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2 min read

You Spent Too Much Time Negotiating Contracts with Agencies This Year

Sending a job to search can alleviate many problems that come with getting a position filled in a timely manner – and most importantly – with a quality candidate.

The decision to work with a direct hire recruiting agency in order to make this happen isn’t as easy as just flipping the switch. For every agency you want to work with, a contract has to be negotiated to include fees, money back guarantees, candidate ownership, and several other aspects of the hiring process.

The biggest problem you’re facing with agency contracts is that you’re spending way too much time in contract negotiations, and it’s costing you.

You can cut down on the amount of time you spend signing agency contracts by optimizing your negotiating strategies and leveraging human resources (HR) technology to work for your organizational needs.

Negotiating your fee each time: the real time suck.

recruiting agency contracts

There are several different types of search fees you can expect to pay when working with a recruiting agency. According to TPD, the three most popular types of fee structures are the following:

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Negotiating this fee structure is the most time consuming aspect of contracting a new direct hire recruiting agency. Before you enter negotiations with a new agency, know exactly what type of fee structure you’re looking for and what fee percentage will allow you to stay within budget.

The fee type might also be influenced by other aspects of the contract that could either benefit the employer or the agency – a big one being employment guarantees.

Employment guarantees: do you know what they really mean for you and your employee?

recruiting agency contracts

We recommend strongly that when negotiating your contracts, you negotiate a guarantee. Having one contract guarantee that you can aim for in all of your recruiting agency contract negotiations will help speed up the process.

In a previous blog post, we explored all types of employment guarantees in-depth. The chart below gives a short overview of each.

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If you already know the fee that will fit your budget, and the guarantee type you think would provide your organization with the highest quality hire, the last step of the contract negotiation process gets a lot easier – getting procurement on board.Understanding that more protections for your organization may result in a higher fee, make a decision to focus on negotiating one of the above guarantees into your contract before coming to the negotiation table.

The battle with procurement: they don’t have to the short-stop every time you send a job to search.

recruiting agency contracts

When negotiating contracts to work with new direct hire recruiting agencies, procurement and legal can be the biggest pain – they’re intimately involved in the contract process, and without in-depth knowledge about the needs of talent acquisition, they might not allow you to negotiate the terms you feel are best.

Procurement professionals aren’t a pain on purpose – they’re trying to understand the risks that negotiating a new contract will bring to their business (if any), and for a good reason.

“You need to understand what you are buying, and why, how it will affect your business, and what the potential risks are. That detailed understanding may be beyond the scope of a procurement department.” – Owen Williams

Speed up the procurement process by not just presenting them with costs and risks, but helping them understand exactly why negotiating this new contract will benefit their organization – your needs are part of what’s beyond the procurement department, and also what they need to know.

Prepare before bringing a new agency on board – know the terms you want to negotiate with a particular agency beforehand, but more importantly, understand why you need those terms.

Using our marketplace means that all your direct hire recruiting agencies work under one contract – cool right? If you’re done with all the contractual madness, sign up.


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