Staffing News Online

Many staffing firms have experienced financial abuses inflicted on them by clients or VMS/MSP agents. Originally lifted from traditional purchasing contracts, these ideas are now widespread in staffing deals. The following are some of the worst financial abuses that you may encounter, along with nutshell summaries of how to fix them.

Stale invoice forfeitures. This clause nullifies staffing firm invoices that are not complete, correct and submitted within 60 days after the assigned employees’ work, regardless of who caused the delay (even clients or VMS/ MSPs). Clients claiming stale invoice forfeitures get free work for administrative imperfections that actually confer a benefit on them (paying later instead of sooner). Meanwhile, staffing firms advance about 80% to 90% of the invoiced amounts to pay wages, burdens and other expenses while awaiting payment from clients.

Fix: Reject the forfeiture entirely, or reduce the amount forfeited by a percentage approximating gross margin.

“Pay when paid.” A feature of most VMS/MSP contracts, this clause absolves the VMS/MSP of liability for payments to staffing firms until clients pay the VMS/MSP. Staffing firms under VMS/MSP programs usually have no direct or contractual relationships with clients, so they have no way to collect from clients that refuse to pay. Because they have a very small stake (2% to 4%) in client payments, VMS/MSPs have little incentive to pursue collections on behalf of staffing firms.

Fix: Require unconditional VMS/MSP payment, or require assignment of client receivables to the staffing firm (plus sharing of information and documents) after a specified number of days of client nonpayment.

Interest-free financing of staffing invoices. This becomes more important as interest rates rise. Staffing firms aren’t banks, and there is no reason why staffing invoices should not be paid immediately or even in advance by deposits that clients replenish, as the PEO industry requires. Long interest-free payment periods not only cost you the use of your money but also reduce the clients’ incentive to pay you. It also leaves you with greater risks of clients’ bankruptcies.

Fix: Allow interest-free payment for a short period, but charge interest on overdue accounts by the day after a certain time, retroactive to the invoice date.

Volume discounts. Such discounts decrease clients’ rates as billings, hours, wages or employee counts rise. But the economies of scale assumed to justify the discounts may not exist; and there may actually be diseconomies of scale because of large-client servicing expenses — like on-site staffing, quarterly reviews, special reports, audits and free conversions.

Fix: Reject the discounts or modify them with deferred annual rebates (which deter account termination), instead of discounts applied throughout the year.

“Continuous improvement” discounts. An outgrowth of the “re-engineering” and “quality assurance” fads of the 1990s, these establish automatic annual rate reductions. In the competitive staffing market, these cumulative discounts soon turn accounts unprofitable.

Fix: Reject this feature, or offset it with programmed rate increases. Rate sharing with client affiliates. This requires you to offer low rates to unspecified client affiliates (or even contractors) whose operations or locations might require much higher rates.

Fix: Limit your rates to named entities, or rate other entities only with specific amendments.

Preferential payment refunds. Bankrupt clients can legally require repayment of 90 days of already-paid staffing invoices. When clients pay staffing firms through VMS/MSPs, the VMS/MSPs required to make refunds to bankrupt clients must retrieve the money from the staffing firms. Preferential payment demands are usually settled for roughly 50% of the amount claimed. VMS/MSP contracts require staffing firms to refund 100% of the payments — and the VMS/ MSPs have little financial incentive to negotiate compromises with bankrupt clients, making these refunds twice as expensive for staffing firms.

Fix: Require VMS/MSPs to assign the debt and bankruptcy claims to you, plus all supporting information and documents.

“Most favored customer.” These clauses make you bill clients at the lowest rates that you charge any client, even if the clients agreed to higher rates.

Fix: Apply the rate-matching obligation only to identical client situations, which don’t exist.

Each of these unfair financial terms can be fixed with simple contract modifications. The first step — as with other kinds of abuse — is to tell the client that abuse is unwelcome. Then propose amendments to fix it.

