Monday, October 08, 2012

How to Successfully Negotiate a Contract for Security Recruiting

When I started in the general IT search business way back in 1990, there was no way to know that over 20 years later, I’d be regularly negotiating contracts with small to medium sized companies as well as with companies that fall into the Fortune 500 ranks.

When Doing Business Was Simple

Not too long ago, I called a recruiter friend of mine who sat in a desk next to mine for several years in the early 1990s when I was just getting started in the search business in St. Louis.  His name is Jeff.  I asked Jeff if my memory of how we developed clients and how we put contracts together back in the early 1990s was skewed or accurate.  I was questioning my memory because I remembered a simple relationship-based process and I’d just gotten off of a call with an HR representative of a Fortune 50 company who presented a contract that was anything but fair or simple.

I walked Jeff through a couple of situations in my memory where he and I had visited a prospective client in St. Louis either in their office or over lunch at a restaurant.  I have a memory of discussing the prospective client’s needs, demonstrating how we could satisfy the prospective client’s need, coming to a mutual verbal agreement, a time where we all stood up and shook hands and a time when the deal was done based on relationship and a handshake.

Then when we returned to our office, we would typically send a recruiting contract that protected the mutual interests of both our new client and the search firm we both worked for at the time.

Jeff confirmed for me that this is actually how we consummated recruiting agreements.  We discussed the mechanics of our search contracts back in the early 1990s.  He again agreed with me that the contracts we used to construct were 1-2 pages of balanced information that was designed to protect both parties to the contract.

Times Have Changed

Today, Jeff owns a search firm that specializes in recruiting for insurance companies.  I on the other hand own a security search firm that specializes in security recruiting, recruiting IT risk management professionals and recruiting global compliance and global privacy professionals.

Jeff and I talked about the 15-34 page contracts that both of us have received in recent years from Fortune 500 companies and how that contrasts with the 2 page mutually balanced contract I’ve created to protect the interests of and our new client.  Jeff’s contract is less than 3 pages as well.

What Has Changed?

What seems to have changed more than anything else is the frequency that we receive contracts from companies that were written by legal professionals who apparently have too much time on their hands.  Seriously, the legal profession has interjected a level of one-sided rhetoric into contracts that has never before existed.

I could provide many examples but consider this one example and then feel free to assume how much additional nonsense exists in a 34 page contract.  On a regular basis, to perform the task of security recruiting, we receive contracts that require us to provide proof of insurance in the amount of $5M of liability coverage for our corporate automobiles.

If we had actually corporate automobiles, this might be a reasonable request but time and time again, I have to explain that we can’t provide proof of insurance for assets that we don’t even own.  Requesting a change to a Fortune 500 company’s contract is similar to trying to move mountain with a spoon.

How a Successful Contract Was Negotiated

Several years ago, I was asked to fill corporate security jobs in Africa for a global Fortune 200 oil and gas company.  The contract they sent exceeded 25 pages and was loaded from top to bottom with issues that didn’t even relate to the relationship would have with the client company.

I presented our case to an HR person who didn’t understand the issues I put on the table.  The HR person sent us to someone in purchasing.  The purchasing person was used to dealing with vendors of oil and gas drilling products.  She didn’t understand the issues I put on the table.  The purchasing person sent me to someone in risk management.  The risk management person didn’t understand and thereby left us in a stalemate for weeks. 

Meanwhile, the business need to fill the physical security jobs in Africa escalated in importance.

Then one day, out of nowhere, I received a call from someone at the global oil and gas company who opened up our conversation in a most interesting and productive way.  She called, introduced herself and explained that she understood I’d been mistreated by several people in her company. 

What was I to say to that statement?  I said nothing. 

She asked if I would consider investing the next 30 minutes into an exercise to help her understand what I needed so we could work towards a mutually balanced conclusion.  Well, yes, I was extremely interested in this most unusual and most professional approach to contract negotiation.

Just about 30 minutes later, we reached a mutually agreed upon conclusion.  The conclusion was a contract (still too long) that protected the global oil and gas company and also protected but the new version was much more balanced than the original version.

It turns out that the person who called on me was a corporate attorney who was educated at Harvard.   It took a Harvard educated attorney to comprehend what a recruiting contract really needed to look like.
So What Does it Take?

Successfully negotiating any kind of contract requires the meeting of two parties that are both focused on creating a mutually balanced working agreement that protects both parties.  If a contract protects one party to the contract but leaves another party vulnerable, the working arrangement will not work.

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