As consumers of products and services, we love guarantees. The idea that a company will stand behind its offerings should anything go wrong gives us peace of mind and comfort that we are making a good buying decision. We almost expect them now, and the same is true for recruitment guarantees.

Including a guarantee in a contract between a recruitment firm and a hiring company has become so routine that most hiring managers only ask what it is versus if there is one.

Just like there are a few options in the type of recruitment agency you work with and how their fees are structured, there are several types of recruitment guarantees too. And unfortunately, most only favor (or protect) the agency, not your company. Which then raises the question, what is that guarantee really covering?

In this post, we’ll outline the purpose behind recruitment guarantees, the variety of options in their terms, and why most are not in your best interest. If you haven’t picked up on this already, AEBetancourt does not offer a guarantee. So, we’ll also share better ways to establish trust and why we don’t provide a recruitment guarantee.

The Purpose of Recruitment Guarantees

All guarantees serve two primary purposes: to build trust in the mind of the consumer and to reduce their level of risk. From peanut butter to luxury automobiles, consumers generally have some sort of assurance that the product will deliver the intended satisfaction or perform as intended.

These purposes also hold true when an individual or business consumer wants to know they can trust a providing company to deliver the services they promise. Can you trust that a recruitment firm will help you source, recruit, and hire a perfect-fit candidate? Further, how can this firm reduce your level of risk in making a final hiring decision from their list of recommended candidates?

Historically, the method of creating confidence has been via a recruitment guarantee. The problem is that this really doesn’t protect a hiring company. No guarantee from a recruitment firm will ensure that a newly hired candidate won’t leave your organization in a matter of months. It also can’t protect an organization from making a bad hiring decision. And yet, this is what many agencies and hiring companies resort to. The truth is they don’t protect organizations from having to find a new replacement if the unforeseen happens.

Herein lies the real question. Beyond a recruitment guarantee, how can a recruitment firm build enough trust so that a hiring company is able to reduce its risk of making a bad hiring decision?

There are several ways and considerations for hiring companies. Hold that question for a moment though while we explain the labyrinth of available recruitment guarantee options today.

Typical Guarantee Options

Replacement guarantees have nearly endless combinations of refunding your fees, replacing hired candidates, and qualifying criteria. Following are the basics of each part.

Money-back guarantees

Exactly as this label implies, money-back guarantees mean that a recruitment firm will give all or a portion of the fees a hiring company has paid back if a hired candidate leaves their company before a predetermined date. The time frames for recruitment guarantees can range from thirty days to a full year, however, the most common is ninety days. (Thirty and Sixty-day terms rank about evenly as the second most common behind the ninety-day guarantees.)

Some recruitment firms will offer a full refund of their fees, however most who offer money-back guarantees structure any returned fees on a prorated basis. In these agreements the longer a new employee remains with the hiring company, the lower the returned fee is.

Replacement guarantees

More commonly offered than money-back guarantees are replacement guarantees. In these agreements, a recruitment firm will find a new candidate for the client company to hire should the original candidate leave before a predetermined time frame.

Contracts with replacement guarantees may also be structured on a full or prorated basis. Meaning that a recruitment firm could conduct the entire talent acquisition process again or at a reduced fee based on how long the exiting candidate did remain.

Hiring companies and recruitment firms tend to prefer this option because it still solves a hiring need for the client company and doesn’t require an agency to pay any of their recruitment fees back. However, that doesn’t mean you will get the same quality of candidate as before or in a realistic timeframe.

Guarantee stipulations

So far the options of available recruitment guarantees are relatively simple to understand. The challenge comes with the fine print, requirements, qualifications, and/or exclusions that follow. The range and variety of included agreement stipulations can vary widely too.

For example, the following stipulations (that have actually been included in contacts) could void a recruitment guarantee.

