Question for you contingent/agency recruiter types

As a recruiter - would you rather take on a search competing with 2-3 other search firms at a fee of 20-25% or have an exclusive search at a lower fee (ex. 17%)?

▶ Reply to This

Replies to This Discussion

Permalink Reply by Sandra McCartt on March 21, 2011 at 2:56pm

I much prefer competition at 20%. It makes me work harder, faster and more selectivly. I love competition.

▶ Reply

Permalink Reply by Amber on March 21, 2011 at 3:47pm

The 20%-25%, I always go in thinking my candidates will be the ones hired!

▶ Reply

Permalink Reply by Slouch on March 21, 2011 at 4:59pm

This may be for another topic but the mistake is when a recruiter hears exclusive and drops the fee because they think exclusive means no other recruiter will work it. A true exclusive search is when the company agrees that no matter what the source of the candidate is, the recruiter is going to get paid on it. So if it comes in through a job board posting or a newspaper ad or an internal referral, the recruiter gets paid.

▶ Reply

Permalink Reply by Thomas Patrick Chuna on March 21, 2011 at 7:33pm

Call me paranoid, but I doubt that company is going to quit accepting resumes from those other recruiters just because I accept a 17% fee...more likely, they will promise the other recruiters exclusivity too, in exchange for a 17% fee, so everyone will be working for the reduced rate..the company is dumb if they don't try that. and their internal HR will be working LinkedIn 24 / 7 so they can avoid paying the 17% as well.

It all comes down to this - can I be first in with a candidate that is worth calling and interviewing? For the amount of work that takes, I am OK with taking 20 - 25%...if I decide I can do it for 17%, or a flat 10K fee, it will only be because I like the company, or who I have met within the company, and I want a filled placement with them on MY resume..or I really trust that I'll get future business..as for the myth of exclusivity, anything outside of a signed retainer agreement is wishful thinking.

▶ Reply

Permalink Reply by C. B. Stalling!! on March 22, 2011 at 9:43am

I am for the exclusive all day long. I know I am getting paid and I also get to see every resume that come in to the company. Pretty much they turn the HR stuff over to me and I handle this. Have you her the term RPO.

This is my angle. I know many of you think differently, Glad to be an American!

▶ Reply

Permalink Reply by Al Merrill on March 22, 2011 at 10:18am

Everyone knows what their time is worth- unfortunately, most recruiters don't stop to realize they build a reputation for being able to be "worked" on fees. The client doesn't give you any more respect for the quality of work you produce because you're willing to negotiate away your income, and in truth you may lose a little respect in the process. Next time they'll have another deal to see how hungry you are, then!

▶ Reply

Permalink Reply by Thomas Patrick Chuna on March 22, 2011 at 10:57pm

I was answering from the perspective of the solo recruiter..if I had a legal team that could act on any nefarious activity that could hurt me, that's a different story..absent a retainer agreement, I think it's best to proceed as if I'm competing with everybody, including my client.

Jeff Dalberg said:

@ Thomas, I think you are correct. You are a bit parinoid. Companies will either do what is in the contract or they will not sign it in the first place. Rest asured that once a contract is signed they will adhear to the trems. No company wants to risk going to court when they know they will loose. Not only will it cost them the fees, most courts will award additional amounts for damages not to mention the attroney fees they end up paying which can end up being as much as the fee itself. No HR Manager or accounting department will risk their job for not doing the right thing.

We have had a few HR Managers refuse to do what was in the contract and we simply avoided going to court by contacting one of the Officers of the company who I am pretty sure consulted their in house attorney. We are still doing business with each of the clients. The only difference is that in both cases we now deal with different people (one a CFO and the other a person they put over the recruiting dept.) In both cases our relationship has improved not deminished.

I am sure we will be on the receiving end one day, and I am sure we will be the ones in the wrong. It is bound to happen the longer you stay in business and the more people you have work for you. When that time comes we will either pay or not get paid. Contracts lay out the responsibilities of each side. We expect to be help accountable for our side and we hold them accountable for theirs.

If you can not count on your contract, your legal team or the courts then you should not even have a contract in the first place.

▶ Reply

Permalink Reply by Sean O'Donoghue on March 23, 2011 at 6:34am

Interesting question Morgan -

It's just like a lottery really if you are working on a contingent basis. It doesn't matter how many tickets you may have in play (candidates), or how confident you are that you've picked the best ones (whether that's because you are psychic, or just have a good hunch) - there's always a chance that someone else will win the jackpot and you'll be left with nothing. Heck - you could give me a role at 50%, competing against 15 other agencies ... or a role at 15% exclusive. I'd still choose the exclusive role all day long - because no matter how confident you are in your abilities, there's always the chance that you'll lose out. 50% of nothing is ... zip, and I don't care how hard you worked on the assignment.

Over here in the UK, it's extremely hard to get exclusive assignments, as the big agencies have been pushing the contingency model for soooo long. Clients don't really understand the benefits of working extremely closely with just one recruiter. Sure, one recruiter or one agency might not be able to manage a large corporate client exclusively - but we have a way of solving that issue in our business - although I'm not going to plug it. If you want to know more, feel free to ping me a message.

▶ Reply

Permalink Reply by Sandra McCartt on March 23, 2011 at 10:59am

No wonder you think four months is a time frame to even give you the idea you have a client. I have never had that experience with CFO/CPA candidate transactions so that must be unique to your business model.

