This will be my only mention on this blog about next Tuesday's event (Oct. 3, 2006) from 6PM-9PM in Waltham, MA, but it should be great. I got Microsoft's regional office to host an appearance by a pioneer of CI who just came out with a very readable book on the subject. In fact, he'll even sign copies available on-site at a discounted price, thanks to the Society of Competitive Intelligence (SCIP), whose Boston chapter meeting is the venue for this.

But non-members are encouraged to attend at a cheap price (food & drink included) so we expect a big crowd. Please sign up ahead of time and tell your colleagues (including those outside of recruiting) to come.  It's a great way to introduce yourself without embarrassment to the world of competitive intelligence (Boston has an active community, in and outside of recruiting). I look forward to seeing many of you!

Here's the event description, speaker bio and particulars:

Competitive intelligence is not about the Internet. It's about a German refugee turned American GI and interpreter in World War II. It's about a goat in the field. It's about Google's battle with Microsoft. In order to unlock the value of competitive intelligence and see past competitive smoke screens and disruptions, one must first learn its five realities. Only then will you be able decode its secret language and help your business strategy succeed.

Leonard Fuld, president of Fuld & Company, will share his insights on this secret language based on the findings from his most recent book, The Secret Language of Competitive Intelligence, on Tuesday, October 3 at the Microsoft facility in Waltham, MA. SCIP Boston is privileged to have this experienced and popular speaker kick off our year.

The meeting presenter for this timely and relevant workshop is Leonard Fuld.

About the Speaker: Leonard Fuld is a pioneer and recognized leading authority in the field of competitive intelligence. Leonard Fuld created many of the intelligence-gathering techniques currently used by corporations around the globe. Mr. Fuld was among the first four people to be named a Fellow of the Society of Competitive Intelligence Professionals (SCIP) and was awarded the Meritorious Award, the highest award offered by SCIP, in 1998.

Fuld & Company is a full-service business intelligence firm, providing research and analysis, strategic consulting, business intelligence process consulting, and training to help clients understand their external competitive environment. With headquarters in Cambridge, MA and offices in London, UK, the company has served over half the Fortune 500 companies as well as corporations around the world.

Location: Microsoft, 6th Floor Conference Room, 201 Jones Road, Waltham, MA (get driving directions).

Registration: SCIP Member $30.00; Non-Member $35.00

Agenda:

• Registration and Networking 6:00PM
• Light dinner and Beverage 6:00PM
• Presentation 6:45PM
• Q & A/Networking 8:00PM

Back in April, Drew Brennan of BioTechnologyJobs wrote an interesting ERE blog post, "Research Recruiting: Beyond the Acronyms," about an open req he was handling that was chock-full of biopharma terms he wasn't that familiar with. As he said, "While it is extremely important for a recruiter to know the meanings of these acronyms, it is just as important to know what each of these techniques are, what they are meant to achieve and how they would fit together in the eyes of the researcher."

His solution: "I invited an R&D hiring manager out for coffee and spent about half an hour discussing a wide variety of research techniques and how each is used during the R&D process. This more in depth knowledge of the techniques and goals in the use of these techniques has proven invaluable over the years in recruiting R&D candidates. Needless to say, it was the best $10 I ever spent..."

However, he came into the recruiting business with the biopharma chops, so he could have that conversation and get more out of it than the average recruiter, thanks to his underlying understanding of the core technologies involved.

But what about folks who DON'T have that core background? The title of my blogpost is taken from the title of part 1 of a great rant and illustrative example by Sean McCown, a Senior DBA for SourceCorp in Dallas and blogger of InfoWorld's Database Underground. After 15 years in database programming, he's had a(n un)healthy share of interaction with IT recruiters.

From the contractor/employee perspective, his ideal recruiter is "an ex-database professional who just decided to play for the other team" and, more importantly, knows "to shut up and get out of the way when he knows absolutely nothing about" what he's recruiting for, and just set up the interview with a hiring manager who can make the judgment. He then hauls off against a young female recruiter with three months in the business who chastises him about his outfit during the initial screen.

So is there a middle ground? There has to be, because there aren't enough ex-engineers willing to fill all the world's tech recruiting jobs. I would argue that you can become a quick study, and while you may never gain the technical chops to do any of the jobs you recruit for, it IS possible to intelligently 1) research/source for those candidates; and 2) be an initial screener for them. That involves other type of learnings outlined above: doing some basic research online, talking with people who do similar jobs already, and maybe -- if you find that you keep getting the same kinds of reqs -- to actually register for some telecourses in the corresponding technology subject area. Would you make the time? Would your employer fund that kind of learning? Given the recruiting success of those who have the knowledge, one could make a compelling business case.

