Agency Contract: Replacement Candidate or Money Back Guarantee?

One of the most important terms to consider when signing a recruitment agency contract is the guarantee. Employers turn to agencies when they have a critical position to fill, and they’re willing to pay for it if they can get a quality hire in the door quickly. But what happens when that hire doesn’t work out?

With the average recruitment agency fee at $22,000, employers could be left high and dry if their new hire doesn’t live up to expectations. Not only will they have they lost their critical employee, they will also lose much of the time and money they’ve put into recruitment and training.

To lower the risk of working with third-party recruiters, many agencies offer a guarantee to share the risk of a bad hire with the employer. The guarantee can range from a candidate replacement, a full money back refund, or a prorated refund. By offering these guarantees, agencies can truly partner with their clients to help them make the best hires.

The best hires come from a little friendly competition

We’ve found that the best hires come from a little friendly competition, which is why BountyJobs includes a full money back guarantee in all of our recruitment agency contracts. Fixed fees or fees below 19% have a 60 day guarantee, while fees 20% or higher are refundable for up to 90 days. If the candidate leaves within that time period for any reason, the agency fee is fully refunded.

This has 2 main benefits:

  1. Employers can find the best candidates. The best candidate can come from any source, and a money back guarantee provides the freedom to hire the most qualified candidate — even it it’s from another agency. With a replacement guarantee, the employer would be dependent on their current agency’s candidates and may not find the best one.
  2. Employers can find a replacement faster. When an employer can consider candidates from multiple agencies, as well as direct applicants, they may be able to hire a replacement faster. Agencies with a replacement guarantee have already been paid, and may give higher priority to new contracts. A money back guarantee, however, puts them back into competition with other agencies to find great candidates as quickly as possible.

With a money back guarantee, both the employer and agency share the same goal: to find a successful hire. If they accomplish that goal, they both win. But, in the event of a bad hire, they share the burden.

2017-08-02T22:22:30+00:00 July 10th, 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, 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.