Overall, contingency recruitment works best in companies that want to fill positions at or below the director level. The recruiter doesn’t get paid until the candidate is hired. Therefore, companies often expand the recruitment reach without having to pay up-front costs.
This guide will help you understand the nuances associated with contingency recruitment. Determine if this outsourced choice is right for your brand.
What’s Contingency Recruiting?
Contingency recruiting is one type of outsourced service. For it, the hiring company will only pay a recruiter when they’ve successfully filled the role. In a sense, it’s an arrangement with a “no win, no fee” style.
What’s a Recruitment Agency?
A contingency recruiting agency works for clients, searching for the most suitable candidate. Firms like these often deal with each project separately and only get paid when the open position gets filled.
How Does the Contingent Recruitment Agency Work?
In a sense, contingency recruiters aren’t employees of a hiring company. Instead, they’re contractors, so they work with the understanding that they are only paid after the successful placement of a suitable candidate. Generally, that means they’re competing with direct applicants and in-house recruiters from the client.
Often a contingency recruiting agency is pitted head-to-head against everyone.
The recruitment process varies significantly between agencies, but they usually follow this generalized workflow:
- The client gives a job description to the recruiter.
- The recruiter and client agree upon a warranty and contracted fee.
- The recruiter contacts candidates to find the right one.
- The recruiter gets the candidate’s permission to be submitted to the employer.
- The client chooses candidates for interviews.
- The client offers employment to the candidate.
How Do Contingency Recruiters Get Paid?
Overall, a client pays nothing if they don’t find candidates suitable for the position. Therefore, the agency works for free until the right person accepts the job offer. When the candidate begins working, the agency receives a fee. This is called working on a contingency basis.
Overall, the fee paid might get refunded if the new hire doesn’t last throughout the warranty period. With contingency recruiting, the fee is often a percentage of the candidate’s first-year salary.
The Difference Between Contingency Recruitment and Executive Search
There are two primary types of job seekers: passive and active. An active candidate wants a job, so they’re likely searching on job boards and sending out applications. However, passive candidates aren’t seeking a new role. They’d change jobs for the right opportunity.
Usually, contingency recruiters tend to work with active job seekers. They’ve got a database of options and introduce the most suitable candidates to the hiring companies. In general, candidates who work with contingency recruiters are early in their careers and could be supervisors, contributors, and managers.
Finding talent for senior roles is challenging. Therefore, executive search works best. This involves finding passive candidates, and the services require a unique strategy to reach people who aren’t already on the market.
Executive search requires a different level of service, so the pay structure is different. For example, it often includes drafting job descriptions and doing in-depth interviews.
Often, executive search means recruiting from the competitors, and it works well for the retained and contingency recruiting model styles. However, clients usually like retained recruiters when dealing with finding senior roles.
Contingency Recruitment versus Retained Search
Retained recruiters are consultants that handle specialized and executive-level roles for clients. They’re paid to make a placement and are then guaranteed a payment for those high-end services.
While contingency recruiters work and get paid upon a winning placement, the retainer gets paid in advance to conduct the search. This often results in someone being hired.
As with a contingency recruiter, retained recruiters aren’t employees for the hiring company. However, retained search firms and clients develop long-lasting business relationships.
Executive search companies are valued because they understand the company’s culture and industry. Whereas contingency recruiting firms work to find someone before getting paid, clients often choose to pay upfront for a retained search company when they require confidentiality, need improved evaluation skills, or have a shortage of resources in-house.
Recruiting strategies vary within businesses and depend on various factors. This can include the uniqueness of the open position, the bandwidth of the Human Resources department, and the organization’s size. Outsourcing contingency recruiting to an agency expands the client’s reach without an initial payment.
Often, contingency recruitment is a low-risk option for employers to find a qualified candidate. They only pay when a candidate gets hired. The business model will also motivate the recruiter to work quickly.
Contingency recruiting requires multiple recruiters to juggle various clients and find projects in which to place a new hire. However, a retained recruiter is dedicated to one or two in-depth projects. Therefore, they use less time to assess the leadership traits and soft skills of their potential hires. The company’s hiring team must deal with that burden.
Sometimes, clients work with multiple agencies at once to speed up the process. However, that often sends a bad message to candidates. If many brands contact a candidate, they might think the role is too junior. Likewise, the client will lose impact for having a consistent brand message.
Is Contingency Recruiting Right for You?
Companies often hire a contingency recruiter because they think they can find candidates. Likewise, these recruiters are proactive and can find more candidates in shorter periods of time. This is similar to retained recruiters.
However, the client has to be responsive and work well with the recruiter. Otherwise, the recruiter will likely move onto another client.
How to Choose a Contingency Recruiter
Does contingency recruiting work? Yes, it can, but you must choose the right recruiter. This professional:
- Builds Trust Through Honesty – Recruiters have to build trust with candidates and clients.
- Does Their Homework – A recruitment agency represents the client, so everything they say and do reflects on that brand.
- Treats Others with Respect – Recruiters will build relationships with candidates and leave lasting impressions on them. They must have experience.
Wrapping Up the Guide to Contingency Recruiting
Working with a contingency recruiting agency could be your best choice. They’ll help you find the right talent for your team. However, there are other options, and you’ve learned about them today.
For a free consultation on your hiring strategy, contact us at firstname.lastname@example.org or 212-971-0033.