In this Issue:
Ethical Practices and Legal Issues
I had a client call me many years ago and ask for advice on how to prevent another recruiter from “raiding” his management team. My response was simple and direct, “hire them.”
A relationship with a recruiter is established when compensation is paid for services rendered. For retained searches, remuneration is provided at the beginning of the contract and at various other agreed upon intervals. For contingency searches, money is not paid unless a candidate is hired. If a retainer is paid to a recruiter, even a contingency recruiter, a client relationship has been established.
My advice to hire the recruiter, pay them a retainer, and provide them with a meaningful search to work on, comes with the assumption that recruiters follow ethical standards of practice. To nullify the question of ethics, a client/employer relationship with a recruiter should always require a contract to describe the relationship and the terms of agreement; including any non-compete clauses.
Without a contractual agreement in place, contingency recruiters have the National Association of Personnel Services (NAPS) as the certifying body that establishes standards of practice and provides ethical guidelines. I have included these standards as an attachment to this article. Most recruiters abide by these guidelines.
Recruiters define clients as paying customers. Contingency recruiters work on many different searches but typically complete and earn a fee about 30% of the time. Providing them a search to work on doesn’t create a client relationship. If that were the case, every company would sign a contingency contract with every recruiter that called, to maintain the façade of a relationship and discourage internal recruiting. Only when the work is consummated and a fee paid is there a bonafide “client relationship.”
How long are you a client for? This depends on the “non-compete” time period you negotiated in your contract. If it is not spelled out, most search firms abide by NAPS ethical guidelines which stipulate a twelve month non-compete period from the date of the last transaction (hire/placement).
Now comes the controversial part: “solicitation” refers to a recruiting firm representing a candidate currently working with a client company. The term “solicitation” can be inaccurate as quite often candidates seek the search firm out rather than the search firm “soliciting” (proactively contacting) the candidate. Soliciting candidates at a client company is unethical. Recruiting candidates for another company, then trying to work on the replacement search at that company is unethical. However, only when it’s spelled out in a contract is it illegal.
If a candidate from a client company contacts the recruiter and the recruiter helps them find new employment, the recruiter knowingly risks losing that client’s ongoing business and is acting illegally if a non-compete is spelled out in their written agreement. If you can’t trust your recruiter, you shouldn’t work with them. It is always best to have a written agreement in place clearly addressing any “sticking” points.