Contingency Recruitment vs Retained Recruitment: What You Need To Know

In our industry we talk a lot about contingency recruitment vs retained recruitment, but its not always clear that clients fully understand the difference. It’s likely that most businesses will be firm believers in either one or the other, without ever having considered that there might be a different approach that would work better for them.

‘Contingency’ is often seen as a bit of a dirty word in recruitment, but at Blues Point we tend to believe that as long as all parties understand the arrangement, and it works for them, there’s no reason why it should be. But its useful to understand the benefits, and the pitfalls, of both approaches.

What is contingency recruitment?

If you have a vacancy to fill, and the process involves instructing HR to engage with some recruitment agencies (probably a Preferred Supplier List of agencies with whom the business has a relationship), and you pay the successful agency a fee after the chosen candidate starts, that’s contingency recruitment. I know a lot of people who use this approach and insist that it works for them.

I wonder how many of them encounter the following issues though…

  • Candidates that have not been properly vetted
  • Candidates dropping out of the process or not showing up for interviews
  • Agencies getting into arguments about who submitted the candidate first
  • Having to look through a high volume of CVs that are not right
  • Hiring managers complaining about the quality of candidates
  • Candidates accepting other offers at the last minute
  • Having to constantly find replacements for candidates that have not lasted in the role

These issues are common, but many businesses just take the attitude that this is how recruitment works. They probably curse recruitment agencies under their breath quite a lot, I should imagine.

Of course, there are some positives to contingency recruitment:

  • Contingency recruitment works well if you have a high volume of vacancies to fill, and a team of people to handle the relationship with the agencies, the candidates, and the hiring managers.
  • It also works well if the roles you are looking to fill do not require highly skilled individuals.

It requires a leap of faith to move from a contingency model to a retained, exclusive partnership with an agency, but if you are growing tired of the approach described above, it is worth knowing that there is another approach that could work a lot better for you.

What is retained & exclusive recruitment?

Bank Card - Contingency Recruitment And Retained RecruitmentThis is going to sound crazy if you have only ever done contingency recruitment, but here are the key things that would be different if you were to try a retained & exclusive model:

  • You would only work with one agency, not the six or seven you are probably working with now.
  • You would pay them a proportion of the recruitment fee upfront, at the point at which you engage them, and the outstanding fee would be settled with the candidate starts.

I know what you’re thinking. What scam is this?! How is one agency going to fill all these roles? Why the devil would you pay them any money before they have filled the role?

Let’s have a look at the issues with contingency recruitment listed above. Why do these things happen?

  • Candidates have not been properly vetted – That’s because the agencies are working in competition with one another. They have to work quickly in order to submit candidates – if they take the time to properly ensure someone is qualified for the role, an unethical competitor could easily fling the same CV over without even speaking to the candidate, and thus be eligible for the recruitment fee.
  • Candidates dropping out of the process or not showing up for interviews – The kind of candidates that you can find in a hurry are not necessarily the best candidates. Their CVs are available on job boards that all recruiters use. They are attending other interviews, so statistically you will have a lot of drop-outs because the candidate has simply found another job, and others because they are simply unreliable.
  • Agencies getting into arguments about who submitted the candidate first – Although HR will inevitably have to go with the agency that submitted first, this does not take into consideration the issue in the first point whereby one agency has upheld a standard of proper vetting and the other has not bothered.
  • Having to look through a high volume of CVs that are not right – If the agencies aren’t sure whether a candidate is right or not, they will inevitably submit them anyway in a contingency situation, because if they don’t, their competitors will.
  • Hiring managers complaining about the quality of candidates – Again, this is due to the lack of proper vetting.
  • Candidates accepting other offers at the last minute – The candidates you’ll encounter in a contingency approach are actively looking for a job, and if you’re lucky you’ll impress them more than the other companies they are meeting with.
  • Having to constantly find replacements for candidates that have not lasted in the role – Contingency recruitment is often a box ticking exercise and does not take into consideration whether the successful candidate is actually right for the team in terms of their behaviour, motivation and aptitude. The wrong person in the role can do a lot of damage.

