If you missed it, click here to Read Part I of Clearing the Fog

Here are some more answers to actual questions being asked by hiring company management about non-solicitation policies.

Q 4.) “Are there any other issues we should know about recruiters calling our employees?”

Answer: While this may not benefit all companies, you should know some companies choose to invest in their search firm partnerships by paying a small “yearly stipend” during years where there is no recruiting activity.

This small fee, which can be around $5,000 or so and pales in comparison to the tens or hundreds of thousands in fees (and millions of salaries managed) many companies invest in recruiting services …is remitted by the company to the search firm for several beneficial reasons as follows:

1. It provides continuance of activity and consideration between the organizations – thus reestablishing a working relationship even when no active recruiting took place

2. Triggers the non-compete and extends its term period

3. Provides considerable Goodwill to the search firm which will often in return notify such clients prior to all other companies when superstar and “hot” commodity candidates hit the marketplace.

Q 5.) “We found out the search firm was representing one of our employees for another job located at another company… while they were simultaneously helping us hire through them. That’s illegal isn’t it? Isn’t that a breach of fiduciary responsibility? I mean you can’t take and place at the same time can you?”

Answer: No, it is not illegal. 3

In fact this is the reason for the search firm’s very existence: To provide recruiting services to marketable candidates worthy of garnering a fee.

And no, there is no breach of fiduciary duty.4

In fact there is no fiduciary duty at all when it comes to contingency search although some search firms are so professional in their execution they mistakenly become considered “part of the company’s organization” by management due to the tight knit relationship that often evolves.

Can an insurance broker sell you auto insurance, then go sell similar auto insurance to the driver that totals your very own car the next day? Yes they can. That same insurance company can insure your auto and as well as sell the same auto insurance to the person who proceeds to wreck your car! In fact insurance companies get away with this every day – this is what they do: Sell Insurance.

Will Monster.com or Hotjobs allow someone to post a resume who happens to be employed by a company that is paying them tens of thousands for a national annual account with a bank of job slots? Yes they will permit that. In fact web-based job boards are in essence earning their fees from candidates (via their resume submission) which makes the value of their resume search functionality more sellable – quite often to the same companies those employees are contemplating leaving.

Whether “recruiting from within a client” makes sense from a long term business perspective however, is of an entirely different matter. This is evaluated on a case by case basis.

The legal requirement for “fiduciary duty” 5 requires that there is first, compensation; secondly the individual must have “decision making authority” which would require the recruiter actually choose who to hire and determine what salary to make the offer at.

No contingent search firm ever makes hiring decisions or chooses who should be hired or sets the salary. Since the search firm never makes such offers or decisions it has no fiduciary relationship. Period.

Tips For Company Hiring Managers

1. Don’t assume. If you want some specific or extended form of “Non-Compete” or “Non- Solicitation” stipulated simply ASK FOR IT when negotiating your fee agreement. Expect to pay a little more…but it may be worth it if this is of concern to you.

2. During periods of inactivity – Consider offering your search firm a “stipend” or small “retainer” during periods of extended inactivity. This will help the continuance of the working relationship and avoid expiration clauses from taking hold.

3. If it’s not spelled out in the contract – then what applies falls within trade association guidelines assuming your search firm is sufficiently vested in their profession to be a member of such an association (many are not).

4. Ask the search firm if they hold any national association membership. This provides added professionalism and adherence to ethics and standards.

3 The American Lawyer, Law.com October 9th, 2006

4 The American Lawyer, Law.com October 9th, 2006

5 Jeffrey Boxer, Esq. – October 9th, 2006

Click Here to Read Part I of Learning the Fog

Frank G. Risalvato, CPC is president of IRES, Inc. His newly redesigned recruiter training site is updated weekly with loads of original content and is found at www.searchwizardry.com. He has been speaking and providing recruiting training materials to the search profession's trade groups since 1987. His Recruiter Training Guide is available online for electronic download. Contact Frank by phone (973) 300-1010 or email him: frank@searchwizardry.com. Be sure to sign up and be the first for his soon-to-be-released book The Kentucky Fried Secret Recipe to Recruiting Millions®.

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