[fecak]

I laid out something similar here on HN last summer and Atlay (of 10x) was one of the first to comment. (https://news.ycombinator.com/item?id=4555165) As a longtime tech recruiter, what I find most valuable about the model is that it is much more geared towards helping tech pros focus on what they do best (code) and not have to worry about what they tend to do worst (handle the business side of their work, negotiate, etc.). I haven't switched my business into an agency model at this point as I think there are still a few kinks to be worked out.

Here is some recruiter-speak (what we are trained to say) that might make sense to some of the contractors out there or at least sound familiar. If you are working with a recruiter and you ask for $125/hr, and you feel that is a very fair market rate for the work you will be doing, and the recruiter is able to get the client to pay say $130/hr, chances are you won't care because you are getting your 125 and the recruiter is making almost nothing. So let's now say that the recruiter is an excellent negotiator and gets $150 - should you (as the coder) get more because the recruiter was able to negotiate a higher rate? At what point should the recruiter be rewarded for doing a good job negotiating? If the recruiter is getting $250 total and you are only at $125, surely you will feel slighted - but if $125 is the market rate for that skill, should the recruiter not be rewarded for the ability to negotiate and get a higher rate? I could argue both sides of this.

One way to alleviate part of this problem is to essentially split the difference. If you come to me asking for 125, let's say my standard cut is 10% (which is low, but this is just an example) - and anything I get above that 10% we split. So at 137.5, you are at 125 and I'm at 12.5 (10%). If I get the client up to 150, I get my 12.50 (10% of your 125) + 1/2 of the additional 12.50 (150-137.5) for a total of 18.75, while you get 131.25. This way the recruiter is rewarded for getting a higher rate, and the coder doesn't feel like a victim.

Unfortunately, most recruiters won't reveal the bill rate (paid by the company) to the coder or the coder's rate to the company, so all sides are in the dark except the middleman.

Almost all recruiting models are quite imperfect and have some really disturbing incentives for the recruiters (http://jobtipsforgeeks.com/2012/09/17/disrupt/). Transparency between all parties is something I am offering my candidates so they can use their best judgment as to whether my advice is clouded by a higher fee with one company over another. Transparency is the real key to solving many of the problems in the industry.

The agent model seems to be the right track, and hopefully we'll get it right some day.

[roc]

> "This way the recruiter is rewarded for getting a higher rate, and the coder doesn't feel like a victim."

Fair recruiter reward for results is also the case when the recruiter just takes a flat percentage.

And in trying to define a 'minimum acceptable rate', you'd be incentivizing all sorts of odd behaviors, as recruiters would preference the gap between 'acceptable' and 'final' rate, rather than a higher final rate.

You'd have created additional pressure to mask final rates, depress clients' understanding of their own value, etc. Those are not remotely healthy incentives for a client/manager relationship.

e.g. placing a 150 for 180 nets you 30. placing a 180 for 200 nets you 28. how many 180s do you expect to keep? what conversation do you imagine taking place when a client says "we should bump up my minimum from 150 to 180"?

Rather counter to your goal of keeping coders from feeling like victims, that incentive structure is maximized when agents explicitly take advantage of coders who least understand their value and then keep them there.

[fecak]

Fair recruiter reward for a flat percentage? Fair to the talent, certainly, but assuming I'm getting a low flat percentage that is much better for the talent. If I'm at 10%, you ask me for $100, and I get you $300 because I'm a master negotiator, I just made an extra $20/hr and you made an extra $180/hr. I did all the work there, didn't I? Is your coding going to be 3 times better because I negotiated you a 3 times better rate? Something to at least consider, from the recruiter's standpoint.

Odd incentives are so deeply ingrained in recruiting that it's almost impossible to get them out of the system. Recruiters have the incentive for motion - people leaving jobs all the time, regardless of whether it is a good career move. If an agent had tech talent paying $X,000 per year to tell them which moves were best for their career, that would be much more of a positive incentive for all sides. Instead, the incentive is for recruiters to get people to change jobs, regardless of how happy they are now or how happy they will be in the new job.

The pressure to mask final rates is much higher under current conditions. Take that incentive out entirely by showing your employees/contractors the invoices that you are billing the company.

Depressing a candidates understanding of their own value is a valid point, and very unhealthy. I don't think agents can take advantage of coders who understand their value, as they are able to leave. At a former company, I saw consultants leave over as little as $5/hr. The only thing that prevents coders from being taken advantage of by recruiters placing them for contract work is the coder's knowledge of their market value. If they know that, they should never get taken advantage of. Again, if they are being paid 'true market value', and a recruiter is able to negotiate a rate well above market value, that isn't taking advantage of the coder - that is taking advantage of the company paying the higher rate.

