Contingency versus Retained Recruiters: A Not So Great Debate
Let’s face it… Not all Recruiters are created equally. Candidates know it. Clients know it. And, yes, Recruiters know it too.
One of the key differentiators between Recruiters are some are Contingency-based, while others are Retainer-based. Each model comes with its own set of strengths and weaknesses. Either model will appeal to Clients and Candidates for different reasons. Both models can boast Recruiters who are good at what they do. And neither model has a monopoly on bad Recruiters.
Portico Inc. is a Retained Search and Placement Firm.
So what are the differences between Contingency and Retained Recruiters?
Contingency-based Recruiters are very easy to engage, and will often work as resumé referral services, meaning they are able to send Candidate resumés quickly. They have to. Their business model depends on speed. In order to optimize the response rate, many don’t require their Clients to sign contracts that detail terms and conditions. In simple terms, a potential Client calls a Contingency Recruiter and places the job order with them. So, as a Client, if it’s speed and a resumé referral service you are looking for, the Contingency model might be right for you.
On the opposite end of the spectrum are Retained Recruiters. So, who are they? Not all are alike, but they basically share certain business model traits. They will require potential Clients to sign a contract that details the terms and conditions of every engagement. They will also require a deposit (some are refundable, while others are not) that goes towards a search and recruitment process that includes ad spends and (significant) time performing outreach. The deposit is usually deducted from the final placement fee when the placement is made.
Some Clients like this model because the Retained Recruiter tends to devote a lot of time and energy to the Client’s specific file and understanding, in a granular way, the Client’s wishes. Rarely do Retained Recruiters act as a resumé referral service.
Each model has weaknesses - some apparent, and others… not so much.
The Contingency model is the most common one in the Recruiting world. If it has a weakness, it tends to revolve around a tendency towards taking on as many Clients as possible, which can lead to a lack of attention paid at the front end of the engagement. Too often there is not a lot of time spent with the Client to learn about the position, the home environment, what has worked/not worked in the past, and deal breakers versus wish lists. It’s very rare for a Contingency Recruiter, for example, to take the time and meet the Client in their home in order to learn as much as possible.
“I’m a clean freak” means different things to different people. A visit with the Client in the comfort of their home helps to clarify what “clean freak” means to that particular Client and hopefully establishes a comfort level for a productive working relationship.
Further, the Contingency Recruiter’s “need for speed” can often lead to missteps. Prior to launching Portico Inc., we often worked with Contingency Recruiters. There were countless occurrences in which Candidates who must drive was a position pre-requisite. There were also countless occurrences where, 5 minutes into the interview, the question “so tell me, how long have you been driving?” is asked only to learn that the person doesn’t drive. Frustrating is an understatement. The interview would end quickly. We would feel badly for the Candidate who paid for transport to get to the interview, and angry that our time was wasted by a Contingency Recruiter's sloppy "need for speed."
Retained Recruiters have their own achilles heal. Too many are in the business of collecting deposits and not making placements. We always wonder about the percentage of placements made for every deposit collected. Our business will only accept a deposit after an assessment of the labour market and measuring the potential for success is completed. As a result, our ratio of placements to deposits is a healthy one.
We are not trying to make an argument for one model over another. We do think it’s important for Candidates and Employers, however, to understand the differences so that the decision to choose one Recruiter over another is an informed one and in alignment with self interest.
Let’s hear it for Recruiters, whatever the model, who do well by their Clients while respecting the hopes and wishes of their Candidates. The Employer / Employee relationship can never be lop-sided. Good Recruiters have a role in minimizing the potential for mismatches.
© 2021, Portico Inc.
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