Does Retained Search Lead to Better Candidates?

If you want to get a job done well, should you pay somebody upfront or only pay them once they are successful?

On the one hand, why would you pay a business to try and provide a service with no guarantee of success when you could get another company (or several) to do it for free and only pay them when they finish?  

By contrast, why would a business accept a job (or at least commit fully to it) where there was no certainty they’d be paid, regardless of the time and resources they put forth. Even if they do everything you asked, circumstances may change. You may even end up cancelling halfway through. And if you don’t trust them to do a good job, then why select them in the first place?

As with a lot of things, the best solution depends on the circumstances. In recruitment, this decision centers on contingency search versus retained search.

Contingency search  

Contingency recruitment is when a recruiter only collects a fee from a client when a candidate they represented is successfully placed in the role — “no win, no fee.” Often multiple recruiters are engaged in competition with one another, and you only pay the successful one.

The benefits:

·      The most obvious benefit is that you don’t have to part with any money until the process has been successful.

·      Several recruiters searching at once will also likely breed a competitive process, and could mean each one works harder. You benefit from all of their collective abilities and experience, and may get access to a wider pool of candidates over the first few days as the recruiters will each have their own databases to pull from.

The pitfalls:

·      While an unsuccessful search means you don’t have to pay anything, it also means you don’t have a candidate. And since you didn’t pay your recruiters anything for their time, they have little vested interest in solving your problem, especially if it’s a complex one. They’ll simply move onto another client and you’ll have to start the process again. There will be a cost to you eventually.

·      Recruiters might get their wires crossed in a “too many cooks” situation and cause confusion—even for candidates who are contacted about the same job more than once. It’s not a good look.

·      Perhaps most importantly, the pressure to send you people as fast as possible becomes the overriding priority, not the quality of the resumes. That means you’re simply getting those candidates who got back to the recruiter first, with little regard for whether or not they’re actually the strongest options for you.

Retained search

Working exclusively with recruiters is called retained search. In this case, a company will agree to pay a commitment fee upfront for the recruiter to work for them on an exclusive basis. This fee is then deducted from the final placement fee. You engage one recruiter at a time and trust, based on your research and evaluation, that they will find the right person for the job, no matter the complexity of the role or any changes that occur over the course of the search.

The benefits:

·      The recruiter will prioritize you as a client. If you trust and commit to someone, you usually get it back, and pushing for a retainer doesn’t mean the recruiter is unwilling to be judged on performance—after all, you could just not work with them again. It does mean they want to build that relationship with you and are willing to own the problem until it is solved.

·      Since they’re priority is not rushing to beat someone else to the punch, the recruiter will take more time searching for the right candidate, screening, and ensuring they are suitable for you to interview. They will also look beyond their, and your, traditional recruitment channels, potentially giving you access to individuals you’d not find on your own.

·      There’s less for you to manage because you don’t have to engage with multiple people bringing you candidates. Working with one recruiter means the hiring process is less stressful.

·      You can build a long-term relationship. You might need a recruiter who is an expert in the function or industry sector you’re looking for, and you certainly want them to be able to represent your brand impeccably in the marketplace. So invest your time in them. They will get to know your company too, so you could ask them for advice about your overall hiring strategy.

Of course, the main pitfall is that you’re parting with your money for no guaranteed return. Nobody feels happy about that, but it’s often putting trust in those you work with that garners the best results and builds relationships for the long term. We treat our full-time employees this way, so why wouldn’t we put the same faith in our service providers too?