Read below to see what might be the best choice for you, as our client, and what each option offers.
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.
Steve Green
Account Executive at ERC
