Supplier beware!
For the first time ever, we’re facing a payment dispute, with what happens to be a multinational defence, security and aerospace company. Very simply, we were engaged to undertake a discreet search for a new role, took the detailed brief, delivered appropriate profiles for a "sense check" within 16 days, took a refinement on the brief from the hiring leader who then interviewed our recommended candidates, then were advised a fortnight later that the role was filled internally, but the leader hoped to work with us again in the future.
We wrapped up our research, “stood down” pending candidates and closed out the candidates expecting further interviews, and contented ourselves that at least the agreed retainer invoice paid for some of the time we’d spent on the assignment to that point.
A further 2 weeks later in a “wash up” call with the hiring leader we presented the market map from our research (on the basis this would be useful to the company for future team hires) and only then heard that the client had taken umbrage at the “tone” of emails from one of our team, then all sorts of other allegations followed in an effort to bully us into conceding a significant payment discount. Timing is key here - the hiring leader only raised concerns 2 weeks after she'd advised she was pleased with the candidates we had recommended but that the role had been filled internally, and after she'd already agreed to pay the research retainer invoice.
Given the extent to which we work successfully with other multi nationals, we found the situation surprising, and it left us bemused, puzzled and deeply concerned. Our only explanation is that this had been motivated by the hiring leader’s need to save face or money or both – she had already had a failed search engagement for this role with another firm, and with the role then being filled internally, was presumably under question as to why she’d engaged us at all.
It’s got me thinking though, about how often we rely on trust and good faith in the course of doing business.
In this instance, we agreed not to wait for that company’s normal procurement processes, because of the urgency of the hiring need as stated by the hiring leader – she is a member of the global HR leadership team and given the email trails between us on terms and directions to proceed, we thought we’d could take her word as a bond.
We took her detailed briefing, and the supplied job description at face value, particularly when it came to her comments on flexibility for industry sector experience; and accepted without question the brief refinement afterwards – this happens on a regular basis when hiring leaders aren’t initially sure of what they really want until they have specific talent profiles to consider.
We were surprised by her indiscretion in her comments about her HR colleagues, a non Exec Director of her company, and the business unit CEO as part of the briefing process, but were satisfied with her explanations as to why such a large company couldn’t fill such a role internally.
We were mortified to hear after the event, that she apparently hadn’t been happy with service delivery and communications with our firm, and endeavored to appease her with a credit note and profuse apologies – in an effort to restore faith and goodwill.
These four factors though, have since been used by the company’s procurement manager, to demand a heavy discount from the originally agreed retainer fee; which is a whole other matter from this article.
The good news, is that our escalation of this matter to the CFO and CEO resulted in immediate payment of the originally agreed fee.
However, as a direct result of this experience, we’ve sadly changed the way we engage with new clients – insisting on detailed documentation and contract scope sign-offs, before we commence any work; and whenever any timing or scope changes are made. Given the internal delays for many companies in effecting these, it adds time to every search process – not an ideal situation but we need to mitigate any future risks.
It’s also exposed us to the reality that some large corporations (despite their public vows of ethical conduct) still feel able to treat smaller sized suppliers with disdain, particularly when their hiring leaders can hide behind procurement and layers of bureaucracy.
We applaud the current UK initiatives for refinements to the Prompt Payment Code and the pending Small Business Conciliation Service.
At this time though for us, this all feels a little like a David & Goliath scenario. And it spurs me to recommend that you take a look at your own work practices today – how often do you rely on trust and good faith in another party’s intent, to achieve what you need to get done? And what coverage would you have if a retrospective dispute arose?
About the Author
Leanne Morris is well known as a both an outspoken advocate and critic of the HR profession. With long standing networks across 94 countries in all specialist areas of the function, and a multi- continent work history, she is a sought after subject matter expert on international HR hiring trends and HR hiring best practice.