Contingency Recruiting as a Business Model

We charge by the results not by the efforts, a concept I never understood. We aren’t salesmen, we source, interview, negotiate, and put a lot effort before we reach a result, even salesmen have the advantage of exclusivity which we don’t have. I don’t like the idea that our destiny is in the hands of our candidates and clients, and all we can do is to pray. I know that some of you will say that the harder you work the more hired candidates you will get. This is not totally true, because I can’t control my clients decisions, sometimes what I think is suitable is not necessarily the same to them. We as contingency recruiters should enhance our business model so we can control our destinies and cash flows.
Last time, I suggested that recruiters should exchange their candidates information for a certain fee, but I was faced with the questions about confidentiality and ethics, I respect this point view but what other solutions do you suggest?

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Permalink Reply by Slouch on May 25, 2008 at 5:30pm

what about trying to transition your business to a full or partial retained model. for instance, maybe try to get your clients to give you a partial engagement fee. problem is though one may think that you should try this with your best clients. Your best clients though know you will work for free so...

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Permalink Reply by Matt Hewitson on May 28, 2008 at 10:45am

The Western Australia market is similar Rami in that because of the much advertised skill shortage because of the resources boom. In effect, contingency recruiters get caught in the CV race, forcing people to comprimise on quality for the sake of just getting the CV in front of the client first. For those outside of that model, we refer to this as the ol' spray and pray method.

Good recruiters will put the time and effort in, work the long hours and get to know their candidates, but are pipped at the post by some spotty 19 year old in a oversized suit flicking CVs at will. Again, peoples behaviours are driven by how they are paid and while they are remunerated for the number of CVs they flick, jobs they fill, they will continue to "cheat" those who put the work in.

The best thing you can do is work hard to differentiate yourself from others in your market, through the effective use of testimonials which show a track record for quality and through building strong networks. It may sound obvious, but I find a lot of recruiters generally don't understand candidates motivations and aspirations as much as they should. Knowing this and using this as a guide will often allow you work with candidates on a more micro and personal level.

If your candidates know that you have their best interests and their career in mind and at heart, they will trust you and your judgement and are more likely to be honest with you...and less likely to let you down.

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Permalink Reply by Kiran Ponnada on May 28, 2008 at 2:40pm

Contingency Recruiting/ Contract Staffing Models are built that way and I don't think you can change that in any which way. As a matter of fact, clients are now asking Recruiting/ Staffing firms to take some of their risks. In the current US market scenario, recruiting/ staffing firms are willing to provide additional services like engaging a candidate for 2 weeks and after 2 weeks if the candidate is not found good, the recruiting/ staffing firm will replace the candidate without any extra cost. It is the survival of the fittest.

Ideally, you would want recognize the efforts of every single recruiter in filling a position but it is a Buyers market not Sellers today. Recruiters put in a lot of efforts in establishing contacts and making their own database. I am not sure if they would be willing to share the candidate information even at certain fees. This would then be altogether a different business model or similar to services provided by job sites like Dice, Monster etc. You can definitely look at partnering with other recruiting/ staffing firms to share candidate information at a mutual beneficial terms. For now you will have to just hope that your recruiters get the best people on board or the client selects the people you have submitted for a specific requirement.

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Permalink Reply by Rami Madi on May 28, 2008 at 4:50pm

I agree with you that what I am suggesting of sharing candidates information at a certain fees is a new business model. But it is not similar to Monster, Dice or any other job board where you can search a database of CVs. Monster didn’t interview the candidates or evaluated them or know exactly what they are looking for. My suggestion is to share inside information where sometimes for executive positions could worth a good amount of money. How many candidates we interview each month, but how many of those candidates we hire, so I think we should have a market place where recruiters can share these information.
In my company we started working on this project, I know it’s risky because we are trying to propose a new business model to the industry, but I see a lot of value in such an initiative.

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Permalink Reply by Slouch on May 28, 2008 at 7:31pm

Hey Rami, There are a number of companies now doing what you suggest, the thing is that you really need to ensure that the candidates themselves say it's ok that their contact info gets shared. if I were looking for a job and I sent my resume to Intel and then an Intel recruiter sent it off to their pal at AMD, I think everyone involved could get into some trouble if I the candidate did not authorize it.

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Permalink Reply by Rami Madi on May 29, 2008 at 3:04am

This is true, and last time when I suggested the sharing information concept, I was faced with the confidentiality issues, but there should be a way to make sure that the candidate approves the refer.
What is the information I am allowed to share without the knowledge of candidates? Can I share the contact information and a recommendation based on an interview without the CV? similar to telephone names sourcing but accompanied with a recommendation or inside information.

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Permalink Reply by Kiran Ponnada on May 29, 2008 at 10:31am

Jason hit the nail on the head. The whole concept is well said than done. You will see some success with the consent of the candidate but is not a scalable model. Good luck to you. I will be happy to see this model work in the long run.

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Permalink Reply by Matt Hewitson on May 30, 2008 at 6:16am

Hi Nick - What is the language barrier like with the Eastern Europeans? Although I don't work for an agency per se, my employees that work on-site as part of our RPO business do.

A few of my contacts in Sydney have recruited Romanians for Process and Instrument Control positions and the language barrier has proved difficult...

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Permalink Reply by Chuck Barrett on May 31, 2008 at 5:44pm

Taking Slouch's point to the next level - there are legally dangerous aspects of sharing your impressions of a candidates skills. If you print things about people that might not be 100% correct, you can count on visits from a lot of lawyers. As you know, companies can only provide a title, employment dates, and verify salary...anything more and lawsuit city! Nice thought, I just see a legal barrier that would dissuade me from participating.

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Permalink Reply by Rami Madi on June 6, 2008 at 1:34pm

I agree that there is a legal barrier, but we will explicitly ask recruiters to ask their candidates before they recommend them. Also in certain cases the contact information, title and salary are enough information where others are willing to pay for.

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Permalink Reply by Chuck Barrett on June 6, 2008 at 1:59pm

So, in essence this will become a 3rd party recruiter blowing the candidates horn for them, where nothing but "good things" are written about the candidates. Because what candidate is going to approve anything that isn't flattering? Or am I missing something?

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Permalink Reply by Rami Madi on June 6, 2008 at 2:31pm

If you are going to recommend someone, sure you will say only good things about him/her. As for the candidates permission, it will be general as if they agree to be recommended to other recruiters or not. Anyway, we are still at the first stages of the project, when we will have something ready to show we will get the feedback of recruiters to make sure that the business model will work legally and financially.