Contingency or Reatined Recruitment – What’s the difference?
Contingency or Retained Recruitment – What’s the difference?
There are three main types of recruitment strategy in common use – they are discussed below:
Contingent recruitment (sometimes called non-exclusive) means that the recruiter is competing on the role either with other agencies or indeed the client should the client have advertised the role on a job board or their website etc. The recruiter will only get paid should they successfully fill the role. Working this way is how the recruitment industry got the reputation of “throwing CV’s against a wall”. That’s because this way of working means that the recruiter has to be quick – do a quick database search and get as many CV’s that look OK to the client. The reason that recruiters send all that they have is that they don’t want to risk their competitors sending someone who they have registered on their database. This way of working does not produce the best result for the client.
How can the recruiter produce quality results when they are under so much pressure to move quickly? This is a transactional way of working where not much of a relationship is formed between the parties.
Exclusive roles are where the recruiter has the role exclusively, but still, only get paid on success. There are huge benefits in working this way over contingent recruitment. Namely that the recruiter has more time to do the exercise properly and as a result, the clients get a better quality hire at the end of the process. Interestingly, the recruiters charge you the client no more and in many instances, many are willing to discount their fee to get exclusive work.
The way recruiters should all be working as professional recruiters is on a retained basis. This is different from the other ways mentioned above as they get paid a fee for service rather than a fee for success. They get paid for the work they put in, not the end result they achieve. They have the time to do things properly, including headhunting, tapping into passive networks as well as searching through their active candidate database. Typically, the client will pay a percentage of the expected fee upfront then another payment when the shortlist is produced; and then the final balance on success. The first payments are not refundable should the client cancel the role. The benefit to you the client in working this way is you get 100% commitment as the recruiter has time to do things properly. It strengthens the relationship as the two parties work together to produce the outcome required.
The biggest win by working on a retained basis is that the recruiter has more time to source appropriate candidates which will ultimately mean a better quality result at the end of the process. Clients should note that it costs no more to work with a recruiter this way.