The only problem i have ever had with a fee or an agreement was a retained search contract that the company didn't honor. I was not about to involve an attorney over 10K or cause a problem for someone who signed something and forgot the terms of it. Or involve an attorney over 10K when the client paid me over 150K that year.

If we want to play the hit em a lick and run then involve the attorneys but the attorneys i know don't work on contingency for small claims collection. Contingency is normally 30% for a decent attorney. The whole sound of what you are talking about makes me want to take shower.

▶ Reply

Permalink Reply by Sandra McCartt on March 23, 2011 at 1:56pm

No Jeff, i am not alone. We have clients that we have recruited for since 1975 and we are still working for them. We are deeply networked, they call us for most of their positions. I much prefer contingency my clients like the idea that i have some skin in the game with them. I have quietly watched several clients that i work with on a contingency basis get sold on using a big retained firm once in a while and have enjoyed going in behind them cleaning up the mess and heard the comments that they will never use a retained search ever again.

We work for small to medium sized businesses, we have gone through the ups and downs with them. They consider us part of their team. Would I ,have i let a wreck slide over 10K that would cause a long term interal connection a problem. You bet, i have and i will. I have in fact turned down a retainer when i knew that it was probably going to be an exercise in futility and have told the client why i felt that way. In exchange for the way i have handled some of the wrecks that happen i have had clients send me a check for a search that did not result in a hire because the position was either put on hold or a reorg eliminated it after we did the work. I didn't ask for it they offered it because they knew we had the time and effort in the search.

The change of recruiters after 4 months or 12 may certainly be the norm with big companies who are open to the next deal or the next offer or the next slick idea some recruiter comes up with. That's not my territory and i don't want it to be. I started this little popcorn stand a long time ago with the philosophy of being a long term member of the team. It's worked very well for us, made us a lot of money and fostered a lot of referrals. We haven't had to make a cold call for business since i can remember. Recruiters make mistakes, companies make mistakes we roll with theirs and they roll with ours. Nobody dies and nobody gets beat up and nobody has to use an attorney or drag anything into small or large claims court. I've had situations where a person fell out before the guarantee period was up. My client called and said don't worry about replacing for free. It was our internal problem that caused this, replace him and we'll pay you another fee. I prefer skin in the game instead of somebody's butt in court or getting somebody in hot water when they were the one who made a mistake or getting a retainer of 10K then having some bad will because they paid for something they didn't get and regret ever paying a retainer.

Your business model may work well for you it would not work for me. That's why they make ice cream in 31 flavors. Actually Morgan's question was "take an Exclusive or Contingency" not a retained. Exclusive and Retained are not the same thing and there is no such thing as an exclusive if somebody comes up with a better candidate. The difference is that with a retained the recruiter gets paid even if somebody else comes up with a better candidate.

I made a placement with a client last week, the first placement i made with that client was 1977, a kid right out of school with a brand new accounting degree. He was promoted to CFO about five years ago. I have never had a retainer or an exclusive with them. Have placed 73 people with them at full fee. They are interviewing a candidate on the 29th for a Director level position and one on Thursday for a manager level spot. That's how i like it to be no matter what the facts are my friend. I have given them some freebies along the way so we sorta like each other and there is a lot of loyalty on both sides as well as many referrals .

Oh, and they are not the only client i have that we have that kind of relationship with. There are about 20 to 30 more. It keeps us pretty busy with our long term friends. It's not fear of losing a good client. It's simply my idea of good business.

▶ Reply

Permalink Reply by Al Merrill on March 23, 2011 at 3:27pm

It seems it has always been a given Jerry, in many retained firms I've known, that there is a certain arrogance in being in or from a retained-only firm. And they tend to look down on contingent firms and recruiters doing contingent work as being second class citizens, as if we somehow aren't capable or don't know how to ask for a retainer, instead of being successful and independent enough to not need it! I'm with you on working my way by choice-

▶ Reply

Permalink Reply by Sandra McCartt on March 23, 2011 at 3:35pm

I have never heard of any retained fee being refunded. Every retained contract i have ever seen started with one third paid at signing of the contract, one third being paid after candidates were identified and interviewed and the last third paid at hiring. Never saw one where a recruiter got paid the full fee upfront and then refunded it if they didn't fill the position. Some retained do not have an exclusive and some do. Exclusives i have seen refer to no other recruiters being given the position or an exclusive time period being offered where even internal did not work on it. Sematics perhaps but different from what you have defined. Everybody has different arrangements.

I think i placed ole Beaver. But i can assure you there are hundreds and hundreds of savvy contingency recruiters who have built their business and continue to enjoy great relationships with their clients without taking the attitude that they are swimming in a tank of sharks. There really is some integrity left in the world out there Jeff. The only good ole boys i know are horse traders and i like the hell out of them.

I am getting the feeling that your business experiences have not been pleasant. I'm sorry about that you might look for some of those clients who value loyalty, service and some give and take. It's a nice place to be. In any century. I , like Jerry have earned my exclusivity and continue to with each new client that comes on board.

I can tell you story after story of folks who came into this business demanding retained searches, /exclusives some of them are selling cell phones. Filed chapter 7 after two or three years so the failures happen in both contingency and retained.

My take, it's about repeat business whether it's contingency or retained. It's not about hit em a lick of retained for four months or a year and go find another one.