A Year Goes by… and then Fair Game?

Typically, third party recruiters give their client a non-solicitation on their candidates – meaning that they promise not to take the candidate that they place back from their own client. But, what if that client isn’t a client any more? Is it ever really OK?

My whole view on the discussion is shaped by my tried and tested belief that the best way to win more business is to keep your existing clients happy. This is because not only are your existing clients a potential source of repeat or ongoing basis, they are also a source of potential leads or referrals to other clients and more new business.

It is also financially prudent to focus on keeping existing clients happy and loyal as studies show that the cost of retaining an existing customer is around 10% of the cost of acquiring a new one. In general, longer term customers are generally more profitable as account maintenance costs tend to reduce over time.

Within the first year non-compete…

If I apply my retain client mantra to this debate, then I think it would be extremely folly for a recruiter to break this non-solicitation agreement within the first year of placing a candidate, no matter how tempting the lure of a lucrative short term bounty.

Because, after the recruiter had enjoyed the short term financial gains of this breach of contract and trust, the recruiter could face a legal challenge from their client which could lead to expensive legal fees and possible compensation which wipes out the recruiter’s gains.

In addition to this, the recruiter is very likely to lose that client and any potential repeat and ongoing business with that client over the coming years.

So, what the recruiter gains from poaching the candidate from their client, they will lose over the long term as they have lost ongoing business and referrals from the client. If word gets around amongst employers that the recruiter has a reputation for this kind of ‘sharp practice’, they  will also find it much harder to win new business. So I see no real long term benefits of a recruiter breaching their  non solicitation agreement with the client.

But what about after the first year…

Of course, after the first year the recruiter is no longer legally bound by the non-solicitation agreement and they are free to target candidates that they previously placed with the client. But, even though they can now do this legally, should they?

You could argue that its a free market. The candidate is free to go and pursue happiness and the best possible opportunity and the recruiter is free to help that candidate and earn a living for themselves – and it is up to the employer to build an environment that encourages loyalty in its staff. No-one is doing anything wrong here are they? In theory, no.

But, in practice if the recruiter does make a habit of taking candidates back from their client after one year, it may become apparent that retention and loyalty levels from candidates that the recruiter has placed are much lower than from other channels or agencies. This could result in the recruiter’s contract being terminated and a loss of ongoing business.

Like in the first year examples, the employer may get wind of what the recruiter is doing and while they have no legal recourse, its quite likely they will still sever ties with the recruiter as they will see the recruiter as a liability to their business, and the recruiter will lose another long term, potentially profitable client relationship.

But, what if the client severs the contract with the recruiter and moves to another recruiter for no other reason than market forces. Are the recruiter’s previously placed candidates now fair game, since the non-solicitation is now finished, and the client is not a potential source of future business?

In many respects they are, but the recruiter still risks damaging any potential future re-engagement potential with that client if they begin poaching back their candidates and undoing all the good work they have done. The recruiter loses the opportunity to go back to the client in six months with a warm call saying, “I hear Joe XXX is still with you, and won a sales award? He came from us. What a great Hire! Do you need any more help?” In fact, I think that candidates that recruiters have previously placed are a key marketing tool and door opener back into a client’s business.

Of course, if a placed candidate initiates contact with the recruiter after the year is up and wants help finding a new role, then I would support helping them, as the recruiter is not actively working to undermine their client’s business in pursuing this candidate.