Re: Headhunter Question

[Andrew Plato <intrepid_es -at- yahoo -dot- com>]

"Tina Cipolla" wrote in message...
> 
> Abby:
>     When a placement agency places a permanent person, the fee is paid
> in a lump sum presumably from by the company that retained the
> employee--but we all know that is taken right off the top of the
> employee's annual salary.

No it isn't.  GOOD agents and GOOD companies negotiate the person's salary and
the agency fee independently. In the 100 or so placements my company has done
we have never once seen a company take the amount from the person's salary. 

>     In a contract situation, what you described is exactly what
> happens.  The agency is paid a percentage of the hourly wage.  Yes, 25%
> of your friend's pay went directy into the agency coffers.  Your friend
> has indeed been shafted (10% is more reasonable) but this is the way it
> works.  

10% margin is virtually unheard of unless you are doing a pass-through where
the contractor brings the entire deal to the agency. Each agency has it's own
standards but 50% to 100% is more common. 

Keep in mind that agencies have an enormous legal burden when they contract
people. On average, 1 out of 5 contractors is a troublemaker (this number is
based on my experience and discussions with other agency owners/recruiters).
The reason agencies take such a huge margin is because they have to make up the
losses for the morons who lie, don't do the work, or flank the agency. 

Furthermore, litigation by some contractors has had a profound effect on the
contracting industry. Many medium to large companies will not under any
circumstances work with independents. Therefore, treating the agency as some
bandit is unfair. As an independent, you couldn't get the jobs agencies are
offering anyway, so it shouldn't matter what margin they take. As long as they
give you what you want, if they take a 100% margin, that is their business. 

> Some agencies take as much as 60%, so really, he shouldn't feel
> that badly.  The only way to get around this situation is to contract
> directly with the companies (not using an agency to find the gig) but
> this is extremely difficult to do.  And most companies have legal
> departments that insist that an agency be used.  (If you want to hear a
> big rant on why legal departments insist on this, we can take if
> offline--I could go on for days about agencies lobbying congress and on
> and on...)

I am curious what your rant is.  While I am sure some of the larger agencies
lobby congress for helpful laws the real reason agencies are even in existence
is because of morons. 

Companies use agencies because it shields them from morons who sue. There are a
lot of people who are convinced that their crap is gold. They're looking to
make a quick buck without working. These people are always the first to assert
rights they do not have or have not earned. 

At any given time, many agencies have one or two morons suing them. I've had a
few pass through my doors.  Logic, reality, and fairness mean nothing to these
people. They think they instantaneously deserve something and they will hire
lawyers to get their way. No matter how reasonable you are with them, they want
more. 

Many times agencies have to pay these people off to go away. You know what is
really unfair? When agencies have to pay a person who never did a lick of work
$5000 to drop a frivolous lawsuit.  

So, next time you curse the agency that is taking a cut from your rate,
redirect that curse to the hordes of irresponsible losers who litigate as a
matter of habit. These people are why you cannot earn all the money agencies
charge. 

Incidentally - this is the root of my complaint about tech comm certificates. I
am tired of self-absorbed, barely skilled people thinking they deserve $95 an
hour for their crap work. These people are hurting the entire industry and I'd
like to see them run out of business.  

Anyway, understand that I defend agencies A) because I own one and B) because I
respect the need for companies and organizations to protect themselves.  I know
it seems like you are getting ripped off and a lot of people are making money
off you - but face it - that is the way capitalism works. If you're a full-time
employee it is no different. The company is making profits (hopefully) off your
hard work.

Andrew Plato 

__________________________________________________
Do You Yahoo!?
Talk to your friends online with Yahoo! Messenger.
http://im.yahoo.com