Written by George Reardon

Before placing an employee in a position to drive a client’s vehicle, staffing firms need to evaluate the insurance requirements and other contractual provisions they’ve agreed to. Provisions that would normally be acceptable for General Liability exposure can completely change the way Auto Liability coverage is intended to respond to claims involving non-owned vehicles.

Claim Example: Your employee is transporting goods for your client in a vehicle owned by the client when they rear-end another car. Both the employee and the driver of the other car are injured, and both vehicles are damaged, as well as some of the goods being transported.

In the absence of a contract that amends insurance provisions or includes indemnification language, the damages involve multiple insurance policies:

• Bodily injury to the employee
• • The staffing firm’s workers’ compensation policy will respond, as the employee was injured in the course and scope of their employment.
  • The client company won’t be responsible for the injury to the staffing firm’s employee unless their negligence contributed for the injury – for example, failing to properly maintain the vehicle being driven. In that case, the driver could sue the client company and their auto liability policy would respond to the bodily injury claim.

• Damage to the vehicle being driven or property within it
• • The staffing firm’s auto liability policy won’t respond. Damage to property that is in their care, custody or control is excluded.
  • The client company’s collision physical damage coverage will cover the damage to their vehicle from the crash, and either their property policy or motor carrier policy will respond to the damage to the property within the vehicle, depending on whether it’s their property or the property of others.

• Bodily injury to the other driver and property damage to his or her vehicle
• • The employee (as the driver of the vehicle), the staffing firm (as the employer of the employee), and the client company (as the owner of the vehicle on whose business the employee was driving), can all be sued for the injury to the other driver and damage to his or her vehicle.
  • The staffing firm’s non-owned auto liability coverage will respond only on their own behalf. Employees are not insureds when driving non-owned vehicles.
  • The client company’s owned auto liability coverage will respond on behalf of themselves, the employee driving the vehicle (anyone that is driving a covered owned auto with the owner’s permission is an insured), and the staffing firm (anyone who is liable for the conduct of another insured is automatically an insured).
  • The client company’s auto liability policy will respond first. If their limits are exhausted, then the staffing firm’s policy will respond. Owned auto liability coverage responds on a primary basis while non-owned auto liability responds on an excess basis.

Contractual provisions can completely change the way that the auto liability policy is intended to respond. Let’s now assume that the staffing firm has signed a contract in which they agree to add the client company as an Additional Insured on a primary & non-contributory basis to their auto liability policy. Let’s say they’ve also signed a hold harmless agreement stating that they will defend and indemnify the client company for any claims or damages arising from the negligence of their employees. Here’s the way this same example would play out:

Damage to the vehicle being driven or property within it

The staffing firm’s auto liability policy will still not respond, but the staffing firm may now be responsible for paying out of pocket for the damage to the vehicle and the property within it based on their agreement to pay for damage arising from the negligence of their employee.

Bodily injury to the other driver and property damage to his or her vehicle

The staffing firm’s non-owned auto liability coverage will respond on behalf of themselves, and the client company as an Additional Insured.

The client company’s owned auto liability coverage will still respond on behalf of themselves, the employee driving the vehicle, and the staffing firm.

The staffing firm’s auto liability will now respond before the client company’s auto liability policy in response to suits made against either party due to both the primary and non-contributory status agreed to in the contract, as well as the hold harmless agreement. Ownership of the vehicle doesn’t matter if you assume liability for another party to pay for bodily injury or property damage to a third party.

Non-owned auto liability coverage is significantly less expensive than owned auto liability coverage, as it’s intended to apply on an excess and incident basis, with the vehicle owner’s policy being the primary response. If a staffing firm assumes the primary auto liability for their clients’ vehicles, they may jeopardize their ability to obtain coverage in the event of a loss. Consider the difference in how a carrier writing a $2,000 hired & non-owned auto liability policy would view a $25,000 liability claim versus a carrier writing a $150,000 owned auto liability policy for a fleet of vehicles.

So, what does this mean for you and your staffing firm?

