a contingency basis. So you're not paying us two-thirds of the money to hire nobody. And our guarantee replaces the professional at no additional charge.

Premium Search

Our next level is our premium searches. They're for Controller level positions below $150,000 to senior level positions, senior financial analysts, senior accountants, and senior cost accountants.

Six-month Quality Guarantee

That offers a six-month guarantee, which gives you plenty of time. Again, we ask for exclusivity because we want to do that, right. We're very confident. We have the time to focus and we are not posting and praying we're going out and actually actively searching for these people and approaching people who are passive lookers that you will get a better product. Again, we do it on a contingency basis because we want to be paid if we're able to fill it. And we do not replace at an additional charge.

Fast-Fill Service

Finally, we do have a fast-fill service, and this is something that we actually steer clients away from. If you ever had to have three people that were trying to screw in the light bulb and there's a chair. So what ends up happening is everybody's climbing over each other, especially if they only get paid if the light bulb. Everybody's climbing over each other, by the time you're done, everyone is beat up and bruised, the light bulb is broken, and you try to flip the light switch and it doesn't even turn on. Candidly, what Eric Roark learned from being on both sides of this as a CFO and the executive search consultant side is this actually is not in your best interest. And even if you went with someone else, I would say, give them the time if you have the belief in them to do the job, right. And then let them do that job, right.

Three-month Quality Guarantee

This is where you have three months. And I think this is important for a lot of you folks out there three months is typically not enough time unless it's a junior-level person.

So this may work great for your staff accountant and clerical folks, right that are more junior in nature. But when you're looking at your senior-level positions to your executive positions, it's just not enough time. And if it is, then you probably got it pretty wrong.

Again, we'll do the same replacement of the professional, no additional charge.

Number of replacements at ROARK

ROARK's philosophy is that we limit the number of replacements. We want to make sure that we are engaged and the companies we work with are engaged and making sure that we bring on the best professionals because the cost of turning over that person is so expensive to the organization.

Work with ROARK on your next executive search

Make sure that you get that great guarantee for your next hire so that you have the insurance and make life a breeze.

If you are interested in Roark helping you find your next great finance or accounting leader, contact us and we'll help you find a professional that best fits your company.


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