Which is better – retained search or contingency recruitment?

  • Reading time:5 mins read

The short answer is: it depends!

 

Let’s first look at why your company should consider outsourcing the search, the screening, the recruitment and the hiring process to an executive search firm or a contingency recruitment company. Here are some of the typical reasons 1065_whistle_orangeI hear from clients:

 

  • We do not have sufficient HR resources or experience internally to find and hire.
  • We have been trying ourselves for a while but still cannot find the right person.
  • We just don’t have time to engage in a recruitment process and, in particular, interview many people.
  • We tried LinkedIn but realise that having a name from the Internet is one thing, to convince someone to consider our job is a very different and difficult task.
  • We know that hiring people is both interviewing for the right qualifications as well as selling the job opportunity and our company; however, our HR people are not sales people.
  • We have looked for senior executives on Internet job boards, but realise that few executives post their resumes on these job boards. We need someone to make a personal approach to the right individuals.
  • We keep losing people we hire for a particular position and need expert help.

 

About contingency recruitmentapple_laptop_working

Another word for contingency recruitment is “success based recruitment”, which simply means that the fee a client pays is contingent on hiring a candidate presented by the recruitment company. In other words, you will only be invoiced if you hire someone.

 

The typical fee for this type of recruitment is 20-25% of the successful candidate’s first 12-month personal income. That’s equal to around three month’s compensation. The income that forms the basis for the fee is calculated from the total of 12 or 13 months gross salary, plus fixed allowances or bonuses, and the value of other benefits like a company car.

 

Contingency recruiting is non-exclusive, which means you can work with as many recruitment companies as you like.

 

They say you get what you pay for. But what also comes to mind is if you pay peanuts, you get monkeys. As in any business, yours too I’m sure, the price of a product or service is closely linked to the quality, benefits and the value you buy. Yes, so there is a reason why some recruiters charge a 22% fee and others 32%. Please stay with me and you will see what I mean.

 

A major difference between contingency recruitment and retained search is that you have no guarantee how long the contingency recruiter will work on your assignment or how they will prioritise your account. Imagine that you are only paid if you find and present candidates quickly. Contingency recruiters know that their client has probably called a few other recruitment companies, so it now becomes a matter of who finds and presents candidates first. You know the idiom: The early bird catches the worm.

 

A contingency recruiter will typically not undertake a thorough analysis of your needs and requirements and will not require a visit to your office for a detailed discussion prior to the start of their work. Most of the time it’s shopping on the Internet or the recruiter’s database, not even interviewing the candidates before resumes are forwarded by email for your attention.

 

About retained search

Working with a retained recruiter means you pay a down payment upfront, a kind of guaranteed fee to cover their services. It’s common practice that you partner closely with your retained search firm and not involve others.

 

The normal fee structure for retained search is 30-35% of the successful candidate’s first 12-month personal income. That’s about four month’s compensation. The income is calculated from the total of 12 or 13 months gross salary, plus fixed allowances or bonuses, and the value of other benefits like a company car.

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Retained search is a thorough and rigorous process that consists of needs analysis, development and implementation of a catchment strategy, the screening and interview process, assessment, psychometric assessment and personal analysis by a third party, English language testing, employment offer presentation, salary negotiation, extended warranty period, preparation of a letter of employment, resignation guidance, reference taking and pre-employment health check. Just to mention some of the benefits.

 

By paying a down payment to get the process started, and to have your personal team working on your behalf, you are ensuring a joint commitment to complete the job by finding your Mr. Right – however long it may take.

Tom Sorensen

Tom Sorensen is an executive search veteran with over 25 years of experience recruiting in Asia, Europe, and Africa. He has worked in executive search in Thailand since 2003 and is recognized as one of the country’s top recruiters and most profiled headhunters.