Best practice for a staffing firm placing their employees driving client vehicles is to add either a carve out or addendum to the existing contract specific to driving exposure. This ensures that any hold harmless provisions don’t apply to driving exposures, nor any endorsements adding Additional Insured or primary & non-contributory status.

WRITTEN BY: KURT MURRAY

Kurt Murray is a Principal at Assurance who focuses on mid-sized companies in the staffing industry. With over 20 years of experience, his primary responsibility is to provide cost-effective solutions and develop insurance programs that are individualized to a company’s specific needs. Kurt graduated from Northern Illinois University with a Bachelor of Science degree in Finance. He’s been a presenter at numerous staffing industry events and conferences, including TempNet, American Staffing Association, New Jersey Staffing Association and Staffing Services Association of Illinois.

Click here to download the article as a PDF.

I’m often asked where the best place to spend money on social paid advertising is: LinkedIn or Facebook?

And I’m grateful for the chance to address it, because it’s no surprise that many staffing and recruiting firms intuitively think LinkedIn must be the winner.

They often think this for a few common and understandable reasons:

1. The perception that “LinkedIn is for business, Facebook is for fun.”
2. “My recruiters and I spend all day in LinkedIn. It’s where we can find new clients.”
3. “We can target our exact audience on LinkedIn.”

Each of these perceptions has its share of truth.

Let’s take the first reason – it’s true! LinkedIn is absolutely designed for professional exchanges, and Facebook, as we all know, is typically anything but. Why do we know this? Because Facebook has over 2.2 billion users, and you’re one of them. That includes CEOs, VPs, and hiring managers. Are they on LinkedIn too? Absolutely. They are using both.

Facebook may be more for fun, but so is television. And PLENTY of new business is driven by television advertising. So, it stands to reason you can reach your target audience on both LinkedIn and Facebook, right?

Which begs the question – where can you get more impressions and more conversions?

There’s a confirmation bias among those in the industry that their audience spends time on LinkedIn. But the numbers don’t lie: The average LinkedIn user spends 17 minutes per month on the platform.

The average Facebook user spends 20 minutes per visit! The monthly average? 600 minutes, or 10 full hours. Facebook users are captivated, many addicted to opening the app the way people became enthralled with TV decades ago. For the same reasons you see ads for ERP software during the Super Bowl, it makes good sense to advertise to decision makers on Facebook.

The last reason is targeting. And it’s true! LinkedIn rolled out a Matched Audience service in 2017 where you can target an email list you upload to the platform, which is awesome. However, Facebook has had this for years, and their ability to target by demographics and “Lookalike audiences” gives us many great tools to work with for our clients.

Where will paid advertising work best for your staffing or recruiting firm in 2019?

Budget is obviously going to be a factor, and we consistently see a lower cost-per-click on Facebook compared to LinkedIn. Perhaps most important for many, you don’t have to make a five-figure investment to get started with the right Facebook PPC program. Facebook is an excellent cost-effective option, but to dive into the specifics, start a conversation with us!

Submitted by Haley Marketing
888-696-2900

Click here to download the article in PDF format.

This article is the first in a series designed to help staffing company business owners get a better understanding of the current M&A market and terminology. Although the term “multiple” is commonly used in business valuations, this article is intended to provide some additional clarity to the concept.

Buyers (“Investors”) make decisions based on an anticipated return on investment. An investment in a diversified stock mutual fund over the past few years averaged about 9% per year, while a lower risk bank CD might have only averaged 2% during that same period. Risk is the key variable that separates one investment from another, and in turn, one rate of return from another. An investment in a business comes with a high degree of risk, thus investors require a relatively high return on investment. Investors make investment decisions balancing risk against opportunity.

