Why Retain Me? (The Hidden Benefits of Retained Search)
In the World of Search, aka ‘Technical Search’, or ‘Executive Search’, which are rather synonymous terms; there exist two modalities: ‘Contingency’ and ‘Retainer’. Contingency search is where a fee is only charged when a candidate who has been hired actually starts at the company/client; whereas retained search is more similar to investing and buying the services of an attorney (for example) who will be dedicated to solving the case: It involves an initial deposit up-front, which is paid to initiate the search, defray costs of overhead, and assure that a highly-skilled recruiter with many years of expertise in the “Black Art” of hiring and finding great people is paid for their time and effort.
Many clients wonder why they should bother to pay a retainer fee when there is no commitment involved in the alternate choice of contingent search, and if they are satisfied with the result of a contingent search, and hire a candidate whom the recruiter has presented, then of course the recruiter will be paid for his services. Why put down any kind of deposit when there is no real need?
This is a fallacy – an illusion.
Recruiters who are working on contingency basis are stacking up multiple searches and working on them in parallel or tandem. Only one-third of all contingency searches ever get filled by the recruiter who works on them… perhaps even less. The only strategy for a contingency recruiter that makes sense is to juggle as many searches as possible, simultaneously. If the recruiter is extremely deft and quick, there is a chance to make multiple placements out of 3 ‘juggled’ contingency searches, but that is clearly against the odds. This means that the recruiter devotes less time to the individual searches, and more time to the goal of maximizing the likelihood of billing. Whichever searches are more difficult will then be neglected, and most likely left unfilled.
Realistically, a recruiter who gymnastically and acrobatically juggles searches is performing a very challenging feat; but it is actually the client or customer who suffers, because the recruiter is smart enough to know what he needs to do to bill (i.e. make an actual placement). For example, I would happily juggle more than three searches in order to make a placement, if I can reduce the amount of Time I waste on the searches that are least likely to pay or provide remunerative benefits of some kind. I’m sure most other recruiters would feel the same as well.
This is why I prefer and recommend retained search as the superior mode or solution for hiring the best and most qualified people for the job. For instance, retained search gives me an assurance that the client actually cares about the position enough to retain me – i.e. they have ‘skin in the game’. If I lose, they lose, which means that they need to be willing to cooperate with me to the needed extent… to provide them the very best possible service.
By retaining me – since I am a proven commodity at finding great employees -- the client has purchased a level of assurance that there will be a committed effort to solving the search to its completion, as opposed to the approach of juggling and catching the ‘low-hanging’ fruit which is most readily available. Rather than being distracted by aberrant assignments where the client is really only on a “fishing expedition”, or cancels the search without hiring anyone, for reasons rarely explained, the retained recruiter is enabled to continue on his quest for the best employee, the best solution, and enabled to conduct an “exhaustive search” which really investigates not merely ‘low-hanging’ and easily-accesible candidates, but most importantly, those candidates which are perhaps the hardest to find and contact.
My goal, as a solution-provider, has always been to find the best candidate in the World (who fits the job description, salary requirements, availability, etc. of the job description). If a company truly wants to find the best candidate, and not just fill a position with a ‘warm body’, retained search is the superior solution.
Some arguments have been made that “retained search is only for C-level positions”, like CEO, CTO, COO, CDO, CIO, CTO etc. (all of which I have accomplished, myself). This is, again, a fallacy, because, even in the very first retained placement I ever made, at the very beginning of my career, the candidate stayed with the company for 12 years, and rose to the rank of Vice-President. This was, of course, an enormous benefit to my client, a small company where I placed about 20% of the employees, which eventually was sold for about $500 million, a few years later.
The value of retained search is where a search is particularly difficult to solve, yet still critical for the company. In my experience, I have seen multiple companies who have had a specific and important position open for more than two years, and as a retained recruiter, I was able to fill those positions with candidates I found in less than two weeks. One client was a $10+ Billion firm which obviously had the Capital and finances to pay recruiters, but no one actually succeeded in filling that position until a retained search.
Not all recruiters are created equal. Some of us are much better at research, persuasion, empathy, sales, etc. Personally, while I love the research portion of my work, I also greatly enjoy explaining to candidates why a specific job is in their best career interests, as well as counseling client companies on why they should interview specific candidates.
Full disclosure: I must admit that the largest fee I ever charged ($151,000) was a contingency search which basically involved making only one phone call to the client to determine if they had interest in the candidate. This is hardly typical, however. Despite this result, I am still convinced that retained search provides superior results to my clients. That was a very rare instance, where the company benefitted with ROI of about 10,000x. Yet, statistically speaking, and most realistically, retained search is more likely to produce best or better results.
Among other reasons, contingent searches are usually not exclusive, and, as a result, with multiple recruiters contacting the same candidates, not only does it create a bad impression among those we are most hoping to impress, but it also potentially leads to multiple submissions of the same candidate by different recruiters. This is unfortunate, and can also be quite costly for the client, if both recruiters insist on being paid. Also, a candidate tends to have a lot more attention when he/she hears that a search is taken seriously enough to be 'retained'. It adds a cache' of credibility that cannot be easily dismissed.
On my side, as a recruiter who spends innumerable hours researching the qualifications of candidates, I question why a client would ask me to work a search on ‘Contingent’ basis, unless they were not serious about hiring the position. What happens, mostly, in my case, is that clients who request contingent searches are merely ‘testing the waters’, ‘fishing’, etc. They are not really serious about hiring. Of course, there are exceptions. I am grateful for those exceptions, because they have made me a considerable amount of income, as well, but there is always a degree of “iffiness” about them that is distracting and counter-productive.
Willingness to pay a fee in advance demonstrates being serious about the need to fill the position. This is a fundamental criterion of ‘qualifying’ the validity of the opening, for me. Take it from me, as someone who has charged $151,000 for that single phone call to a client – retained search is still a much better solution for both parties.