Secret Commissions and Cane Toads

It’s the same with unprofessional behaviour and secret commissions ….

Bob’s story

Bob runs a great manufacturing and exporting business but his accounting affairs got a bit complicated recently, so he decided to get a top flight accountant to sort out the mess – he went to Simon, a partner of a Big 4 Firm. Simon charges like a wounded bull but it’s a big prestigious firm so Bob decided he must be worth it.

Simon recommended some software as essential to solving Bob’s problems, and while it’s WAY more expensive than all the competing products, Simon said it’s the best. It added $12,000, about 40% to Simon’s quote which didn’t thrill him. But what Bob knows about accounting is not worth knowing – Simon’s the expert so he signed the cheque.

Would Simon’s advice have been accepted if Bob knew Mega Firm was trousering 25% of the $12,000? And Simon was personally putting an extra thousand in his own pocket?

Might Bob have explored the alternative products, most costing less than 10% of Simon’s?

Undisclosed commissions are considered dodgy in the accounting profession – but are everyday practice in recruitment.

When a recruitment consultant from a big firm says that solving your problem will need an advertisement at the front of the newspaper that costs $12,000, the reaction of most employers is like Bob’s: It’s a lot of money but he’s the expert and good people are hard to find. Better write a cheque.

And yes Josephine, recruiters do take commissions for selling ads – they buy wholesale and sell at retail. And some have used dummy invoices to conceal the practice from their clients. And some firms have paid their ‘consultants’ up to a $1000 for selling them.

Does that motivate the ‘consultant’ to hard sell an ad? Maybe a little.

What about if their commission structure was linked to selling 3 ads every quarter – and they stood to make an extra $10,000 or even $20,000 a year if they sell them?

How much pressure will the ‘consultant’ put on their client to buy an ad when they are one ad short of their quarterly quota? With THOUSANDS riding on it? The client will feel some heat. Lots. (To feel the pressure, read all about Friday Night Specials - go to the end of the article that opens)

In the big firms, nearly ALL their strategic focus is on selling the giant ads which gives millions a year in free publicity.

But hey, it’s not free publicity! They make a cash profit!

So you’d better believe they care. Reminds me of a pride of lions - with the dominant firms holding the front of the paper (the high ground). The young males constantly challenge them for the prize, inching closer to the front of the paper (the front is better than sex for these lions!).

It’s full on warfare - has been for about 30 years. Winners: large recruiters. Losers: employers!

Their position at the front of the paper underpins everything the big firms do. It gets them huge profile and market position. All paid for by naive clients who believe the ads are useful as an expert told them.

No. Just a salesman.

WHY ARE THE GIANT ADS THE SAME AS THE CANE TOADS that have invaded Australia? They are ….

Bloated, ugly, destructive and shouldn’t blo.dy well exist!

My argument against Cane Toad Ads?

They don’t work; they only benefit the big recruitment firms; they damage our economy; ruin careers and damage lives; and they promote unprofessional behaviour due to the secret commissions paid.

Why don’t they work? We’ll cover that in the next Rant, just assume they don’t for the moment - but if you really need to know, the reasons are here.

Why do they cause so much damage? Well, newspaper ads fragment the market in an area where the internet is perfect for the INITIAL matching of people to jobs. Fragmenting makes it more inefficient so companies find it harder to find people. And people find it harder to find better jobs.

IT’S ALL ABOUT THE THEORY OF MARKET PLACES. An efficient one always has lots of buyers and sellers in one place.

Now this is complicated to explain in a Rant (for a fuller but still simple explanation), but here’s the Very Simple Guide: Think about a boat show – like the one in Sydney at the moment. Not surprisingly, they put all the boats in one place, Darling Harbour.

Imagine the chaos if we scattered them over 10 different locations, with a random mixture of different boats at each?

Well, that’s recruitment. Twenty or more different ‘market places’ for each type of job including: newspapers, large recruitment firms and the internet. The only place ads should be is the internet – and Cane Toads are the main blockage to this efficient market.

Do you think big recruiting firms would spend so much time and money pushing Cane Toads if their rewards weren’t huge?

Come on HR! There are better uses for your company’s money. Stopping the Cane Toad Gravy Train is a giant stride towards making the recruitment industry more effective.

So far there is no magic bullet for real Cane Toads – but their is for the recruiting equivalent. A bullet a mere 200 people have and can fire at will.

Who? The 200 HR managers in the organisations who buy Cane Toad Ads.

Just say no. Today.

It’s worth billions to our economy. And a huge growth in happiness.

Cane Toad Ads are a naked, very ugly emperor with no reason to keep living.