Multiples are shortcuts and probably have the most value when comparing companies in a similar industry. Mathematically speaking, a multiple is nothing more than the inverse of an interest rate – frequently referred to as a capitalization rate (“cap rate”). For example, a multiple of 4.0 = 25% cap rate (1 /.25); a multiple of 6.0 = 16.7% cap rate (1/.167); a multiple of 8.0 = 12.5% cap rate (1/.125) and so on. As multiples go up – cap rates go down. It may appear that buyers who are willing to pay higher multiples are willing to accept a lower return on investment. But keep in mind there are many other strategic, financial and economic issues that factor into business valuations.

Key issues affecting valuations for all businesses:

• Financial performance (primarily EBITDA and GP%)
• Customer concentration
• Owner dependence
• Scalability/Growth Opportunity
• Size of market
• Strategic fit/Synergies

Additional issues affecting valuations for staffing businesses, include:

• % Revenue dependent on Vendor Management Systems (VMS) platforms
• % Revenue dependent on H-1B visas
• % Revenue dependent on 1099 contractors

Dependence on any of the three issues above will cause many buyers to lower valuations due to a perceived added risk.

The following table is an estimate of the current market (November 2018):

Adjusted EBITDA	$1mil	$3mil	$5mil	$10mil
Multiple Range	3.75-5.0	6.0-6.5	7.0-7.5	8.0-10.0+

Data Source: Stony Hill Advisors transactions, other advisors’ published data, input from several large strategic active buyers in the market. These multiples are more representative of healthcare and technology staffing companies since they make up a large percentage of the transactions in the current market.

Note about Adjusted EBITDA:

Lower-middle market businesses (especially those with annual revenues between $10mil and $100mil) are valued based on a multiple of adjusted EBITDA (Earnings Before Interest, Taxes (on Income), Depreciation and Amortization).  EBITDA is intended to approximate cash flow (i.e. return) and cash flow is the return investors receive for their investment.  Understanding why the word “adjusted” is included in the definition is critically important to potential sellers.  Give ten CPAs an Income Statement and ask them to compute EBITDA and all will give you the same answer.  Give ten CPAs an Income Statement and ask them to compute adjusted EBITDA and you might get ten different answers – it can be very subjective. 

Written by: Bob Maiden, Partner, Stony Hill Advisors

Staffing Companies and individuals with unpaid NJ tax liabilities may be able to get a break on penalties under the Amnesty Program which is in effect from November 15, 2018 through January 15, 2019. The measure applies to all state taxes including gross income, corporate business tax and sales and use tax. However, it does not apply to unemployment type taxes administered by the Department of Labor.

Why should I do this now?

Because under this limited-time offer the Division of Taxation will forgive all penalties, and one-half of the accrued interest due at Nov. 1, 2018.

The Good News for Staffing Companies….

Employer withholding taxes as well as personal, corporate and sales & use taxes are eligible for the program. All penalties and one half of the interest due will be waived.

Is there a hitch?….

If a taxpayer is eligible for amnesty and does not take advantage of it, an additional 5% penalty will be added to the already imposed penalties and interest on the original tax liability.

The Details….

• NJ Amnesty will provide relief for 2008 –2016 delinquent individual or business tax return filers.
• Requests for amnesty must be filed electronically
• The Division of Taxation recently mailed a letter to all taxpayers who are known to have amnesty-eligible deficient and/or delinquent accounts
• If you didn’t receive a letter and you want to participate, you will need to register or self-report through the Non-Outreach Portal
• Federal tax liabilities are not included under the program

Please contact us with any questions about the program or any Staffing tax and accounting issues.

Written by: Pamela Avraham, CPA, Partner, Urbach & Avraham, CPAs which provides accounting and tax services to staffing agencies. Pamela may be reached at 732-777-1158 or pma@ua-cpas.com. Firm website is www.ua-cpas.com.

By now, you’ve probably heard about Indeed’s upcoming policy change.

Effective January 7, 2019, if you want your jobs to be on Indeed, you must be sponsoring your jobs on Indeed.

So now what?

Don’t panic! While this policy change may seem scary, it also offers new opportunities for you to evolve your recruitment marketing strategy – and your career site and ATS are great places to start.

What improvements should you make?

