"George and Scott have just completed a most professionally effective engagement for one of my critical IT Director positions.  Every step of the process was made clear and was executed with precision.  Their sourcing generated for my organization a viable cadre of leader-candidates whose credentials were aligned with our requirements and yet reflected variations in focus, personality, and style.  Their assessments were spot-on, just the right balance of reality and optimism.  Their leader-candidates were so well qualified that even those not selected proved to be strong candidates for other opportunities in my organization.  DP's work is the most satisfied I've ever been with an executive search firm performance."

Tom Ream, Regional CIO, Sacramento-Sierra Region
Sutter Health

 

“George is incredibly well-connected, and is a phenomenal asset to help find the right people for leadership roles in organizations. He is also a great pleasure to work with, and I highly recommend using him for executive searches.”

Kirit Sarvaiya, Executive Director
Fox Interactive Media

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Retained vs. Contingency - A Primer Print

When companies seek to hire high-performing talent, they have three basic options:

  • Manage recruitment internally, using advertising primarily to attract applicants
  • Use contingency recruiters
  • Use a retained search consultant

Using the first option, the hiring manager or an internal recruiter makes an effort to source potential applicants, typically by advertising the position, and then screens responses over the phone, interviews candidates, and selects a finalist for an offer. The advantage here is that the company maintains full control of the process, and appears to minimize recruitment costs. However, there are important disadvantages: (1) the most highly qualified candidates (“A-players”) are typically employed elsewhere and not job hunting, and are less likely to see or respond to an advertisement; (2) a great many highly unqualified applicants must be screened by the internal recruiter before he can present a subset to the hiring manager who must begin the lengthy process of actual qualifying through live interviews; and (3) internal recruiters often risk their political capital with the hiring manager/team when unexpected flaws emerge during interviews, because the overworked internal recruiters neither had the time nor experience level to properly vet candidates, particularly senior leaders.

Therefore, for resource and quality reasons, many organizations prefer to utilize the services of external recruiters. But, how do they decide whether to use multiple, competing contingency recruiters, or a single retained search consultant?

The contingency search process is geared to identifying prospective candidates quickly and in high volume — but not necessarily the most qualified candidates available.  In contingency search, significant research and in-person interviewing cannot be applied to the hiring organization’s needs. Without exclusivity, and in competition from the company’s own job board and HR resources, and probably one or more competing firms, a contingency recruiter has no assurance of being paid for services rendered. Therefore, the competitive contingency business model dictates that the contingency recruiter focus energy on sourcing and registering as many resumes with the client as possible, whether they are appropriate for the position or not. Investing time to qualify candidates works against the recruiter’s likelihood of being the first to register those candidates. Moreover, it is in the contingency recruiter’s own best interest to register every resume with multiple potential employers, as any registered resumes may end up residing in those company databases for up to a year, each one a potential commission downstream. Contingency recruiters typically work with a large number of concurrent job openings and, using databases of known candidates, look for matches on paper and send those candidates’ resumes to clients for possible interviews.  It is a numbers game, and candidates are commodities.

A retained consultant always works with exclusivity on a search and is expected to thoroughly vet and pre-sell all qualified candidates to be presented to the one client. A retained consultant lives or dies with his or her reputation earned from each performed search.   No clients are put in competition with one another, as a matter of contractual obligation and professional ethics.  The client contracts with the retained consultant to attract, vet and deliver only the most qualified and most interested candidates, then to present the client’s offer and to manage the negotiation process to the benefit of the client.

Neither contingency nor retained executive search consultants accept fees from individuals for the purpose of helping them to find a job, though staffing and placement firms do. However, since the contingency search business model, by its own definition, forces contingency recruiters to simultaneously present candidates to as many clients as possible, their actions sometimes generate a bidding war.  Retained consultants are not motivated to market candidates at all.  They are being paid for the process of selecting the best candidate so they can be more objective about whether a particular professional is the right choice.

There are other stark differences between retained search and contingency firms:

  • Retained search firms conduct exhaustive interviews of candidates, in-person, whereas contingency firms perform cursory interviews of candidates, primarily over the telephone.
  • Whereas contingency recruiters tend to spend less time on initial research and specifications (and seldom meet company management in person), retainer based firms make it a point to thoroughly know their client and the open position’s responsibilities and requirements before commencing a search.  In the latter’s case, it’s not about ‘selling’ a company to a candidate, or vice versa.  It’s about ensuring there is the best, long-term fit for both parties.
  • Retained search firms focus their recruiting and evaluation efforts on a targeted spectrum of defined candidates, most of whom are not in active job market; they are process and results-oriented.  Contingency firms focus opportunistically on candidates who are actively seeking new employment and are thus placement-oriented — often to the detriment of their client.  The best candidates available often are not those actively seeking employment.
  • Retainer based firms provide their client thorough documentation, including a written assessment of a candidate's strengths and weaknesses, position and compensation history, written references, and motivations.  Contingency recruiters typically provide a client a resume and salary requirement.  The latter’s vetting process is about responsibilities, roles, dates and titles, as opposed to measurable accomplishments, which requires hours of ‘eyeball to eyeball’ discussions and reference checking to ferret out and validate.
  • Retained firms thoroughly prepare candidates before client interviews with details of the position's requirements and the client's environment and history, whereas contingency recruiters often neither have the in-depth background information nor the time to do more than send their candidates on interviews with much more than a cursory understanding of the position or the client’s expectations.
  • Retained search consultants personally handle a maximum of three to five concurrent assignments on average, whereas contingency recruiters work with a multitude of open job orders.  Again, without a guarantee of payment for services performed, contingency recruiters cannot afford to invest much time in any single search.
  • Retainer based firms typically present two to five pre-screened, highly qualified candidates to the client.  Contingency recruiters submit a high number of minimally screened resumes to increase probability of an eventual placement.  Therefore, in the latter case, the burden of screening and qualifying is placed on client personnel.
  • Retained firms are generally reputable and offer a professional guarantee and commitment to thorough, ethical practices and results.  Contingency recruiters may work for reputable firms, which typically offer only a 90-day prorated guarantee, leaving the client to decide how best to replace the initial mis-hire.  In contrast, retained search firms typically offer a 6- to 12-month no-fault guarantee that covers complete re-initiation and fulfillment of the original search.
While there always are exceptions to any rule, understand that in the majority of cases, the business model of the firm drives these characteristics more than the capabilities of its recruiters. The value of an individual recruiter (judgment, experience, ethics and thoroughness) can only be fully considered within the context of the business model.
 

 

 
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