In a continuing effort to share interesting viewpoints with, and foster discussion within, the recruiting and sourcing community, I am pleased to share this creative and provocative guest blogpost by Paul Smith, a veteran who aptly calls much of his business "non-traditional contingency recruiting." After outlining some tough candidate categories, read about the unusual recruiter compensation model he describes to solve the problems inherent to each. --Glenn Gutmacher

How a Creative Recruiter Makes Great Money on Problematic Placement Situations

guest post by Paul Smith

There are many ways to increase your profits, if you are really good at what you do, and know when to hang on or when to cut and run. Here is one of the fee structures that I use. Any questions, feel free to ping me at paul{at}mylifeline{dot}com.

Three of the toughest areas to recruit in are recruiters, salespeople and contractors. There are many more, but for this post, I'll pick on those three.

• Salespeople: If the company is hiring first level salespeople, a turnover rate of 70-80% is just part of the cost of doing business. Paying a fee for these types of people is something many companies are reluctant to do. Even if you explain to them that NOT using a good sales recruiter contributes to their turnover rate, they are still reluctant. If they recruit more experienced salespeople, the stakes are even higher. The base or guaranteed income is greater and the turnover rate is still high. Identifying winners is difficult for the company, but again, is part of doing business.
• Agency recruiters: They are another issue. Even though the client is a recruiting company, they seem to lose all their recruiting skills when hiring people for themselves. An 80% turnover in the first year is not unusual for non-experienced recruiters. All just part of doing business. If they hire experienced recruiters, they must first examine why the person is looking, what bad habits do they bring with them and how difficult will it be to indoctrinate them to a new system. Again, the cost of doing business.
• Contractors: In this case, let's use contract recruiters. Placing contract recruiters is an interesting business, but it does have its difficult side. First of all, if the recruiter is a contractor, how are you going to finance it? If a contractor is working 40 hours a week and you pay them $50/hour, that's roughly $55/hour that you have to come up with. $2,200/week may not seem like much, but if the client takes 3-4 weeks to pay you, that can be $8,800 paid out. May not be a ton of money, but put 10 of them out and its an $88,000 outlay. Do you have an extra 88 grand lying around? It's too small for most of us to get an equity-backed loan for and if you go to a funding group, they can leave you with as little as 10% profit. Not the kind of numbers I like to work with.

I'm a very good recruiter and proud of my work. I know my candidates stick. I even have one placement retiring in January who I placed in the Sprint national account program 20 years ago. He has never taken a promotion and is still selling in the top tier of Sprint salespeople.

So how do I put these first two types of people in the client corner and solve the financial issues of the third? Easy: "Performance Based Fees".

Let's take the experienced salesperson. The client is reluctant to pay fees. Why? What is their turnover rate? Is it a good place to work? What is the yearly quota for a new hire? When does the salesperson become profitable? Are available candidates out there that can do the job well?

I would like to hear that the turnover rate is about 50% in the first year. Let's say the quota is $500,000 the first year and the candidate goes profitable for the entire year at $300,000. My base fee is 20%. Because their turnover rate is 50%, my initial fee is 10%. That means that on a $50,000 base, my initial fee is $5,000. When the candidate reaches $150,000 (50% of profitability) I bill for another 5% or, $2,500. When the candidate reaches $300,000, I bill another $2,500. At the end of the year, I bill them another Performance Bonus for all revenue over $500,000.

So, if my candidate fails, I don't make a bunch, nor does the client pay a bunch. If the candidate reaches profitability, I make a normal fee and the client pays me what everyone else is trying to charge them. If the candidate does perform in excess of the client's expectations (over quota), I make an additional 5% on that revenue. 110% of quota gets me an extra $2,500. 125% gets me an extra $6,250. So here, my piddly 20% fee turns to $16,250 or a fee percentage of 32.5%. In retrospect, show me a sales operation who won't pay 33% for a proven winner after he proves he's a winner. HR might have an issue, but the Sales VP won't.

Take the recruiter looking for a recruiter. As a recruiter and an owner, I know the issues. Doing the same formula works just as well. What is your turnover rate? How much will this person make at quota? What is quota? When does this person become profitable? What percentage do they charge their customers?

Turnover rate is 75%. First year quota is $150,000 and profitability is $100,000. At quota, the candidate will earn $60,000. They charge a minimum of 25% to their customers. Simple enough. My fee is 25% of the $60K, or $15K. Because turnover rate is 75%, the base fee on hire is $3,750. When the candidate reaches $50K in billing or in 60 days, I bill another $3,750. After 6 months or $50K, I bill another $3,750. When the candidate reaches $100,000, or 9 months, I bill another $3,750. At the end of the first 12 months, I charge an additional 5% of all billings over $150K. That brings the fee just short of 30% if the candidate reaches $200K in his/her first year's production. I can live with that.

