To someone who isn't from a recruitment background, the terms 'contingency' and 'retained' probably mean very little. We’re going to cut through the jargon and explain not only what they mean, but also the pros and cons that would make you choose one over the other.
Before we go any further let’s look at why you should use a recruitment consultant in the first place.
Well, as you know, recruitment can be an arduous task - and here the bulk of the heavy lifting will be done for you. Just imagine:
No more paper avalanches as that stack of CVs you've been trying to get chance to read through for the past week slowly slides down the back of your desk ...
No more getting excited over a seemingly great candidate who then goes off the radar for no apparent reason. The list goes on. It’s just easier to get someone else to handle all the donkey work for you. When you do decide to take someone to interview, you'll be briefed by someone who’s spoken to the candidate in person already - so there'll be no nasty surprises.
Recruitment consultants aren't for everyone, but if you like the idea of saving time and effort, while improving the quality of the hires you make, then you should give us a call.
What is contingency recruitment?
You’re probably familiar with contingency planning - but that's not what we're discussing here. This time the contingency is that the recruiter doesn't get paid by you unless you choose to employ a candidate that they put forward.
The power here is very much in the hands of you - the employer - and you often see multiple recruitment agencies trying to fill a role all at once. This might even involve competing against an employer's internal HR department, who are also searching for a candidate. As you can imagine, this can all get very competitive, very quickly.
Contingency recruitment is simple. If the recruiter does not supply the 'winning' candidate, then they don’t get paid.
Generally speaking, contingency recruitment tends to be the more mass-market of the two approaches. The role you'd be filling could be anything - Cleaner, Manager, Candlestick Maker, the list goes on ...
It's not limited to generic positions either - and you'll often find that specialised roles in industries like IT and Engineering are filled this way. There are even recruiters that specialise in certain industries - with consultants often having professional experience in the roles they recruit for.
Contingency Recruitment: What are the benefits?
The benefits of contingency recruitment for the employer are fairly obvious - because you're in charge of the whole process.
If a recruitment agency operating on contingency sends you candidates that you don't feel are suitable, you simply don't have to interview them - or pay a fee. This means that it's in the agency's interest to send you the best candidates they can find, but as quickly as possible.
Contingency recruitment therefore makes an excellent choice when a candidate is required quickly - or if you have multiple positions to fill ...
The candidates an agency puts forward should fit the bill, and shoud be capable of doing the job you need them to do, as in they should have the skills, but that’s it.
The Disadvantages of Contingency Recruitment
As for the potential downsides of contingency recruitment - well just consider the benefits and then put yourself in the recruiter's shoes ...
If you were a recruiter and you got an inkling that there were multiple firms working on a job, or that you were up against an internal HR team, would you bother expending resources on that project? No, probably not.
Instead, you’d probably put your efforts into sourcing a top-quality candidate for a job you know you would end up getting paid for. This means that it pays to limit the number of recruiters working on a contingency contract - and to make the fact that you have done this clear to them. This way, you get less people working on the job, but they will all have a fair chance of success and you are more likely to get a better candidate.
What is retained recruitment?
Retained recruitment is the opposite of contingency recruitment. Here, you’re paying to 'retain' a recruiter to your cause - guaranteeing them exclusivity and an income from the job once they find a suitable candidate. While you will be giving up some control over the process here, that's not necessarily a bad thing ...
Benefits of retained recruitment
As we saw above, exclusivity will get a recruiter to work much harder for your cause. They are motivated to do this because they stand a fair chance of making money from it - and who could blame them? Because retained recruitment guarantees exclusivity, you know that the consultant doing it is going to exercise consideration and due diligence in sourcing you candidates. This is a boutique approach, and although you may think it only suits the top-end of the recruitment market, where potential candidates aren’t always looking for a new job it suits any role where you want the candidate to stay with the company long term (isn’t that every role?)
With a retained approach you will generally be provided you with dossiers on four or five candidates who have been thoroughly researched, including psychometric/personality profiling and approached on your behalf. All that’s left for you to do is carry out the final interviews.
Downsides of retained recruitment
The main downside of retained recruitment when compared to a contingency approach, is that you are placing much more trust and investing more resources in the recruiter, but is that necessarily a bad thing?
While retained recruitment can be a slower process than contingency recruitment, the reason for this should be obvious. What you are getting is a much more consultative approach. The recruiter will be working in partnership with you with the full understanding of not only what skills the candidate will need for the role, but also the personality type that will best fit with the company or team. With a retained approach, the candidates you meet should be perfectly suited to not only the job role in question, but also the company - and this takes time for a recruiter to set up.
If you are still unsure if a recruitment consultant can add value to your hiring process take a look at our bad hire calculator and see how much money you could save!