So how would a retained, exclusive model eliminate these issues?

Working with a recruitment partner on a retained, exclusive basis essentially takes the pain of recruitment away from you. The key thing is that it is a partnership in the first place – your success is the recruiter’s success. They are motivated to work hard to find you the right person because they know that they will make the placement, rather than having a race to the finish line against a competitor. That means they have an agreed amount of time to go out and find the best candidates. They have time and space to identify them, and to properly vet them. They can even do the first interviews for you. They will also consult with you on what the market is like, identifying problems, advising you if you need to take a slightly different approach to finding the right person.

Why on earth would you pay part of the fee upfront?

Recruiters that work on a contingent basis tend to get used to being hurt by roles being pulled at the last minute. This is a real blow if you’ve worked hard on a project, to suddenly learn that you have no chance of earning a fee. So, paying a proportion upfront demonstrates a commitment to the recruiter as they embark on the project. Be honest, if you’re not sure if you are going to get paid or not, how hard are you really going to work?

What are the other benefits of a retained exclusive recruitment partnership?

  • Your recruitment partner will take the time to understand the role, so the candidates they send you are more likely to be a good fit. They’ll sit down with you and talk about it rather than just using the job description for reference.
  • You’ll get a level of expertise from them that you don’t often get from contingency recruiters who often use inexperienced consultants to resource contingency roles on the basis that a fee is not guaranteed.
  • You won’t have to wade through hundreds of CVs. They’ll give you a shortlist of the best candidates, you can even agree with them how many candidates you expect to have on the shortlist.
  • As you have agreed a period of time for them to resource the role, they will have some time to find the best candidates. These people might not be actively looking for work, but the agency can sell the opportunity to them and entice them to have a chat with you. The fact that they are not actively looking is a positive thing – it means they are not being courted by dozens of other companies. If they accept the role, its because they really want to come and work for you.

Issues with retained exclusive recruitment

Of course, retained exclusive recruitment might not be right for your business. Here are the main objections:

Its slower.

Yes – its not going to work for you if your only priority is to recruit someone as quickly as possible. But if you always do this, and find yourself with a high turnover, it might be worth considering that valuing speed above all else is not likely to result in finding the best person for the job.

Its more expensive.

Yes – per placement it undoubtedly will be. But it’s worth considering the much greater cost of hiring the wrong person, not just because of the cost of finding a replacement, but of all the time and resources put into the recruit that didn’t work out.

The pricing model is different.

Yes, it is. If you often recruit for roles that end up being pulled or going ‘on hold’, retained exclusive recruitment is probably not for you. But if what you’re looking for is for the agency to be dedicated and focused on finding you the right person, it will ensure your project gets the attention it requires.

It requires a lot of trust.

Yes, it definitely does. So you should choose your recruitment partner very carefully, and look for evidence of their results in working in a retained exclusive partnership with businesses like yours.

Which recruitment model is right for your business?

At Blues Point we try to work with clients on a retained exclusive basis, because we believe that this is the best approach. But with many of them, we began our relationship with them many years ago, working on a contingency basis. We’re not opposed to this approach, but it will always be with a view to nudging the client towards a retained exclusive partnership if we think this will work better for them. We understand that contingency works fine up until a point. That point might be when the business wants to make a strategic appointment where its critical that they get the right person in place. Or it could be that they have found themselves ‘firefighting’ constantly with a high staff turnover, and want to focus on building a team for the future rather than just filling seats.

The change in strategy doesn’t happen overnight, there needs to be buy-in from senior leaders in order to move away from the contingency model, and it can be a hard pill to swallow. But we’re very proud of our results, and happy to share them with clients that are uncertain about changing the way they recruit.

Hey, if it’s not broken, don’t fix it.

But if you are open to a different approach, contact us today.

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