Quantity vs. Quality, Reason #1 to Reject Contingency Search

There are many good reasons to reject Contingency Search in any form, but for today’s post, I’ll deal with only one reason.  Quantity vs Quality. In most cases, by no fault of their own, recruiters are forced to produce poor quality work or get left in the dust by other recruiters with a quicker trigger finger. The inherent weakness of Contingency Search lies in this conundrum: The more you endeavor to vet and qualify your candidates, the less likely you are to get paid for your work.  The take home is that if you want to get paid, you had better not take too long in skimming those online resumes and be late to the party.

A basic rule of Contingency is: If the same candidate is referred to a client by multiple recruiters, only the recruiter who FIRST  sent the resume to the client gets paid for the referral. Therefore, the most conscientious recruiter will far too often lose out and not get paid for their referral. Why? Because they were too thorough in doing the job of a recruiter. Even if you want to do well on behalf of your clients, you are put in the position to have to race to the resume submission before you should. I am convinced that this is the reason that the best recruiters don’t stay in Contingency Search for long.  They either convert their business to a Retained model or leave the business altogether.

Why would a client want a flurry of resumes filling their inbox only to have to spend time sorting them to determine who sourced them only to then begin the arduous task of vetting and qualifying the new resumes?  Furthermore, because of the race to the bottom, they have been flooded with all the “low hanging fruit.”  These are essentially two kinds of candidates; Physically Unemployed or Emotionally Unemployed. In either case, they are motivated to escape a bad situation giving them an impure motive in many cases.  That severe motive can compel such people to embellish their experience and worse, misrepresent who they are in order to meet a basic need they have. If you’ve hired much, you know who this is.  Its the guy who once he's hired, turns out to be a very different person than the one you interviewed.

I’ve spoken to many different recruiters who suffer burnout and mental and emotional fatigue from trying to balance doing the right thing on behalf of their clients and getting paid. Okay, money isn’t everything, but its right up there with air. So the problem for many is that they desperately desire to be a good recruiter who does excellent vetting of the people they present to their clients yet they simply cannot accomplish this and thrive or in many cases survive.

The irony in all of this is that usually the FEE  for contingency is the same or close to what it would be on retainer. The main difference is the terms of payment. Yet the key benefit to working on retainer is the ability to gain a commitment from one firm with a good reputation that you believe understands your company's needs and what it takes to be successful in the position. In doing this, the company will have a slate of qualified, vetted and interested people with the right motivation that ensures the best possible outcome.  This is why it is still a mystery to me that companies think that they are better off working on contingency.  What a gross miscalculation!

For those recruiters who work contingency but "exclusively" with their clients, and want to argue this point, I would ask you this question: What happens if you vet a potential candidate and determine that they are not a good fit and do not present them to your client only to find out that the candidate contacts the client directly and becomes a candidate for the position you are "exclusive" on?  Do you get paid regardless of the source of the hire?  Or do you only receive your fee IF the hired candidate came through you?

There are so many additional reasons to avoid contingency search that it could fill volumes of books.  But I have to get back to search work. Thanks for reading.

Views: 1539

Comment by Mitch Sullivan on June 4, 2013 at 11:05am

It's interesting that most of the defence of contingency I've seen has been based on why it works for the recruiter/agency rather than why it might be best for the clients.

The reality is that most permanent jobs are filled more effectively when only one recruiter works on that vacancy.  That's why so many companies are bringing their recruitment inhouse. 

Plus, you never see a hiring manager asking three of the company's internal recruiters to fill the same job.  That doesn't happen because it's incredibly stupid.

Comment by Stephen Nehez, Jr. on June 4, 2013 at 11:30am

@Mitch So you are proposing that leaving the hunt to a single individual is better than utilizing a team of some sort?  Hmm.  So now you have one person reading the resumes and extrapolating the persons background, skills, and individual characteristics.  One person to filter.  The same person to guess.  The same person to decide all of the major decisions.  Kind of like hiring a wedding planner.

What if that person has some biases?  Against schools, the spelling of a name, the degree, the GPA, the commute, the type of font used on the resume, etc. etc. etc.

If I was the hiring Manager, I would want as many options that I could get my hands on.  Unless of course I worked for the government.

Comment by Seth Lidren on June 4, 2013 at 11:43am

If the person is recruiting off of biases rather than the clients needs, he/she should be fired.

That is the mindset that a lot of managers have, the more the better, right?  Well, isn't that the reason this blog was written to begin with?  Quality over quantity.  There's a reason, in Corporate that a certain level of decision making is not given to the HM.  The company would go broke if the HM had that type of authority.

The only time I have ever tasked multiple recruiters on a single vacancy was for sourcing purposes.  The team would source candidates and pass them to the assigned recruiter.  But having multiple recruiters accountable for the same vacancy?  That's just asking for a screw up down the line.  And the only person you can point your finger at would be yourself.

