Whenever I’m introduced to a potential new client, we eventually get to the question, “So, how do you work?”. I’m sure you’re vaguely familiar with the terms “contingency” or “retained,” and perhaps you’ve already formed strong views about which works best for you. However, I urge you to read on if you’re open to hearing many perspectives for and against each approach and learning about a potential middle ground. Below, I’ll outline the pros and cons of each agreement for clients and recruiters so you can be aware of each party’s concerns. Hopefully, this will lead to more appreciation for either position and for finding an amicable agreement.
Contingency Recruitment
The first is contingency recruitment, often referred to as “success only.” In this model, if I introduce a candidate and you hire them, you’re liable to pay the agreed fee. This arrangement is non-exclusive, meaning you can utilise the help of other agencies or conduct your own recruitment efforts in tandem.
Pros for Clients
One of the main attractions is that you only pay if you’re introduced to a candidate you decide to hire. This means you have no risk of paying any fees without successfully hiring someone. Additionally, by utilising multiple agencies, you can potentially increase the pool of talent introduced to you. This also lets you see which recruiters are most effective at introducing relevant talent before committing further. Contingency recruitment generally prompts quicker introductions from recruiters because they compete with other recruiters and must operate faster.
Pros for Recruiters
For us, this model allows us to introduce candidates we already know or have discovered through other activities/searches, potentially leading to positive outcomes for all parties. We can match the low commitment from the client by ceasing to make introductions if the client isn’t collaborating in a way to make an effective hire. This model also allows us to work on more opportunities and with more clients, spreading concentration risk and potentially increasing our chances of success. With the non-exclusivity agreed, we can introduce candidates to multiple clients, enhancing opportunities for placements. The competitive nature of this model can be a powerful motivator for some to work faster and smarter.
Concerns for Clients
Recruiters working on a success-only basis have less confidence they will be the ones to make the hire for you, so they spend less dedicated time and effort finding you people. So, you might think using numerous agencies gives you more coverage, but it often results in diluted efforts. It incentivises speed, often resulting in cutting corners and simply “getting CVs in front of you.” This leads to more irrelevant or poorly screened candidates, increasing the time required to be involved and likely juggling sporadic candidate introductions from numerous recruiters. It can get overwhelming and disorganised fast. Suppose a recruiter cannot spend as much time learning about your business to position you better or go deeper on candidate exploration calls. In that case, they are less likely to be able to convert the best talent – those that usually take time convincing to even consider. Moreover, having multiple recruiters contact the same talent can lead to mixed messaging and dilute your brand’s image, making you appear less desirable to the market and potential hires. A final point for now, which IS a generalisation, is that typically, higher-skilled recruiters will not work on a contingent basis as they can command upfront commitment for their time from clients.
Concerns for Recruiters
For us, there’s a high risk of dedicating time and effort only to wind up unsuccessful. Multiple agencies approaching the same candidate about an opportunity does not look good and reflects poorly on the recruiter and company involved. Some talent won’t take seriously a job opportunity if it’s not an exclusive/committed search. Presenting opportunities to candidates with little client knowledge can be challenging, as understanding properly a company/client takes considerable time. The pressure to get CVs in front of clients quickly reduces the overall quality of recruitment and experience you can reasonably expect to provide. Not to mention, with numerous agencies submitting candidates at the same time, it often generates conflicts over which agency has a representation of the talent presented.
Retained Recruitment
Retained recruitment usually involves paying an initial upfront fee to engage a recruiter, followed by payments at agreed milestones or upon successful placement. Typically, the company agrees to work exclusively through one search firm, giving them the time and resources to conduct a thorough and methodical search. In return, the recruiter dedicates specific resources to the search and gives their client exclusivity or first refusal of candidates.
Pros for Clients
Providing you choose the right search agency to work with, this model will likely provide you with a thorough and systematic search process and assure you that the market has been well covered. You’ve been presented and positioned by professionals, achieving the overall best result/hire. A proper search professional can help you understand your current positioning, your team’s strengths and weaknesses, and the talent needed to achieve your goals. They should be able to provide market insights and position your company compellingly to top talent. They should also create and control a recruitment process that comprehensively assesses talents’ behavioural and technical competencies while making it enjoyable and engaging. If it’s organised well, at the end of the process, you should be able to decide on the best talent backed by data and feedback throughout.
A big benefit of choosing the right search partner is that they should enhance your brand image throughout the process—to all who engage with you, regardless of whether they are successful or not.
Pros for Recruiters
For us, upfront commitment, financially and contractually, provides clarity and alignment of expectations and the confidence to dedicate significant time and resources to a search. Any professional who has conducted an extensive and methodical search knows it is the surest way to achieve a successful hire, and a term I coined is “know you hired the best person vs. thinking you hired the best”. This relates to the fact that when you do an effective search, you include all of the relevant individuals possible, approach them thoughtfully, and have the most information and skill to convince them to consider. The agreement of timeline expectations and exclusivity enables the recruiter to structure their time to be most effective. We can enjoy and derive satisfaction from running an effective and informed search process for both candidates and clients.
Concerns for Clients
An upfront commitment poses a financial risk if the expected results aren’t achieved. Just because you’ve paid upfront and given an agency exclusivity doesn’t guarantee that the quality of work and individuals you are presented with will improve. A search firm may take a more relaxed approach and take longer to produce, given the assurance of your prior commitment. Accepting candidate submissions from other agencies presenting desirable talent might mean you incur more costs. How do you know which search firm you should entrust with this process?
Concerns for Recruiters
As soon as we agree to a search, we are expected to deliver. Contractual commitments to a scope of work often mean we must conduct an extensive search process. Scope creep can occur if the client changes the brief or expectations, leading to more work without additional compensation. Unrealistic expectations from a client around the talent level they can reasonably expect to recruit at. I’m sure many recruiters have found out halfway through a search their client’s expectations are entirely detached from the reality of the talent they can attract or afford to hire.
The terms “rock star” and “unicorn candidate” are often touted as requirements for talent without the appreciation that you as a company need to be at or above that level of quality to be desirable to the talent.
A Middle-Ground: Exclusive Contingency
A middle-ground solution could be to try and agree on an “exclusive contingency” basis. This is where you decide to commit to working with one recruiter for a defined period but without financial commitment upfront.
For some search professionals, this is enough for them to commit the time, energy, and resources to a more thorough search. However, naturally, there will still be questions and concerns about how committed you are and if you’ll even hire at all.
Personal Preferences in Recruitment Methods
I could continue with arguments for and against on either side. There are countless examples of firms partnering with the wrong search agency or recruiters partnering with the wrong clients. Like any relationship, everyone has their own views and approaches. I prefer building long-term relationships supported by trust, competence, and mutual respect. Occasionally, I’ll make opportunistic introductions for talented individuals to companies, but this will be due to individuals reaching out to me directly for help or having discovered them while conducting another search. For searches, I’ll demand upfront commitment from my clients.
Regardless of your chosen method, be open and honest about your expectations, address concerns upfront, and align incentives as best as you can.
