How many times have you had a recruiter call you and want to market a potential candidate or generally market their services. When the conversation turns to fees a lot of the time the response you get is dependent upon the type of search or agreement that is proposed. How many times have you been faced with a choice of what sort of an agreement you could have available but then no one took the time to explain the benefits and advantages of anything but a contingency based search. Many times you pick the contingency based search because there is no upfront cost to you but then again is cheaper always better.
I would like to take this opportunity to offer information about the differences, advantages and disadvantages to agreements that might be offered.
Let’s start with contingency searches. In most cases the contingency search offers an opportunity to the client to see candidates with no upfront costs. In many cases this search is used when there is limited urgency and there may be a larger pool of qualified or nearly qualified candidates. The only cost incurred to the client is if and only if a client presented by the recruiter or recruit firm is hired. The disadvantage is that with this kind of search the recruiter or search firm cannot afford to dedicate a set amount of time to the search. There may also be limited calls made to prospective clients outside the pool the recruiter has been working with. In many cases the client will and can end up with a very good candidate but in most cases will not be the best the industry has to offer.
I am sure you have all had a recruiter pitch a retained search and probably presented it in such a way that both sides have some skin in the game. This goes beyond a simple commitment between client and recruiter. In most cases a retained search will involve up t a third of the projected placement fee to be paid up front. This will provide the client with an urgent, committed, and dedicated search that has a larger market coverage. When a placement is made then the balance of the fee will be due. In contingency searches a recruiter may limit the number of calls being made to prospective candidates or limited to a pool of candidates that are readily available. With a retained search the number of calls will increase immensely and the recruiter will research and call every candidate they can find until that market coverage is broad and in most cases all potential candidates have been contacted. In many cases if the search is unsuccessful the fees can be moved forward to another search that may need to be done.
Another option may be the financially committed search. Normally there are payments upfront with milestone payments throughout the process. This opens the door for the client to request documented work that has been done so they can be confident in the recruiters work and efforts. The client can also attach payments to the milestones they select and the recruiter agrees to. Also because of the shared risk associated with this option the client may be able to leverage better fees and contractual terms. This is also available for annual commitments where a company may be in a growth mode and anticipate needing a number of candidates. The agreement can be crafted to cover potential hires and needs as they arise throughout the year. It may also create a financial advantage for the company and may see more candidates hire at a lower percentage of the normal contingency type fee.
The final option may be a consulting agreement. I think recruiters do not present this option nearly enough nor do clients take advantage of this option as much as they could or should. With this agreement there are many advantages to the client. It will allow ongoing recruiting being done on a number of positions, it keeps the recruiter in the market place constantly in order to gather data and information that can be shared with the client, it allows the client to keep their thumb on their industry’s pulse and retrieve some information that otherwise might not be discovered, and it allows market feedback and reports of what is being found and heard within the industry on a regular basis.
In the meantime I think that it is would be imperative for a company to sit down with a recruit firm they are doing business with and look at all options that are available. What could be gained is a stronger more client focused relationship that provides better returns for the client and a better outcome for the search firm or recruiter.
Account Executive at ERC
You can contact Steve at (605) 369-2105 or email firstname.lastname@example.org