Not saying contingency cannot to a "quality" job at all, because it's possible.  But Mitch has it right, what's good for the recruiter may not be good for the client.  As an organization that utilizes a fair amount of agency cost based on the need to (as Stephen said, options); I prefer a one-retained, many contingent signing.  And believe me, some of my contingent folks do way better than the retained when they are tapped.

To touch on Mitch's point a little further, I'm not sure why the "defense" of agency (from the agency side) is not more considerate of the client.  I'm not sure about other corporate folks, but I cannot wait until I'm able to eliminate agency costs from my organization...you guys tend to make that cut-and-run very easy.

Comment by Mitch Sullivan on June 4, 2013 at 11:46am

No Stephen, I think using a team is a good idea, as long as that team are all working towards the same objective. 

Trouble is, competing recruitment agencies never cooperate with each other to help get the client's job filled.  All they're interested in is their candidate(s), not everyone elses.

All people have some bias and the recruiter's job is to recruit based on the hiring manager's biases - so not sure where you were trying to go with that one.

I agree with your last point though.  If I was the hiring manager I'd want as many options for finding candidates as possible too.  But I'd only want one person managing those options.

Comment by Cora Mae Lengeman on June 4, 2013 at 11:48am
Damn! I retire and then decide to check what is going on in recruiting after a few months and this idiot is once again acting like he is God's gift to the recruiting world. Should I brag about how much money I made as a contingency recruiter? Should I tell him how stupid he sounds? Is he a recruiter or is he trying to sell recruiters on hiring him to screw with them?

First of all, the first one in with the resume is not the recruiter of record! The client decides. Argue all you want I tested this in court and won. THE CLIENT decides which recruiter they want to work with when more than one submits the same résumé. (At least in Michigan!) I placed - are you ready for this - 99% of all contingent searches I took on. Yep, 99%. In my retained practice I completed 100%. I have never had any complaints from clients . None from candidates either. I still get thank you notes from folks I placed, companies I worked with and people I didn't place but counseled through the process when another recruiter was placing them and didn't know how to get a candidate from point A to point B. Yes, that was with retained recruiters who do not care about candidates, just where the $ is and where the next search is. I am still getting emails and telephone calls from companies begging me to come back to recruiting. Thank you for the compliments but I'm having too much fun traveling and hanging with my husband!

I completed more than 30 searches in my career that the so-called major retained firms or very specialized retained firms screwed up. I completed them as a contingent recruiter with no regrets. Over the life of my career my average fee was $150K. Maybe I'm just good or my clients are dumb, I don't know which for sure. I was having too much fun.

Recruiting is recruiting. If you are good, you are good. If you stink as a recruiter, you stink as a recruiter. It is YOU not whether you are contingent or retained. You can fool clients for awhile that you are a good recruiter because you are a retained recruiter but if you are not a good recruiter it will catch up with you quicker than you can say "retained search". Strive to be the best recruiter, not the fastest the BEST. The money will follow. But become the best first.

I was trained in the MRI system. Best training around for recruiters back when I went through it. Or maybe the guy that owned the office I worked in was just a great teacher.

Recruiters, get your heads on straight. Great recruiters remember that they have two clients: the company and the candidate. This is the only 'sales' job that your 'product' (whether it's the company or the candidate) can say no. You have to keep ALL parties happy. Juggle all aspects of the process. So of course, you need to know the process backwards and forwards.

OK, I'm going back to being retired. Enjoy!
Comment by Cora Mae Lengeman on June 4, 2013 at 11:50am
You know if no one committed on this idiots posting, he might just go away.
Comment by Stephen Nehez, Jr. on June 4, 2013 at 11:53am

In my humble opinion, the hiring manager's opinion and biases is all that matters.  "I want you." 

Regarding our internal "biases" as the recruiters, our attempt should be to mirror the hiring manager's desires case by case and adjust the dials accordingly.

Comment by Mitch Sullivan on June 4, 2013 at 12:13pm

That's pretty much what I said, Stephen.

Thing is, it's much easier to do when one properly briefed recruiter who has some intimacy with the hiring manager, his department and the company takes control of the vacancy than having 5 different recruiters all of whom have little of that intimacy.

Looks like we're starting to agree on most things now Stephen.  That's good, eh?

