Picture this: You’re the CFO of a large company and your corporate controller resigns suddenly. This was your right-hand person, and now she’s gone. Even if you wanted to get by without her (and you don’t), the board wouldn’t allow it. Obviously you need to fill the position right away, but no one internally is qualified. What do you do? You know you’ll need to enlist a recruiter’s services, but now you’re faced with the choice of a contingency or retained firm. While some companies balk at the increased expense of a retained agreement, this often proves to be the most successful route. Once you’ve made a financial commitment to a recruiting firm, they are obligated to follow through on that contract.
While some companies balk at the increased expense of a retained agreement, this often proves to be the most successful route.Your recruiter on a retained agreement meets with every possible candidate themselves and vets each one according to your standards. In a high stakes situation like the vacant controller scenario, you really want the best, most committed people on the search.
Retained vs. ContingencyThat’s not to say that contingency searches don’t yield great results, because they often do. The difference is the financial commitment. Many recruiting firms work on commission, and thus their recruiters are working closest to the dollar in order to earn their compensation. When a search gets tough, and worse, EXTREMELY tough, even the best recruiters will shift their focus to make sure they can earn a living. In a candidate-driven market, like today, it is very difficult to attract strong candidates, because there are so many options out there. When you know you must fill a position with an outside candidate, and you also know it’s going to be difficult to attract talent given the market, you need your recruiter completely committed to your search in order to push through the challenging times to completion. In exchange for that commitment, you need to commit to them in return – by retaining them on the search. The contingency search model works very well when your open job order is not too different from the same role at other companies. Contingency recruiters recruit certain profiles of candidates who fit the general footprint of the types of positions they specialize in. The time they spend recruiting these candidates will eventually pay off because they will place them in one of their clients because the searches are fairly consistent.
If you need a customized search, you need to hire a firm to find that needle in the haystack.As soon as your search becomes very specific, the contingency recruiting model starts to break down. If you need a customized search, you need to hire a firm to find that needle in the haystack. Recruiters will be incentivized to do it because their time spent recruiting candidates with your highly specific requirements will pay off when the search is complete. They have the guarantee of the placement fee in exchange for their commitment.
Benefits of Retaining A Search FirmIt’s important to note that when you retain a search firm, you’re paying for the higher service offering, not necessarily the prospective hires. Retained recruiters spend more time with the candidates and will stick with the search until you’ve found the right person. Not only are they carefully vetting each applicant, they’re gathering data that they can use to help you make a final decision down the road. Often times they are vetting candidates that are brought to your attention via other sources. You can rely on their guidance and expertise because they understand the company’s culture and the necessary skills and attributes required as well as the overall talent pool for the position.
The advice recruiters can offer once they’ve immersed themselves in the organization is what you’re paying for, and it’s worth it.When you call them in to discuss your finalists, they will have a deep understanding of these candidates. They’re not repeating what they heard from colleagues, but offering genuine insights into the people you’re considering bringing into the company. This is incredibly valuable because you may have only met two or three finalists individually, but they’ve seen them in the context of the whole pool. The advice recruiters can offer once they’ve immersed themselves in the organization is what you’re paying for, and it’s worth it.
Can’t I Just Hire Several Contingency Agencies?Some managers ask whether they’ll get more value out of hiring several contingency agencies rather than putting one on retainer. The answer is still no. When you give your search to several recruiters, you’ll see a flurry of initial activity, followed by a steady decline when things become challenging. Even though they will all have your best interests at heart, they could assume that another recruiter has the process under control and they may focus their efforts elsewhere. While this may frustrate you, it’s understandable in the context of their business models. If you hire three agencies to work on the same search and they don’t get paid unless they bring you the successful candidate, their chances of filling the position drop considerably. Of course they’re going to prioritize the clients who are 100% committed to them.
If you hire three agencies to work on the same search and they don’t get paid unless they bring you the successful candidate, their chances of filling the position drop considerably.The guarantee on a retained placement usually spans 6 to 12 months whereas the typical guarantee on a contingency placement is 3 months. That’s a tight timeline, especially when you’re filling high-level spots. There’s a lot of pressure on you and the agency to get it right, and the financial dynamics make it a precarious situation. Although the fee is higher in a retained search, you get not only a team living and breathing your search, but up to four times as much runway to evaluate the candidate once they start. The cost benefit trade off is well worth the peace of mind. Don’t underestimate the power of exclusivity, either. The team you choose to retain feels the added weight of that decision, knowing that you’re counting on them and them alone to find you the perfect hire. This further incentivizes them to draw on all their resources for that search. Of course, some roles are so niche that they demand a retained agency. If you’re hiring for a senior vice president position, you need a customized process that can draw in people outside of the standard talent pool. Often times Director and Sr Director roles are justifiable to be retained as well, depending upon the specificity of the requirements. This is even more essential if you’re considering candidates from other markets. No recruiter will fly from San Francisco to Washington, D.C., to recruit on a contingency basis because it’s not worth the cost. She will only work with this person once in her career, and she doesn’t even know if she’ll be paid for the effort. Retainers are absolute musts in these scenarios. You don’t shop off the rack at Nordstrom when you want something unique; you commission a custom-tailored piece. So we’ll ask again – if you’re the CFO who needs a new corporate controller, which approach do you take? While hiring multiple contingency agencies may seem more cost-effective at the outset, retaining one good recruiting firm will ultimately pay off in money saved and talent acquired.
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