Option 1: Plug the leaks in your website

At Haley Marketing, we review analytics on hundreds of staffing websites. And almost every time we review a website, we find “leaks” where candidates leave the site before applying to a job. While you can never get 100 percent of candidates to apply to your jobs, we’ve seen (too many) websites where only 10 to 15 percent of job seekers complete an application.

Want to get more of your candidates to apply? Put these ideas into action:

• Simplify your job application. This is the BIGGEST leak on most staffing websites. Forget the long ATS application form and replace it with a submit resume or quick apply form. If you need the long form, consider a two-part application process. First, get the candidate’s basic contact information and perhaps a resume, then ask the candidate to complete the full application form. 

• Make sure your website is responsive. It needs to look great and work well on any device so candidates can easily apply from their smartphones.

• Improve job descriptions to better sell your jobs.

• Test different job titles to see which titles produce the highest response rates.
  

• Add a chat feature to allow job seekers who are not quite ready to apply to a job to ask questions.

• Incorporate more calls to action such as search jobs, apply now, get a job agent, and opt-in for a newsletter.
  

• Add fly-ins to direct candidates to specific calls to action.
  

• Ensure all your entry pages are optimized to drive jobs seekers to your jobs.
  

• Incorporate tracking cookies, so your company can “follow” visitors after they leave your website…and encourage them to come back to apply to your jobs.

• Use marketing automation to follow up with people who start but don’t complete your application.

• Activate  job alerts and job mailings on your Haley Marketing job board to encourage repeat visits and referrals.

Option 2: Mine your ATS

How many candidates are currently in your ATS? Thousands? Tens of thousands? More? And when you get a new job order, what’s the first thing your recruiters do? Mine the database…or place an ad? Staffing firms spend tens of millions of dollars each year recruiting talent. And millions more purchasing and maintaining their applicant tracking systems. Sadly, most companies don’t do a great job fully leveraging the talent they’ve paid to recruit.

Why not? Because it’s easier to run another ad. The data in the ATS may be stale, filled with junk resumes or simply require more work to discover than starting from scratch.

But in an era of talent scarcity, every staffing firm needs to leverage their ATS to the fullest. Here are few ways to get more from your ATS:

• Require that a search gets done before allowing any job advertising spend.
• Implement a sourcing team tasked with the specific job of mining your ATS.
• Send targeted job alerts by email and text to candidates for specific, relevant job openings.
• Conduct regular re-engagement campaigns to get candidates to update their information.
• Start and nurture an alumni network.
• Use tools like Candidate ID to automatically re-engage the talent buried in your database.
• When you find a great candidate, skill market! To accelerate skill marketing, feature top performers on your website, send top candidate emails and require recruiters to make marketing calls within 24 hours of interviewing a superstar.

Option 3: Improve your referral programs

Referrals are almost always the best source of talent, but most staffing firms get far fewer referrals than they would like. If you want to increase referrals, improve your referral program:

• Provide stronger incentives for giving referrals. 
• Ask more frequently (during interviews and onboarding, on your website, on social media, via text and email). 
• Promote referral incentives next to each job on your website. 
• Offer variable referral bonuses based on the value of each job to your firm.
• Test referral management software like Staffing Referrals and Preferhired. 

The key to an effective referral program is simply to ask for referrals more frequently. Ask on your website. Ask on your job posts. Ask in job alert and newsletter emails. Ask via text messaging. Ask at any and every touch point you have with your candidates!

Option 4: Send more branded communication

Every day your recruiters, sales reps, managers and executives connect with hundreds of other people. It may be via email, text, social media or your phone system.

All these touches are opportunities to strengthen your brand, drive job seekers to your website and encourage referrals. Here are a few specific tactics for better branding your daily communication:

• Create email signatures that promote hot jobs or your career site. 
• Create social sharing images to promote jobs or other content on your website. 
• Use your out of office assistant to market jobs whenever you’re away from your desk. 
• Create on-hold messages promoting jobs or content on your website.
• Create an email signature to ask people for referrals for specific types of talent.
  

