Candidate Ownership: A Must-have in any Recruitment Agency Contract

One of the biggest points of contention between direct hire agencies and employers is candidate ownership.

When average recruitment agency fees are over $22,000, the stakes are high. Contingent agencies only get paid when they make a successful placement, and they want to be sure they’re getting what they’ve rightfully earned. For employers, agency fees are their biggest recruitment spend and they want to be sure they’re not overspending.

That’s why it’s so important to negotiate candidate ownership terms in your recruitment agency contract. When it comes to candidate ownership, and whether or not a fee is due, it’s not always black and white.

The grey areas in candidate ownership

For instance, who owns the candidate when an agency submits someone who has been in your ATS for a year – even if you have never contacted that candidate?

What if your agency submits a candidate that interviews but doesn’t get the job, and then that candidate applies and is hired for a different position 4 months later? In both of these cases, you may hesitate to pay a fee when the agency wasn’t solely responsible for the introduction – but you probably wouldn’t have discovered the candidate if not for their submission.

Now, let’s take a different view. What if an agency submits a candidate who is completely unqualified for the job at hand, but an employee refers them for position 6 months later – and they’re hired. While the agency was the original source of the candidate, you didn’t find the correct position for the candidate until an employee referred them.

From where the agency is sitting, however, this scenario may look like an attempt to skirt their fee – it wouldn’t be the first time an employer lied about the source of hire to avoid paying.

With so many grey areas and a history of dishonesty and different views, how do you and your agencies agree on candidate ownership?

Our suggestion on candidate ownership

We suggest that you include crystal-clear ownership terms in every direct hire agency contract, and believe that 6 months ownership for both the agency and employer is the new market standard.

If the candidate applied directly to an employer in the preceding six months, the employer should own the candidate.

Agencies should own the candidate they submit for a period of six months from the date of submission. If the employer hires an agency’s candidate for any job within that time period, the employer owes a fee.

In the event that two agencies submit the same candidate, the fee should go to the agency that first submitted the candidate so that employers don’t pay two fees for the same candidate placement.

These terms simplify candidate ownership to make the gray areas a little more black and white. The truth of the matter is that agencies and employers don’t always agree on when a fee is due because hiring is a complex process. With so many moving parts, each side sees the situation a little differently – so it helps to have clear terms to govern each interaction.

Are you burnt out from candidate ownership disputes? How do you solve them?

2017-08-02T20:39:26+00:00 November 5th, 2015|

About the Author:

Jen Dewar is a marketing consultant in the HR technology space with a focus on developing educational content for recruiters, corporate HR professionals, and staffing agency owners. She has spent the past 10 years working with a wide variety of companies — from corporate marketing for healthcare organizations and recruitment firms, to startup marketing for both Identified and Bright.com, prior to their respective acquisitions.

When she’s not doing marketing, you can find Jen snowboarding in Tahoe with her husband, traveling abroad, or enjoying a night in with friends and a good bottle of wine. She’s a graduate of the University of California, Santa Barbara, with a degree in Socio-Economic and Political Global Studies.