[roc]

> "I did all the work there, didn't I?"

The negotiating work, yeah. Which is why you're getting 10% of every hour of work that someone saw fit to pay $300/hr for, despite your effort being of a fairly fixed quantity of time.

And regardless of your negotiating, the client has the option of choosing from more than one candidate. So if they look at the $300/hr candidates and they choose hypothetical me, then my $100/hr ask and the huge delta is far more a function of my ignorance/naivete than your skill. [1]

> "I don't think agents can take advantage of coders who understand their value, as they are able to leave."

You wanted to minimize feelings of being taken advantage of. Which is simply not a concern of people who understand their value. So who else were you concerned about wronging, if not the people who do not understand their value?

And I'm not saying good relationships couldn't be had under the system you proposed. Just that you have some perverse incentives built-in that makes the antidote seem worse than the disease.

> " Take that incentive out entirely by showing your employees/contractors the invoices that you are billing the company."

That's a solid move. Though if you put the person who is advantaged by information mis-match in charge of erasing that mis-match, don't be surprised when short-cuts are taken. But that's simple enough to avoid by having administrative staff handle that directly.

> "[if] a recruiter is able to negotiate a rate well above market value, that isn't taking advantage of the coder - that is taking advantage of the company paying the higher rate."

Yes, but as we all know, one of those tasks is far easier and more common than the other.

[1] And I'm not trying to write off the value of skilled negotiators. I'm just saying that competition means you simply don't get huge deltas on negotiation alone.

[fecak]

Points well made, and in my position I'm able to argue both sides on this one. I should probably preface my comments with the fact that I have done contract work in the past, but for the last couple years I've focused almost entirely on permanent placement, and part of the reason is this lack of trust between coders and recruiters and this whole dialogue.

In perm placement the incentive of the recruiter is usually to maximize the coder's income (fee = n% of salary), but contract placement is the opposite (margin = bill rate - pay rate where minimizing pay rate leads to higher margin). I don't remember ever being accused of gouging by any coder as our margins were pretty low relative to others, but I would hate to have to explain/argue in the real world to a coder why my ability to negotiate a ridiculously high rate deserves to be rewarded (and as I said earlier, I'd split the reward, but I don't feel splitting at a flat rate is fair to the recruiter).

You seem to be downplaying the value of the negotiation work just a bit in my view, and you say as much at the end with the 'we all know...one of those tasks is far easier and more common than the other'. You say you are not writing off the value of negotiators, and competition should mean that there are no huge deltas, but as long as you are truly getting at or above market rate I'm not sure I can see the fault in a recruiter getting a huge delta.

You are correct in that I can't do what coders do, and I can do things that coders can't do also. On a site like HN, frequented by coders, everyone here will agree that what coders do is far more difficult than what recruiters do. There is not point in arguing that, particularly here where most people seem to equate recruiting with the lowest form of humanity. But I can assure you that I help people get jobs and solid comp packages that probably lacked the tools to do it on their own. It's a symbiotic relationship with many of my candidates, at least in my case.

You keep alluding to the fact that if I negotiate a huge delta that it is a function of your naivete - couldn't it be the naivete of the company that is paying that rate? If you pay $200K for a car that can be had for $20K elsewhere, you as the buyer are the 'victim' if there is one (certainly not the car). Of course cars don't care, but hopefully you get my point.

Who is the true victim here if a coder is being fairly compensated based on market rate? The victim, if there is one, is the company that is being overcharged - yet the coder seems to think he/she is the victim when they are being paid a fair wage.

Again, we stress coders need to know market rate, and the ones that are 'victimized' are the ones that don't know market rate. They are victimized by recruiters who gouge. But if the coder is getting market rate, and the recruiter is able to negotiate a higher-than-market hourly rate (with a high delta), you seem to believe that the coder is a victim - it's not the coder, it's the company.

[kybernetyk]

> I just made an extra $20/hr and you made an extra $180/hr

This is implying you would be negotiating as long as I will be coding. But once the client signs the contract your work is pretty much over and you will get $20/hr even if you sit at the pool.

[fecak]

My negotiating a higher rate for you is like an annuity, since your earnings every hour have increased for the same level of work. So you are rewarded every hour for the fruits of my labor. Yet I should only be rewarded once?

[kybernetyk]

No, you get a percentage and the more hours I work the better for you?

[ABS]

I tweeted this idea back in December 2011: https://twitter.com/capotribu/status/147730720192872449

looking forward to receiving shares as a thank you ;-)