You contract an executive recruiting firm for the benefit of their expertise with top talent and the quality of their relationships. You know working with recruiters may cost you more than your in-house HR department, but they're worth the price. But, just as there is no such thing as one-size-fits-all hiring practices, there isn’t just one engagement model.
Knowing the difference between contingency search, retained search and the new, innovative option known as the hybrid recruiting model, can mean the difference between making the right hire and losing time and money on an unproductive search.
3 Recruiting Models
You're No-Risk Option. Signing a letter of agreement for a contingency search is binding only IF the search results in a hire. Yes, you’ll have agreed to a percentage of the closing salary, but if the recruiters don’t bring you the A-level talent you’re seeking, then the search doesn't cost you anything. You’re not bound by an exclusivity agreement and can work with multiple search firms at once. And most firms offer a guarantee period, anywhere from 30-90 days. The recruiters carry all the risk- if they don’t deliver, you don’t pay.
But Nothing Is Truly Free. The contingency recruiter search process can often be costlier, carrying higher percentage fees. And what you might not get is fully-dedicated resources or the full force of the search team’s focus to fill your positions. With no guarantee of payment, a contingency search firms will only dedicate so much of their time and resources to your search.
We’re There For You. There are some hires, such as C-level suite and marketing manager level positions, that are just too important to leave to chance. You need a focused search dedicated to building your team. When you engage a recruiter in a retained search, they’ll be looking not only for the candidates with the right resumes, but also mining for hidden talent -- candidates who are primed to take on new challenges but may fly under the radar. This is where the recruiter’s reach and relationships come into play. You get all their time and attention focused on your search by paying them an exclusive, pre-determined percentage of the final salary. Usually payable in three installments (1/3 at the time of engagement, 1/3 at an agreed-upon point in the middle of the process, and the last installment rounded out based on the actual salary). With a retained search consultant model, you know your money is hard at work for you.
What Will It Cost You?
Retained searches are structured to mitigate the risk for both you and the recruiter. However, in the event that the search does not end in a successful hire for either internal or external reasons, that first 1/3 of the fee is non-recoverable - though many firms will apply it to a future search. This is the time to work with a search firm whom you trust and who has a solid, long-standing reputation in your business sector.
THE HYBRID RECRUITING MODEL
Quality Service At A Discount. You need quality talent, and you need it fast, but you’re not looking to pay premium recruiting fees. You may be a start-up needing to fill out staff, or an established firm looking to test the waters with a new recruiter. Either way, the Hybrid model may be the perfect solution for your staffing needs. You’ll pay an engagement fee, but in exchange for a small outlay at the beginning, you’ll get treated like a retained client AND you’ll pay a discounted rate. The upfront fee is deductible from the final percentage based on starting salary. Think of it as a down payment. Recruiters like it because they get a targeted search that’s more than likely to end in a hire, and you get exclusive service at a discount.
Is There A Downside? Sure there is, but it’s pretty slim for you. The only way your engagement fee won’t go to work for you is if the recruiting firm can’t fill any of your staffing needs within the agreed-upon specified time, and even then the fee can be applied to a future search.
There are, of course, other models for engagement, solutions that are tailored to special needs, such as filling out a new branch or for contracting short-term hires. If you find yourself faced with one of these situations, talk to your recruiter and explore what works best for you.