When a top executive hears the term "professional recruiter", he or she will likely only think of retained search. When managers who hire entry level and lower level professionals hear that same term, "professional recruiter", they may only be familiar with contingency search. Let us eliminate some of the confusion by explaining those terms, as well as some variations. We will also express an opinion as to when each should be used.
A Contingency Search Assignment is most commonly used when you, as a hiring official, want to recruit on the position yourself and have a fair chance of avoiding paying an agency fee. For an easy assignment, a contingency search notice will get many agencies actively working on your assignment. You pay only the search firm that provides the candidate you actually hire.
Unfortunately, you are often flooded with inadequately screened resumes because the agencies are in competition with each other to get each candidate's resume to you. Many agencies may each put forth a little effort, with the hope of winning your fee. Some search firms may not tell you this, but for a difficult assignment, or a discounted fee, you may find that none of the agencies will put forth the effort required to recruit the very best candidate and make the placement go together. This may lead to a selection from relatively unqualified candidates, a series of turn-downs or no-shows, or lead to having months pass without success in filling your open position.
Our recommendation is to work with a very limited number of firms that you trust, and give them the necessary communications links and details required to do their jobs effectively. Build relationships of honesty and cooperation.
An Exclusive Search Assignment is a contingency search assignment given to only one search firm. The promise of exclusivity is generally an effective method to encourage a search firm to work on a moderately difficult job assignment, and still on a contingency search basis.
You must, as a hiring official, have confidence that this selected search firm can and will produce for you. And, the search firm must trust your commitment that no other search firm will be working on the same search assignment.
A Retained Search Assignment can be used anytime you can assume that you will need to pay a service charge to fill a particular position. A retained search costs about the same as a contingency assignment, with the addition of expenses if you require the consultant to travel to interview candidates. You pay one-third of the estimated service charge to begin the search and the remainder over the next two months. A retained search can also be used when you need to maintain a degree of confidentiality, such as when there is an unknowning incumbent to be replaced; or you have concern about any public impression of high turnover. A retained search is a good way to know that someone is actually working on a difficult assignment and that it is likely to be filled. A retained search will also minimize the number of recruiting contacts the hiring official must maintain.
Any reputable search firm will work diligently to complete the assignment. To ensure success, share your organizational data and your complete selection criteria and avoid changing the job specifications or reporting relationship once the search has begun or it will be considered a new search.
PREFERRED SEARCH (OR MODIFIED CONTINGENCY)
This firm calls any assignment that is a combination of the retained and contingency relationships, a Preferred Search. The client pays a portion of the estimated service charge up front in exchange for the search firm's commitment to work diligently on the assignment, when just a review of their currently active resumes may not turn up the necessary degree of expertise or desired quality of candidates. The remaining one-third, or two-thirds, of the fee may be paid contingent upon the search firm providing the candidate who is hired.
In addition to using this method during periods of extremely tight market conditions, this option may be advantageous for a client who is in a state of reorganization and whose requirements are subject to change. If your company changes the requirements or cancels the search before it is completed, you will have paid only a portion of a total service charge.
For Contract Recruiting you pay an individual, or a search firm, at a fixed rate per placement, or at diminishing hourly rates for the labor of consultants, recruiters, researchers, and clerical assistants respectively. In our opinion this relationship offers the greatest opportunity for savings for many of our clients.
Contract Recruiting can be very effective when filling a large number of positions, such as in a plant start up. I have seen a placement completed for as little cost as one hour of researcher's and four hours of consultant's time. In this case, we specialized in the needed industry and were willing to include the use of their extensive industry and candidate files in our quoted hourly rates. As a search firm, we have offered Contract Recruiting only to companies to whom we can statistically project significant savings, based upon data collected from having worked a significant number of their assignments.
A word of caution: Beware of a contingency or retained search "consultant" who will work cheaply if you give him, or her, a contract. Logic would indicate that he or she may not be good enough to earn a better living as a professional recruiter. Their skill level or work habits will not be changed by your company paying them on a contract. Also be aware of the restrictions and tax concerns associated with paying an individual on a 1099 (government reporting form) as a contractor when they do not pass the stringent 1099 qualifying criteria.
More and more companies are finding occasions when temporary employees should be used to augment their core staff. This may be to free up their own employees for special projects, to fill specific functions that are not necessarily ongoing, or especially skilled outsiders to fill even the President's office in an emergency. I recommend against using temp-to-hire to fill all of a company's open positions. In effect, this would cause your entire company to be staffed from that limited population which is willing to take temporary assignments.
I am not advocating that every company should be using every one of the above options. But, if you are doing business the same way you always have done it, and not finding opportunities to sharpen the way you use search firms, you are likely to be costing your company real bucks, if not in agency fees, then probably in lost opportunity costs of an unfilled position.Back to Employer Articles / Back to Home