And then there is the contractor. I am not interested in getting involved with financing payroll or anything near it. But I do have a notable solution. As you may know, most companies sending out contractors are charging from 35% to 100% add on. Nice money, but huge accounts receivable. Again, not for me.

But again, the solution is simple. The client wants to bring on a candidate as a contractor, and I don't want to finance it. I let them bring the contractor on directly. I base my fee on the hourly rate they are going to pay them. My fee will vary depending on the scheduled length of the contract. Let's assume the contract is for a year and the rate is $40/hour directly to the contractor. I decide on an annualized fee of 20%. $40/hour equates to $83,200/year. If they tell me there is a lot of overtime, I will put that into the equation. On start date, I will bill them for the first quarter, or $4,160.00. Three months later, if the candidate is still there, I bill again. I do this for 4 quarters. After the four quarters, if my candidate is going to be there for another 3 months or more, I bill one additional quarter as my performance bill. After one year on the job, in a non-revenue generating position, if they are still there, they are doing the job and if they stay longer than expected, they are performing better than expected. I may or may not continue billing in quarterly increments. All depends on my mood that day. But remember, if they are there with someone else paying them, the client is still going to be charged that 35-100%. It's a good selling point to cut off the billing somewhere, but if you don't have to, don't.

About the Author - Paul Smith joined the recruiting business in 1987 as one of the first franchisees of Lloyd Personal Consultants. Under the guidance and tutelage of Merrill Banks, the Franchisor, business flourished. After 10 years, that business changed direction towards contract recruiting. LifeLine Solutions became the new business entity for Paul and other recruiters. In 2005, Paul's business became a mix of both contract and non-traditional contingency recruiting. He has now joined with SearchPath International, again as one of the first franchisees. With SearchPath, Paul and they are seeing tremendous growth. Paul is never to old to learn, and had received some tremendous help from Tom Johnston and Company, the Franchisor for SearchPath International. In his spare time he is usually enjoying his family or fishing, mostly fishing. If no one is at home, he's fishing. If anyone is asleep, he's fishing. If he's not fishing, it's a lousy day and he's probably catching blue crabs or digging little neck clams.

To remember the fifth anniversary of the World Trade Center disaster, Yvonne LaRose (better known to the recruiting industry as Viva) is republishing today some of her original 9/11 content with new introductions, conclusions and updated comments. Because mine is also a recruiting blog, I'd like to complement that briefly with the themes of competitive intelligence and leadership under pressure, using a timely example.

I'd like to mention the movie running on ABC Television called "The Path to 9/11." (Part 1 aired last night and is still available in streaming video, though you might prefer to record tonight's conclusion directly from TV for better quality if you can't catch it live.) The show's timetable starts in the early '90s with terrorist incidents related to Al Qaeda personnel who were connected to what happened years later on 9/11.

Of course, any program of this type will have a bias and factual inaccuracies (ABC admits that, and won't even call it a docudrama). However, I think it accurately profiles the tension between senior levels of the federal government and the CIA field forces who had terrorists cornered multiple times: The latter succeeded when leaders took timely, decisive action. They lost when they delayed, caving in to political pressures about how they didn't have "enough" intelligence or "might" have killed a few civilians in the course of capturing the folks known to be killing hundreds or thousands. The emotional reaction of CIA operative "Patricia" to one such failure in part 1 of the ABC program is compelling.

One of the themes Viva is exploring is leadership, especially in the face of difficult circumstances. There are few situations more challenging than the ones faced by the real-people equivalents of those portrayed in the ABC special, and I will give them some slack, as a result.

However, if they choose to take such jobs, then they are expected to do what ultimately saves more innocent lives, even if a few must unfortunately die in the process. It's hard enough to get advanced intel about where a top 10 most wanted terrorist is going to be, and the government should always take the best precautions to reduce the chance of innocent casualties, but the baddie should be taken (preferably alive).

Interestingly, the show implied there was evidence that a terrorist event might be staged at New York City's Times Square on Dec. 31, 1999. When the CIA asked Mayor Rudolph Giuliani if he would cancel the event, he allegedly refused, saying we don't cave to terrorists. Now if indeed a terrorist had been among the large, innocent crowd there, then circumstances obviously required amending one's tactics (no missiles here, but a bunch of SWAT team snipers would be more appropriate). If a suicide bomber was believed to be in the crowd, then I'd rather see targeted shots fired, and potentially hit a couple of nearby people in addition to the bomber, rather than let the bomber do his/her thing.

Leadership includes making some unpopular choices among all the tough decisions. Not all may stand the test of time as great decisions. When asked if they'd do it again, this type of leader says yes, based on what they knew at the time. Do the senior people you hire have some of that in their work history? I'd rather have one of them leading my company than someone who's dotted and crossed every political i and t, rather than someone who's always taken the safe path or had the decision made for them by inappropriate delay or indecision.