Want more strategies for managing the loss of free job postings on Indeed? We’ve created a free eBook to help you survive “Indeedmageddon” - and thrive in the coming post-apocalyptic recruitment landscape.

Joe Kelly is a seasoned veteran of the staffing business. Having built several staffing, recruiting and consulting firms from the ground up, he understands the challenges that face staffing companies at every stage of the business lifecycle. He knows that the focus of any team needs to be on hiring exceptional people and exceeding customer expectations.

However, that strategic focus can only be achieved when time-consuming, yet critical back office functions run smoothly. When Kelly first branched out to start his own business, he knew he needed to:

• Control turnover by providing a competitive but stable compensation model
• Allow all investable dollars to go towards generating revenue
• Outsource functions that were not part of core competencies

Bootstrapping may work in some industries, but for staffing firms looking to scale quickly, access to financing and technology are crucial. Kelly was looking for a flexible solution that allowed him to fully outsource functions so that his team could focus 100 percent on building client relationships and connecting with top talent.

Access to financing services has made a real difference in Kelly’s business, but so has Sterling’s full suite of technology services. Payroll processing compliance can be a major hurdle for staffing firms that serve multiple markets, and Kelly currently operates in over a dozen unique geographic areas serving over 700 clients. Payroll and tax rules and regulations vary from state to state, city to city and Sterling allows Kelly’s team to remain compliant with changes coming down the pike.

Kelly relies on the flexibility of Sterling National Bank’s model to provide him with agility. He and his partners can move quickly on new initiatives and focus all of their energy on strategic growth, while trusting Sterling to handle the rest.

Sterling National Bank’s Payroll Finance Division works solely with staffing companies and understands the challenges facing their clients every day. The Division is powered by Sterling National Bank, which means clients have access to a full range of payroll finance solutions and a full-service back-office technology suite complete with ATS and traditional bank products:

• Payroll Funding and Processing
• Acquisition Financing Available
• Invoicing, Payroll Tax Administration and
• Custom Reporting
• Industry Leading Payroll and Billing Software
• Government and Diversity Program Support
• Traditional Lines of Credit
• Asset-Based Lending
• A/R Finance, Factoring and Equipment Finance
• Full Suite of Banking Products

To learn what Sterling National Bank Payroll Finance Division can do for your staffing firm, contact our expert team today at 516-682-1421; adejak@snb.com; https://www.snb.com/commercial-banking

It’s likely you’ve heard the saying “customer experience” a time or two. But what does customer experience actually mean? And how can you provide the ideal customer experience? By cultivating healthier customer relationships, you can drive revenue growth and grow your company.

There are several ways you can edit and enhance your current customer experience at every stage of the customer journey to improve your relationships. By measuring your customer experience today, you can transform your customer experience tomorrow.

So, are you ready to build a better customer experience? Here are five ways to evaluate and enhance your customer experience:

