Recently a company contacted me looking for a recruitment consultant; two years plus experience, good billing figures and a genuine reason for moving. In other words the most difficult thing to find in the present market. They then told me their pay package, which was lower than average, then they told me the maximum fee they were prepared to pay me for a successful introduction, which was a lot lower than average.
A client of mine has an email signature that states; "Quality is remembered long after price is forgotten," which as far as I can tell was originally said by Henry Royce, of Rolls-Royce. The reason I mention this is that as the rec-to-rec market is once again becoming increasingly candidate-driven (especially in those sectors, such as IT, which suffered somewhat less during the recession), issues of both quality and price are paramount at the moment.
This in turn got me thinking of the Common Law of Business Balance, attributed to 19th Century polymath John Ruskin:
It is unwise to pay too much, but it is worse to pay too little.
When you pay too much, you lose a little money, that is all.
When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.
The common law of business balance prohibits paying a little and getting a lot; it can’t be done.
If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.
When you pay too much, you lose a little money, that is all.
When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.
The common law of business balance prohibits paying a little and getting a lot; it can’t be done.
If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.
There is a great deal of false economy in business, for various reasons, often to do with short-termism, and people trying to make themselves look good. I used to work with someone who I'm convinced derived actual physical pleasure from getting people to accept the lowest salaries possible. Then of course those people would leave at the earliest opportunity.
So, if you do get what you pay for, pay once for the right thing, not several times for the wrong.
Hi Duncan, I missed your blog the past few months. Good to see you back.
ReplyDeleteI have a lot of experience with Agencies that try to pay lower than market rate. AND they have the cheek to say you can make it up in Commission... ye, if your commission structure reflected that.
I was about 2ish years into my Career, I had a terrible interview with a company in Bristol, who really dig into me and grill me for nearly an hour! At one point I was nearly ready to leave.. They offered me the job, I refused because I really didn't like the interview, apparently it was tactics, and I did really well. But the salary = £12,500 a year!!!!!! What the....
For 3 months I was called every now and again, emailed, even a letter asking me to work for them. But I said no every time. And I explained, like with other companies that offered me work, there salary is well below market rate.
Ye, I could have made up the money in commission, but for 3-9 months I would have not been able to pay rent and bills let alone getting to work. I would have been worried everyday how I was going to pay bills and eat.. which would have effected my work, thus a cycle would start.
Any recruitment consultant with proven billings, and has 2 years Experience should be paid the market rate. Oh, and a have a decent commission structure. It goes back to what I said a few months ago, on how consultants are the bread winners of your business, so why treat them as the lowest form of life??
Recruitment is very short sighted from experience, I feel sometimes some business never play the long game and are too caught up on the quick fills/quick fixes. Hence the high turn over of companies. They never nurture, they never invest and they never have patients to see past 3 months with most consultants. From day one, your expected to Bill over £250K in the first year!?
If that was possible, I would drop what I am doing, get a loan and higher 4 people today, pay them 5K above market rate and give them 15% of everything.
You know why I haven't done it, because its a dream. 1 in 10 will produce something close to £120K in the first year. The rest will break even or make a loss. But can you imagine if you invested £10K into training, what it would produce, not hand the consultant a book called "training" and expect them to read through it and understand it. And seriously thought about the treatment of consultants, and the KPIs that shallow the work, not increase productivity. (KPI argument another time).
Never have I actually seen a manager pick up the phone and show a Business development call?
But back to the point of Salary vs. Quality. I think chucked in there for good measure is Nurture, commitment and realism from managers/directors. Also get on the shop floor and lead by example.
Sadly Henry Royce will be turning in his grave with Rolls Royce today. Share prices falling - engines exploding.. next thing we will see Rolls Royce bought out by the Germans... oh wait..
Well said Mark, thanks for the comment. I have been a bit tardy with the blog of late, will make make up for that soon I hope!
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