  • Failure to make timely payment(s) of original fees
  • Failure to provide notice of candidate leaving within 24-48 hours
  • Internal restructure or layoffs during the guarantee period
  • A candidate was fired during the guarantee period
  • Changes to the job description after a candidate was hired
  • If the hiring company made a hiring decision alone or different than what the agency recommended

One-sided protection

Just because a recruitment guarantee is provided to instill trust and reduce risk does not mean they are written for the full benefit of the hiring company. Unfortunately, poor business practices like this are also what lead to poor impressions of our industry.

When it comes to money-back guarantees, we aren’t talking about returning a sweater that you purchased in the past 7 days, still has the tags attached, and has not been worn. How motivated do you think an agency will be to refund a significant fee after work has already been completed? The original fees have already been dispersed by way of paid commissions.

The stipulations listed above aren’t provided as guidelines for client companies, but as loopholes for the agencies.

Now consider the alternative of a replacement guarantee. Here too, a recruitment agency has completed a search project and assisted you in finding a candidate. Time and effort were expended on their part and now they are forced to find another candidate for little to no compensation.

How motivated is that recruiter to find you a high-quality candidate? Remember that most recruiters are paid commissions based on completed placements. Their motivation and incentive are based on which company will pay the highest fees.

A Better Alternative to Recruitment Guarantees

So what can a hiring company do to find a recruitment firm they can confidently trust to help them find their perfect-fit candidates? Here are three recommendations to consider.

Remember your why

There are many reasons why organizations outsource their talent recruitment process. The most common factors involve:

  • Availability and allocation of internal resources
  • Guidance and advisement in an ever-changing and challenging labor market
  • To source a higher-quality candidates in less time

A reputable recruitment firm will help you in all of these areas and will act as a true partner to your organization. Focus on what they can do for your organization and how before and during the recruitment process instead of after a hire has been made.

Check out these related articles for more information:

Manage your expectations

It should be expected that you will pay for services that your business outsources. This doesn’t mean accepting substandard results. On the contrary, you absolutely should be gaining access to top-quality candidates. Even more, they should be visibly working from your first encounter to earn your trust by explaining their process clearly and transparently.

What this does mean is that you shouldn’t expect a recruitment firm to guarantee what might happen once they are no longer in contact with the candidate regularly. Once a candidate is hired, it is your obligation to support them with a solid onboarding process, quality training and development, and a culture that fosters their professional growth.

Learn more about employee onboarding and development in these articles:

Do your homework

Working with a recruitment firm should be approached no differently than you would any other service provider. Review and understand their hiring process and interviewing methods. Ask questions about how they evaluate and measure sourced candidates. Make sure they are providing you with clear answers to your questions.

It is also important to work with a recruitment firm whose structure and purpose align with your business and hiring needs. Professional business services require different talent needs than a manufacturer. Further, a recruitment firm that specializes in on-demand staffing shouldn’t be considered if you need to hire for executive-level positions.

Review these articles for more guidance when selecting a recruitment firm:

Why We Don’t Offer a Recruitment Guarantee

We do a few things differently than most recruitment firms, and guarantees are just one. Simply put, we don’t offer a recruitment guarantee because they don’t serve the best interest of our clients and quite frankly, we don’t need to.

Instead, we offer transparency, dedicated resources, and a pricing model that benefits everyone. Here’s what we mean.

  • Transparency. Our clients are provided full access to sourced candidates and their evaluation scores, and real-time visibility into the progress of their search project. Further clients are provided with two status updates every week. We also detail our talent acquisition process before our work begins.

  • Dedicated resources. Our Talent Development Specialists focus on your hiring needs instead of working to fill quota requirements. Each search is unique and therefore receives a dedicated allocation of time each week. Candidates sourced for our clients also aren’t shared with other hiring companies.

  • Pricing model. We charge a flat hourly rate allowing our clients to secure the best candidates without a premium fee that can widely fluctuate with each role. Further multiple hires without multiple placement fees — a huge benefit to organizations focused on continual growth.

If you want to know more about what makes us different from other recruitment firms, we would love the opportunity to share our story and approach. Contact us today with your questions.

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