What HR Needs to Know When Hiring a Contract Recruiter

Human resources
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Picture this. You are the Human Resources head (manager, director, VP, whatever) of a mid-sized but growing company. You and your team are not recruiters but have always managed hiring of new employees internally on an as needed basis. Yesterday, however, the CEO called to let you know that your company signed a huge contract that will require skills upgrades to staff in 3 departments and both production and logistics need to grow by 25% in the next six months.

Yowsers! Aside from having a problem most companies would kill for in the current economy, you now realize that handling this assignment could be a full time job. You and your two HR reps can’t do it and continue run HR. So, you need to retain the services of one or more contract recruiters and to do that you need a crash course in What HR Needs to Know When Hiring a Contract Recruiter.

A note to all my recruiter friends: This is not intended to be a complete lesson plan in contract recruiting (something that would be helpful for HR as the economy picks up, by the way). It is intended to help the HR professional who has never retained a contract recruiter to put their a toe in the water without feeling like a complete idiot or worse – without being taken advantage of or condescended to by the “not nice people” that seem to inhabit every set of vendors that interact with HR.

What is a contract recruiter?

A contract recruiter is a professional employee recruiter who works with a single company for a set period of time. Unlike headhunters (who can work with dozens of employers at a time and charge fees up to 30% of the first year’s annual earnings per hire), a contract recruiter is typically retained to act as an employer’s agent in the recruiting and employment function. According to Recruiter.com, contract recruiters are typically retained to meet very specific hiring needs. When the jobs have been filled, the contract is over and the recruiter can move on to the next job

Companies hire a contract recruiter (a) when they don’t have staff to handle increased recruiting volume and a permanent increase in recruiting staff isn’t warranted, (b) when they may not have a recruiter with technical recruiting experience in-house, or (c) to cover leaves-of-absence when HR may be temporarily shorthanded. A contract recruiter works on- or off-site for only for the company.

A contract recruiter works under a written agreement, typically calling for a nonrefundable deposit up front and continued hourly or periodic payments throughout the search. The recruiter is paid whether or not the position is ultimately filled. The contractor has duties and rights well defined in the retainer agreement. The recruiter also owes the company duties of loyalty and due care during the recruitment process.

What information should you collect before interviewing contract recruiters?

  • A summary description of what the company does
  • Where the job is located
  • The job title, job description and, if available, a physical activities description
  • The threshold education, skills and experience necessary to be interviewed for the position
  • Whether skills testing, background checks, or medical or physical exams will be required
  • Salary range and standard benefits for the position
  • The hours and work schedule for the job
  • The division or department in which the job is located, the identity (by title) of the person to whom the position reports and whether and how many direct reports answer to the position being filled.
  • While you may not wish to disclose all of this information every time you interview a potential contract recruiter, having this information will increase your confidence and allow you to explain exactly what type of person you are looking for and – whether the recruiter you are speaking to knows and understands your business and industry. Be prepared, if you are in a highly specialized or technical field, you may have to do a bit of recruiter educating, too.

What questions should you ask the recruiter?

  • Have you ever recruited for this industry before?
  • How many placements in the industry?
  • Do they know who your competitors are?
  • What is your placement success rate (employees still employed after 12 months)?
  • What steps do you take to insure that the candidate is not subject to a non-compete agreement (regardless of wehther you think it is enforceable)?
  • What steps do you take to preserve the confidentiality of information I give to you to facilitate your search?
  • What will the contract look like?
  • What and how do you charge?

Independent Contractor Agreement:

The contract recruiter will not be an employee of the client company. They will be a consultant or independent contractor.

As a threshold matter, the contract must contain the basic independent contractor acknowledgments and agreements:

  • The contract recruiter is engaged in a distinct occupation or business from the client, and typically has his or her own company, license or other corporate indicia of independence.
  • The type of work being performed is usually done without direct client supervision
  • The contractor possesses specialized or technical skills or knowledge not generally possessed by the client’s own workforce*
  • The contractor provides his or her own tools, place of work
  • The beginning and conditions of termination
  • The method of payment is by invoice as opposed to by the time clock (even if the invoice reflects the hours worked and rate by hour)
  • The contractor’s work is not part of the client’s regular business*
  • The parties agree that the relationship is not one of employer/employee

*While our hypothetical situation states that the HR department has performed its own job search, interviews and hiring as needed by the company, the contract must explain how this situation is different; i.e., short term, full time devotion to the project, specialized skills (such as social media) or network (industry contacts) that the employer’s HR department may not have. For legal reasons I’d be happy to explain if you drop me a line, you want to make sure that your independent contractor/contractor recruiter is not doing the same thing as your employees, right along side your employees for any length of time.

Non-Disclosure Agreement:

The recruiting contract may contain a non-disclosure agreement. The client company is entitled to require the recruiter to sign an agreement not to share any confidential, proprietary or trade secret information about the company to outsiders. As set forth above, contract recruiters will learn a lot about the client company to facilitate the recruitment and find qualified candidates. Along the way, they may learn information from the company that has competitive value. A non-disclosure or confidentiality agreement protects the client from a recruiter who may pass on confidential, proprietary or trade secret information to potential candidates unless and until the candidate is placed in the company. Particularly in industry specific searches such an agreement prevents the recruiter from disclosing information to the client’s competitors who may be the recruiter’s clients at a different time.

Non-Solicitation Agreement:

The client can expect that the recruiter will agree, in writing that he or she will not fish from your employee pool. In other words, the recruiter will have access to the candidates’ coworkers and supervisors, and even HR. They can be required to promise not to solicit those individuals for other employers. Moreover, you can require that the recruiter not return to the placed candidate and attempt to re-recruit them for another search. (In some states, be mindful of the fact that you cannot prevent the employee from contacting the recruiter if they find themselves unhappy in their job).

Money Back Guarantee? Probably not.

A client does not usually get their money back from a contract recruiter if the placed employee leaves the client within a certain period of time. If you want a money back guarantee, you need to find a “headhunter” – someone who shares that risk by charging a significantly higher fee on a per hire basis.

Blogging4Jobs has a great stable of contributors, many of whom are recruiters and some may be contract recruiters. If you need firsthand information about their expectations of the client, go to the contributor page. If you want a legally enforceable contract drafted that is specific to your company, you might want to consult an attorney and you can always contact me.

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