1. Define what the ultimate customer experience looks like for your business - To truly improve your customer experience, you first need to have a holistic understanding of what that looks like for your business. This is an opportunity to determine how you stand out from your competition and capitalize on it. What makes your customer journey unique? Where along the journey can you excel and bring a truly seamless experience? This should be evaluated both pre- and post-sale, giving your customers meaningful interactions along the way.
2. Create a consistent experience across your processes - One of the most important aspects of providing the ultimate customer experience is consistency. This means having consistency not only across your branding and marketing efforts, but also your processes. When customers work with more than one person during their customer journey, it can quickly become frustrating and confusing to hear different explanations or conflicting information between departments. Consistency in your service and being on the same page across your agency will ensure your customers feel informed and confident in your people and processes.
3. Listen to your customers and address their needs and frustrations - To get true insight into your customers’ needs, you must listen to them. What worked last time doesn’t necessarily mean it will work again. Be a listening ear and clarify any of their needs or concerns to ensure you truly understand them. Show them you want to take action to improve their experience and overcome any frustrations they have. 13% of unsatisfied customers share their unhappiness with 15 or more people. That’s why you have to constantly be engaged with your customers to understand their business, their needs (which will probably change often) and their frustrations. This can be done through focus groups, customer interviews, surveys and more.
4. Use technology strategically, not as a crutch - When used properly, staffing and recruiting technology is a great tool to help serve your customers in the best way possible, leading to an enhanced customer experience. With that said, it is not an excuse to ignore or forget about important interactions with your customers. It is and will always be about people in the staffing and recruiting industry. Don’t forget that! You can use staffing and recruiting software to enhance your relationships by being able to quickly and easily communicate with them by phone or email, give them instant access to their bills and allowing them to access what they need via any device.
5. Show appreciation - What are you doing to show your customers you appreciate them? As a part of providing the ultimate experience all the way through the customer journey, you should build a customer appreciation strategy. There are several ways you can do small things that make a big difference. You can contact them more frequently to continually give them that personal feel or you can tell them thank you, whether through email, a personal phone call or mailing them a card. As simple as it sounds, the more appreciated your customers feel, the more likely they are to remain loyal and spend more with your staffing and recruiting agency. It’s all-around a win!

Whether this is your first time creating a customer experience strategy, or you’re looking to enhance their interaction with you, there are many small, yet critical ways you can make an impact. Between using your technology strategically, while still including the human touch, you can provide each customer an ideal experience. By successfully implementing the ultimate customer experience, you can increase customer satisfaction, reduce customer churn and drive revenue growth.

With Avionté Staffing & Recruiting Software, you can implement a strategic, first-rate customer experience. By providing a full software solution with a simple way to contact customers, quick and easy time card approval via email and automated statements to keep an open line of communication with your customers, Avionté Staffing and Recruiting Software has you covered.

Description:  Industry experts answer your questions on challenges you are facing in sales and recruiting. If you have a question, please email to office@njsa.com. We will solicit answers from industry experts.

Question: What do you say to a client who says they already have a candidate you submit in their system, however when you spoke to them about the job they tell you no one has contacted them from the company. Is the only choice to confront them?

Answer:

It's not your only choice, but probably your best choice.

First, this is a different situation than what some recruiters refer to as the "backdoor". An equally awkward situation when you find out a company purposefully went behind your back and hired a candidate you submitted. In most cases this is a breach of contract terms and should be handled accordingly.

But back to your original question - the candidate ownership issue you describe is a bit more "gray". Giving your client the benefit of the doubt, perhaps they interpret your terms and conditions differently? Maybe they have attempted to contact the candidate? Is it possible your candidate did connect with the company and doesn't remember?

Regardless of the answers to these questions, it is a great opportunity to meet with your client and discuss the circumstances so going further you can have a successful partnership. Prior to the meeting:

1. Review your contract terms. Does it cover this specifically? What does it state? Did your contact agree to these terms, or perhaps someone else from the company that should be included in the meeting?
2. Prepare for the meeting. Create a list of questions to ask to understand their process; Be prepared to talk about your own process, and the time it takes to source candidates.
3. Bring solutions to the table. Assuming this specific situation is not covered in your terms and conditions, what do you want the "rule" to look like? Be reasonable. It would be unfair to ask that any and all candidates you send them you have ownership...just as it would be unfair if any candidate that ever applied to their company "ever" were their candidate.
4. How far are you willing to go? Determine where is your "line in the sand". Is this a customer you are willing to walk away from if they are unwilling to bend on this rule?

Remember, most of these problems are lack of understanding or a miscommunication. The goal of the meeting is not to be defensive and point out what they did wrong, but to create solutions and understanding how you can work together.

Answers provided by Rachel Modrak, a trainer, speaker, and consultant focused on the Staffing Industry. After 20+ years of working for leading national and global staffing organizations she created Apex Staffing Consulting Group to provide strategic solutions that solve problems. Rachel can be reached at Rachel@apexscg.com or 908-377-3465.