Comment by Drue De Angelis on June 15, 2013 at 11:17pm

Jeff , Thanks for taking the time to explain your business model. I’m pretty sure that I understand it quite well, as it is not new. You stated on the radio show that you have 100 open Job Orders and send out a minimum of 80 resumes per week and present candidates within a few days, if Im not mistaken. You obviously are filling a short term need for your clients. It is just a vastly different business model of mine and one that I left long ago. I believe recruiters like you will be the first to go away since anyone can spam/blast a JO to a master list of “fill in the blank” titled people.  This simply is not what I would consider “search.” This is better called “sift.” If you are only finding people who can be sourced within hours of receiving an order, then they are available to anyone online or through email lists which are not proprietary. So, what then is your value proposition? Speed?  Because speed is never high quality.  There is a general rule that goes like this, “If you want it to be quick, is isn’t going to be good.  If you want it to be good, then it isn’t going to be cheap.” I subscribe to this way of thinking. If you set out to find someone who “can simply do” a job, then how can you be confident that they are talented? By taking their word for it? If we apply the Paredo Principle which is the 80/20 rule, there is a large portion of the market who do a particular job with the performance that falls within the fat part of the bell-curve. If your clients are have such a high urgency that they are willing to sacrifice quality on the alter of speed then perhaps they are willing to have anyone who can do a job in that role. Perhaps that is a function of your industry. I don’t know the automotive industry.  My conviction is that talent makes ALL the difference. The best companies have the best talent, regardless of the function. A company can have an average product, but if they hire the top sales talent, they will outperform other companies that have better products than theirs. It happens all the time.  My firm’s value proposition is that if just about anyone with a particular skillset will do for you, don’t hire me. Go online and do it yourself and save the money. Or find the bottom feeder firms who can sift the market for you and get a cheap flat rate while you’re at it. But if you want to hire the top professionals in your industry, then lets talk about it. That is the kind of work we are interested in doing.

 

I am not saying that your way doesn’t work. We all know it does for many within the MRI system. What I am saying is that it is the most expendible and least valuable to the clients.  I also believe that the type of work you do does more to undermine the industry than it does to help it from a reputation perspective.

 

As for Retained Search ALWAYS being better, that is an over reach and not what I am saying. I too have done clean up work for Heidrich, Korn Ferry, CT Partners and Russell Reynolds. Their model isn’t ideal in my mind either, but that isn’t my soapbox today.

 

Essentially, what I am saying is that if you are working on contingency, you are not ABLE to do the best work for your clients. You cannot do your best work because the terms of the search/rules of engagement incentivize you to take shortcuts and dilute the true effectiveness of high quality search work. How do I know this?  Because those who work on contingency must have many searches simultaneously because you don’t get paid on every one you work on. As a survival tactic, you must mitigate your risk by working on as many  “searches” as you can at the same time. I am currently working on two searches. (CEO & VP Engineering) This is the kind of work that has you target all the people who can’t be found online and who are not currently motivated to leave their jobs or find employment. Those candidates are not “low hanging fruit,” and “always looking.” If anyone else with an internet connection can find your candidates, and and maybe even beat you to them, what does that say about you?  I don’t believe there is a better way to partner with a client than in such a way that you have the freedom to perform the difficult work of finding talent, getting them to engage with you so that you can evangelizing them about your client’s opportunity and bring them to the table to explore a new opportunity. This process takes longer. Not months, but certainly weeks. This person typically has been at their company for several years and it doesn’t take one quick call or an email to get them interested. This is the caliber of candidate that we should be concentrating on to differentiate ourselves from the rest of the noise. 

 

I’m not saying contingency doesn’t work.  I am saying it is not in the client’s best interest to engage a recruiter in this manner because it forces a behavior that doesn’t yield the best talent.

 

I’m sorry to offend those who make a living by this means.  Though it is not my intent to offend, I recognize it happens. Any time that I have needed to make a change, it took an uncomfortable situation to get my attention and motivate me to change. I am not saying it is the fault of the recruiter per se. I believe that the problem ultimately lies with the process that you use. Somehow in the minds of the clients this makes sense.  They think it is in their best interests to work on contingency and I get why they do. They simply don’t fully understand the Unintended Consequences of Contingency. I am calling out the process that the vast majority of recruiters default to it because it is easy. 

 

The funny thing is that working on retainer, engagement fee, container or whatever you want to call it, changes the process and the relationship with the client. I haven’t done a contingency search in over nine years. Does that mean I never place someone without being retained? No. If I know of a company with a need, and I know a candidates with the requisite skills who I believe fits, then I have made placements on that basis. But that is usually a “one and done” scenario.

 

Additionally, I have received many emails and linkedin invitations from recruiters who read my comments and completely agree with me, however they are afraid of the mob mentality on this site. There are a few very vocal and cranky people who love to call people names rather than engage in an intelligent discourse. Too bad that the loudest voices drown out the reasonable ones and deter people from engaging in the discussion.

Comment by Sandra McCartt on June 17, 2013 at 9:44pm

http://www.hrexaminer.com/weasels-and-sociopaths/  Good article by Heather Bussing that pretty well sums up this whole thing.

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