27 July 2015
No temp-to-perm fee? You've got to be kidding!
The following article was written by Ross Clennett about 18
months ago, but is becoming increasingly prevalent and many
recruitment companies are accommodating! I could not agree with
this article more. It's not good enough. Keen on your thoughts?
"One of the more odious internal recruitment practices being
seen with increasing frequency around the country these days is the
inclusion in recruitment PSAs or tenders of the 'no temp-to-perm
Here's what I hate about this practice:
1. It penalises the agency for providing outstanding
Think about it for a minute: A recruitment agency places an
average candidate into a temporary assignment. The candidate works
out their (let's say) 8 week assignment diligently and competently,
but no more. They finish the assignment and the recruitment agency
subsequently places them into another assignment, from which the
agency makes a margin.
Consider the alternative where the agency places an excellent
candidate into the temporary assignment; one who impresses the
employer so much they are offered a permanent job.
Under the 'no temp-to-perm fee' clause, the agency has clearly
and unequivocally delivered an outstanding service, not just once,
but twice. The first service was an excellent temp worker and the
second service was an ideal candidate to fill a permanent
The first service receives an appropriate return (margin) to the
service provider. The second service does not provide any return.
And Internal Recruiter, please don't give me that pathetic 'but the
agency hasn't done any more work to deserve the fee' bullsh*t
I assume by this logic you are happy to pay a fee every time an
agency you give a vacancy to 'does work', whether they deliver a
candidate that's hired by you or not? I thought not.
Please don't insult my intelligence by using an argument whose
logic you only wish to use when it works in your favour.
2. It provides little incentive for the client to undertake a
separate permanent recruitment process
Why wouldn't a client just recruit using a temp-to-perm process?
They hire a temp for, say, 4 weeks, then convert them to permanent.
They have probably paid $1000 or less in margin and have a 'tested'
Of course, for highly skilled, high demand workers, this won't
apply as the field of suitable available candidates who would
consider a permanent job through a T2P process is likely to be too
small and would compromise the quality of hire too
For lower skilled, more easily filled roles, it's unlikely the
T2P-only hiring process for permanent roles would significantly
compromise the quality of the permanent hire.
3. It provides a significant incentive for the client to
undertake a temporary recruitment process like it's a permanent
A permanent recruitment fee reflects the time, skill and
resources invested in a permanent recruitment process; a process
that almost always takes longer, (much longer) than a recruitment
process for a temporary worker.
If a client has no temp-to-perm fee to pay then they are likely
to substitute this much longer process to ensure, as much as
possible, that their candidate hired as a temp will be suitable for
the perm job.
If the recruiter does a really great job, the client may only
need two weeks, rather than say two months, to conclude that the
temp should be hired permanently. The outcomes is that the agency
recruiter will score a total margin of around $500 for their
efforts. That's taking the piss … big time!
4. There is no guarantee that the candidate was converted to a
With such a large financial incentive to convert temp workers to
perm for $0 under a 'no temp-to-perm' clause, who can be absolutely
sure the worker has been offered a permanent job?
The client could just offer the temp worker a slightly higher
rate (easy to do as there is no pesky agency margin to pay) and ask
the candidate to tell the agency they have been offered a permanent
As there is no T2P fee involved, what reason has the agency got
to request a copy of the candidate's letter of offer? The client
now has a tried-and-tested temp, still on temp terms of employment
and they aren't paying a margin, nor have they paid a perm or
I mean … all clients tell the truth all the time about resumes
received and candidates hired, don't they? #sarcasm
5. It's highly detrimental to sectors of the recruitment
industry that are heavily reliant on casual, temp or contract
As any recruiter who specialises in a specific sector will tell
you (in particular mining in the current market) - there is a much
stronger preference for using agencies to source temps, casuals
and/or contractors compared to sourcing permanent staff. These
recruiters are financially disadvantaged to a much greater degree
by a 'no temp-to-perm' clause than recruiters in more permanent
recruitment dominated sectors (eg accounting, sales, executive
6. Other vendors are not asked to provide their equivalent of
the free temp-to-perm
Do companies expect free tax consulting because their accountant
provides them with an auditing service? Do photocopier providers
have to throw in endless reams of paper for free with each
photocopier they have sold? Do Councils expect the household
general waste removal contractors to also provide free recyclable
disposal services ? I mean the trucks travel exactly the same route
on the same day, right?
Free temp-to-perm fees are asked for, and given, in certain
circumstances. Those that can be reasonably justified are the
The increasing habit of companies and not-for-profit
organisations expecting recruitment agencies to sign up to a
one-size-fits-all-in-all-circumstances free temp-to-perm fee is an
unjustified and disrespectful rip off."
Keen on your thoughts?