A while ago I read a great book that made me look at the world a little differently – Freakonomics (if you haven’t read it then I can very highly recommend it). One of the themes in the book was the conflict of interest that is inherent in a real estate agent. They are, in theory, supposed to be acting on behalf of the seller – they are after all contracted by the seller to sell the house and are paid by the seller based on the proceeds of the sale. One therefore assumes that they hold the seller’s interests at heart in their actions. Those of you who have ever sold a house would not be surprised to know that this isn’t so. The agent is actually just keen on getting a deal, at pretty much any price as long as it happens quickly – 7.5% of 1.5million for 3 days of work is better than 7.5% of 1.65million for 30 days of work (particularly in a good market where they can move onto another deal on day 4).
This is of course not to say that estate agents are dishonest – it is rather just understanding what their drivers are.
Unfortunately the same can also be said for another profession which has the unfortunate perception of attracting the “less than scrupulous” in good times, recruitment agents. Recruitment agents are paid by companies that request their services to find them good people to hire. Therefore, as in the real estate model, one would normally assume that the agent is working with the best interests of the client company in mind. Unfortunately this is not so since they make their money on a % of the person’s salary when they join the company, their “driver” will be to sell a person into a company no matter what the fit – an inherent conflict of interest.
Since all players of the “game” know this one could argue that this is fair. What is not fair however is when the agent realizes that a good person can be “sold” multiple times (person joins, collect fee, then head-hunt to another company, repeat) across a number of companies in a short space of time – something to watch out for (both as an employee and an employer).
