26 Apr Contingency vs. Retained
You might be an established business, have earned your reputation in your industry, and you want to expand to keep yourself in the game and at the top of your league.
You might be starting out, and you are looking for the best people to put you on the map.
Whatever your business strategy, recruitment is key to your empire, and you need to make it work for you.
What is contingency and retained recruitment…and which one is best for me?
By definition, contingency is a provision for a possible event. In recruitment, the provision being the recruitment process; advertising the role, sifting through CVs, conducting interviews, head-hunting etc. The possible event is finding the ‘winning’ candidate.
There are no upfront fees for this service, which means the recruiter doesn’t get paid until that chosen candidate starts their new role. Payment for contingency recruitment works as a percentage of the new hire’s starting yearly salary, which is usually between 15–30%.
Retained recruitment is the opposite of contingency recruitment; payment of a recruiter’s time and effort is considered at milestones during the recruitment process, instead of being paid in one go after the candidate has started work.
The fee structure for retained searches typically involves a nominal upfront retention fee, a shortlist fee, with around 5 candidates being presented, and then a final fee upon completion.
So which one is best?
Good question well asked, shall we look at pros and cons?
On the surface, contingency’s “no win no fee” style payment is appealing to clients, with the power being very much in their hands. If they don’t like the candidates delivered to them, they don’t have to pay the recruiter, it sounds like a no brainer. The client, at no extra cost, can open the search up to as many different recruitment agencies as they wish, while even having their own internal HR department search as well. This can prove very competitive, encouraging a fast paced approach; granted an excellent option if you have several roles that need filling quickly.
However, if quality is what you desire, then lower your expectations…the service provided and the calibre of candidates may be substituted as a result. Commission often provides the bulk of a recruiter’s salary, and the technique and approach used may not be as personable as you would like. Leads, leads, leads, targets, targets, targets, is this part of your recruitment plan? For some of you it might be, but when wanting to get the right person for the job, you might be looking for something more.
So for the recruitment consultant, why put in significant hours and time and effort for a highly competitive role that has no guarantee of earning a fee? They will work hard and provide a much better quality of service for recruiting for an exclusive role with less competition, and a guaranteed payment, hence, a retained fee.
When the service is paid for at different points in the process, the recruiter has the funds to conduct the search effectively, ensuring candidates are delivered in an agreed timescale, and that the recruiter can whole heartedly put in the time and effort needed to produce a quality service. Real experience, professionalism and due diligence can be put into a highly specific search. Overall, you can expect a tailored and boutique recruitment service.
Supply and demand suggests that filling lower paid jobs that require widespread skills via contingency recruitment will produce timely and satisfactory results with there being a mass market of candidates to choose from. When filling executive roles, however, the market is far more specific and sparse. The focus should weigh far more heavily on quality, thus a retainer would be the ideal option in delivering the perfect fitting candidate to your company and work culture.
Here at MA Executive, we offer a boutique, retained recruitment service. We specialise in detailed candidate searches and headhunting within the finance industry. Our focus is heavily on quality matches and delivering your desired results. We deliver on all aspects; skills, experience, credentials and culture fit. With our recruitment consultants having over 15 years’ experience each within the recruitment industry, we are able offer a highly extensive network and connections, as well as reliable recommendations and results. Confidentiality is a given, and we pride ourselves on thorough and personable approach to meeting your needs.
If you’re looking for your next winning executive hire, to seamlessly fit in with your company and move it forward, get in touch here.
Written by Kimberley Bailey-Sumner and Lydia McNally, MA Executive