Contingency recruiting is appropriate in the following situations:
When many people are likely to be qualified for the position;
When you only pay when you hire.
When there is limited sense of urgency and commitment to filling the positon.
When industry sourcing has limited value.
When the hiring organization wants to take more responsibility for screening, interviewing and negotiating with candidates.
Retained executive search consulting is appropriate in the following circumstances:
When the compensation level of the position is above $70,000.
When it is critical to hire not just any qualified person, but the most qualified person available.
When the hiring organization wants:
A recruiter who will make a dedicated effort on its behalf to filling the position, and who will take into account nuances of the hiring organization’s culture and other critical issues related to the job vacancy.
An independent third party to thoroughly screen candidates, through in-person interviews, before finalists are presented. Evaluation of internal candidates against an external shortlist. A go-between to help persuade an executive to leave a desirable position for a better opportunity, and to help negotiate the terms of the move.
A high degree of confidentialityis required in the recruitment process.
Differences in Approach
There are several key differences between retained and contingency recruiting in the way the process is carried out. A retained consultant is typically working exclusively on the search and is expected to evaluate all candidates being considered for the position. As a result, a retained consultant will never present a candidate to more than one client at a time. A contingency recruiter usually does not have an exclusive assignment, but instead is in a race against their sources to present a winning candidate, and often present attractive candidates to as many clients as possible.
Contingency recruiters tend to be more specialized by industry and function. Retained search consultants also specialize but, because they are driven by original research for each engagement, are willing and able to apply that process across industries and functions, especially when circumstances indicate the possibility of recruiting from outside the client’s industry.
Fees for the two kinds of service are similar, typically 20-30% of guaranteed first-year compensation for the hired candidate. Retained recruiters make an estimate of the fee and bill for a portion of the fee to initiate the engagement, with progress payments leading to a final bill that makes an adjustment based on the actual compensation package awarded to the hired candidate. As an alternative, most retained consultants will also accept a fee fixed at the outset based on the expected compensation level and billed in three or four monthly installments during the search. Contingency recruiters, on the other hand, receive one lump sum on hiring. In addition to the fee, retained consultants ask clients to reimburse them for out-of-pocket expenses—mainly travel expenses for candidate interviews. Contingency recruiters typically don’t incur these expenses as they typically don’t interview candidates who are out of the area.
Neither contingency nor retained executive search consultants accept fees from individuals for the purpose of helping them find a job. However, contingency firms are motivated to "market" highly attractive candidates to several potential employers at once. Retained consultants are not motivated to sell candidates in the same way; they are being paid for the process of selecting the best candidate, so can be more objective about whether a particular individual is the right choice.
Search Process
The contingency recruiting process is quite simple. Recruiters learn the basic facts about the job vacancy, scan known candidates and submit their resumes as quickly as possible.
The retained search process has many more steps. If a firm decides to hire a retained executive search consulting firm, here is what they can expect:
The consultant will conduct detailed interviews with the client organization’s management team to develop a full understanding of the position to be filled and the qualifications of the executive to be recruited. A summary of this understanding, including a detailed profile of the qualifications and experience of the desired candidate, will be communicated to the hiring executive at the outset of the engagement. This engagement letter will also include a complete description of how the search will be conducted and will outline the firm’s policies on fees, expenses, guarantees and assurances against recruiting executives away from the client organization in the future.
The consultant will conduct original research, targeting organizations identified as likely employers of potential candidates, and accessing proprietary and commercially available databases for sources of potential candidates. Through this research, the consultant develops a "long list" of potentially qualified candidates, and then conducts telephone interviews to develop candidates for possible in-person interviews. During one or more in-person interviews the consultant conducts a thorough evaluation of each candidate’s suitability for, and interest in, the position.
The consultant presents several qualified candidates to the client for interviews, and throughout this process acts as a mediator to assure that all issues relevant to filling the position are being addressed. Once the client has selected one or more candidates it would like to hire, the consultant conducts final reference checks to confirm the accuracy of judgments about the candidate’s suitability and to assure that all relevant information about the candidate has been gathered.
The consultant will help the client develop the job offer and will help the candidate prepare to accept it. After the hiring, the consultant will stay in touch with both the client and the successful candidate to assure an orderly transition.
Finally, the hiring organization can expect two assurances from the search firm: first, the firm will pledge that, during a given period of time, if the hired candidate does not work out for reasons the search consultant should have foreseen, the firm will repeat the search at no extra charge (out-of-pocket expenses only); second, the search firm will pledge not to recruit from the hiring organization for a stated period of time following the engagement.
