Contingency or Retained?
Contingency recruitment is a type of recruitment in which the recruitment agency collects a fee from a client only once a qualified candidate is searched for and successfully placed in the vacant job role. It’s a ‘no-win, no-fee’ arrangement.
Contingency recruitment is best suited to volume recruitment or the recruitment of individuals where there is likely to be a good selection of candidates available in the market. It’s a more ‘mass market’ approach to recruitment, ideal for lower to mid-level employment, such as support staff and industry juniors or graduates. The fee for contingency recruitment is a percentage of the annual salary.
If the recruiter is unable to find you a suitable candidate, no fee is charged.
Here you’re paying to ‘retain’ a recruiter to your cause, guaranteeing them exclusivity to work on your vacancy.
Retained recruitment jobs tend to take place at the top-end of the market – where salaries are high, and suitable candidates are scarce. Often known by other names like ‘headhunting’, ‘search and selection’, or ‘executive search’, retained recruitment is associated with hard to fill job roles or high level senior management and director vacancies.
Due to the nature of retained recruitment it has a different pricing structure to contingency recruitment. Typically, a flat fee for the project is negotiated before the recruiter starts work, the fee is then split and invoiced in two stages. A non-refundable ‘up-front’ charge to set the ball rolling (invoiced immediately) and a final balancing fee, invoiced once your chosen candidate has been employed.
Pros and Cons of Contingency/Retained Recruitment
Benefits of contingency recruitment
- The employer keeps more control over the whole recruitment process.
- Freedom to use multiple agencies/recruiters on the same vacancy.
- It’s in the recruiters interest to send you relevant candidates as quickly as possible.
- If you are sent candidates that you do not feel are suitable, you simply don’t have to interview them – or pay a fee.
- Contingency recruitment is a good choice when a candidate is required quickly, or if you have multiple positions to fill.
- The candidates a recruiter puts forward should be relevant and will be capable of doing the job you need them to do.
Downsides of contingency recruitment
As for the potential downsides of contingency recruitment, consider the benefits and then put yourself in a recruiter’s shoes. If you were a recruiter and you knew multiple other recruitment firms were working on the same vacancy, or that you were up against an internal HR team, would you expend maximum resources on that project? Probably not. Instead, you’d want to put your efforts into sourcing a top-quality candidate for a job you know you would end up getting paid for. Therefore, if you do intend to use multiple recruitment firms, be upfront about it.
It pays to limit the number of recruiters working on your contract, make the fact that you have done this clear to the recruiters you are using. The risk in using multiple recruiters is that your recruitment campaign turns in to a competitive race between recruiters, your service level from each recruiter will drop, the quality of candidate presented will drop and the candidate pool is likely to get frustrated with multiple calls, from multiple recruiters, about the same job. You could also find that you create yourself more work having to manage relationships with each recruiter and deal with potential arguments over who found which candidate first. It can get messy.
Either use one recruiter or two, you will have less people working on your job, but they will all have a fair chance of success and continue to be motivated to provide their best service. You need to consider that all recruiters advertise in the same place and all have access to the same pool of candidates.
Benefits of retained recruitment
- Granting your recruiter exclusivity on a vacancy will ensure your recruiter works harder for your cause. They are motivated to do this because they know they will get paid.
- The exclusivity element of this type of recruitment, eliminates the ‘rush’ to submit candidates. Meaning that candidates will have been well researched, vetted and more precisely matched to your requirements.
- Retained recruitment suits the top-end of the recruitment market, where potential candidates aren’t always looking for a new job. Recruiters will approach passive candidates (head hunt) and market your opportunity to them.
- In the rarefied atmosphere of big salaries, bigger benefits, and massive levels of responsibility, discretion is essential – retained recruiters will go out of their way to ensure that confidentiality is maintained.
- On a retained basis, recruitment is more focussed and research more detailed. Your recruiter will generally provide you with a dossier of information on three to five candidates, who will have been thoroughly researched and approached on your behalf. All that’s left for you to do is carry out the final interviews.
Downsides of retained recruitment
There are very few downsides to retained recruitment you just need to be certain that it suits your own requirements. If you want to keep full control over your recruitment process, or what to use multiple recruiters or your own internal team, it not the right solution. When working on a retained basis your recruiter will want to their job and will require your trust to enable them to do this. Usually, you will need to spend some time, upfront, helping your recruiter to understand your business and exact requirements. This is an important part of the process and will enable your recruiter to find the best candidate for your vacancy.
The only other issue is payment, with the retained model your recruiter will charge will split your invoice in two, it’s not necessarily more expensive, but you will be required to pay a percentage of the fee before work starts and final payment when the project is complete. Your initial payment is non-refundable and usually constitutes 50% of the total recruitment fee.