Recruitment firms have been around long enough that they’ve diverged, taking different approaches to their work in some major and some minor ways. And, since we all need to make a living, the way we charge our clients is no exception. In this respect, recruitment firms tend to come down on one side of the fence or the other: retainer or contingency. In today’s blog, I’d like to share with you the approach we take, and more importantly, why it’s for the benefit of our clients.

Some definitions first. Under a contingency fee agreement, a recruitment firm is paid only when a client company hires a candidate presented by that firm. A retainer agreement, on the other hand, means that installments of the fee are paid to the firm while the search is underway – typically, a portion of it up front to begin the search, and usually when a milestone is reached at some point in the middle.

From a client’s perspective, a contingency agreement can seem more appealing. There’s no commitment, no liability unless the recruiter actually comes through for you. And it may feel like you’re casting a wider net. Since you only have to pay if you hire someone, you can have several firms all working away at the same time. Competition would make them try harder, it would seem. And you can even keep sourcing on your own as well! If you happen to find a hirable candidate before the firms do, you don’t have to pay anyone.

Why, then, would you commit to using one firm, and agree to pay towards a hire you haven’t yet made?

There are some good reasons for this. And sure, we’re biased; most of our work is conducted on a retained basis. In part, this is because we are specialized professionals at the work we do. We know that we earn our fee through the hard and thorough work we do during the course of a search. We work this way not just because it’s better for us, though, but because it’s better for our clients and candidates as well.

First, let me address the question of exclusivity. While it may seem to be a good thing to have multiple recruitment firms competing to ‘win’ on the same search, the reverse is actually true. For any given search, the supply of real candidates – candidates that are truly qualified, a good fit for our client, and at a point in their career to consider the change – is finite. Let me draw this comparison. If you were selling your house, would it make sense to have a dozen agents’ signs on your lawn? Working with one listing agent – assuming they’re good at what they do – reaches the market just as well, and with a lot less confusion on the part of prospective buyers.

Now put yourself in the position of a candidate. The first time you’re contacted by a contingency recruiter, you might be interested in the opportunity. The second time you’re contacted – by a different recruiter – you’re probably a bit confused. By the time the eighth recruiter has called you about the same position, how do you think you’d feel? Mostly just frustrated, I’d bet. And on top of that, your estimation of the hiring company has become tarnished. They must be desperate and disorganized.

When we work with a company on a retained basis, it gives us the ability to fully map the marketplace, identifying and vetting all prospective candidates to ensure we leave no stone unturned. In short, our clients benefit from a more thorough search when working exclusively with us, than companies who work with multiple firms.

When we approach candidates on behalf of our client and tell them we’re working on a retained basis, it’s a different kind of conversation. The candidate understands that the relationship is a partnership, and the hire is one that the company is taking seriously. 

Then there’s a question of pressure. When we first contact a prospective candidate who’s happily employed – someone who would make the move as a matter of choice, rather than necessity – the decision to consider a change is a significant one. When working on a contingency basis, recruiters have to move quickly. They apply pressure on the candidate to make a decision on the spot. In contrast, when working with our clients, we can take the time to nurture their interest. In fact, in many cases we’re able to present candidates who wouldn’t even have been interested if approached with a high-pressure pitch.

As candidates move through the interview process, we devote a lot of time to keeping the lines of communication open. When our clients select a finalist that they want to hire, they trust us to ensure that we’ve covered all the bases – checking and rechecking for interest, speaking openly with the candidate about potential counter-offers, and more – so that when an offer is made, their chosen candidate is ready to accept.

When a recruitment becomes a race to the finish line – a chaotic rush to throw as much as possible against the wall in the hope that something will stick – these things don’t always happen. Firms working on a contingency basis simply don’t have time to devote to a search when it’s possible – even likely – that they won’t generate a fee.

Do you really want to be caught up in that race? Recruitment – done right, and done well – takes commitment. Our clients commit to us because they know we commit fully to them.