Explained: Contingency vs Retained Recruitment
Not all recruitment agencies are the same and not all recruitment methods are the same either.
If you are looking to hire, were you aware that there are two distinct recruitment models – contingency and retained.
Both have very different ways of operating, which is why not all agencies are the same, as depending on which model they use, will also affect the way the work.
It is important that businesses and those in charge of hiring are aware of the differences and the impact of the two recruitment styles. Having this knowledge, will assist you in your future recruiting strategy.
Here’s our guide to both:
The easiest way to explain this is ‘no win, no fee’. Only the recruitment company that supplies the candidate that gets the job gets paid. So as the client, you could select a number of agencies to search for you knowing that you only pay one fee.
This method puts the onus firmly on the agency to come up with suitable candidates, who will be aware that they are likely to be in competition with other agencies as well as job boards, direct applicants and the employer’s own HR team.
Usually, this model is used for roles that appeal to a wide market, have plenty of prospective candidates and tend to require fewer skills and expertise. It also works for businesses looking for a quick appointment or have various vacancies to fill, as they will get a significant number of candidates and can take their pick – and still only have one fee to pay.
This fee usually tends to be a percentage of the successful candidate’s salary and can be anything from 15-30%. The rate will vary and depend very much on the recruiters’ experience and reputation.
However, given the nature of how this works and that payment is only secured on a placement, if contingency recruiters are aware there is significant competition, they will look to use their time and energy placing candidates where there is less competition and it is easier to secure a fee. This can mean the hiring business missing out potentially suitable candidates.
This is an entirely different proposition. Using this model, requires the hiring business to pay a ‘retainer’ up front to the recruitment agency to act exclusively on your behalf and source the best candidates. Unlike the contingency model, the business and the agency will work closely together to ensure that only the most suitable and talented candidates are found for the role.
This model is very prominent at the top-end of the market such as executive positions or for key roles within a business that are hard to fill.
This outs more onus on the recruiter, who will be tasked to put forward candidates that are of exceptional quality. Therefore, the recruitment process is much more rigorous and takes more time. They will be thorough in their research. Put candidates through more test and will provide dossiers on each candidates put forward for final interview.
Retainer agencies are experienced and have an established reputation for delivering results, which is why they can adopt this model. They will know the best way to approach this and to deliver the type of candidate required for the role.
Due to the nature of the roles being filled, and the time taken to finalise candidates, this method is more expensive (it can be up to 50 per cent of the salary for the vacancy) and that also needs to be taken account.
What do you choose?
Much will depend on the type of role you want to fill, how quickly you want it filled and what you willing to pay. It will also depend on how much input you want. As a simple guide, for lower-paid job roles, contingency recruitment will usually be best – whereas for the highest paid jobs, a retained headhunter will often deliver superior results.
If you would like to know more about filling your vacancies, please contact our CEO and founder Russ Metcalf by clicking here.