There are many different ways of finding a candidate to fit a role within your company. Finding the right fit for a position is key in order to assure that your company continues to grow at a healthy pace, so you don’t waste time, money, and resources training someone who isn’t fit for the role and will need to be replaced.
One of the major benefits of using a recruitment agency is the ease of finding the right talent at the right time, for the right price, even while there is a perceived shortage of applicants, or the job is in a niche field.
However, how do you know which recruitment methodology is the best for your business? The choice may depend on several factors, the most important being the time, budget and type of candidate. Usually, there are two ways of working with a recruiter: retained recruitment and contingency recruitment. Next, we present you the main differences and benefits of each method.
What is Contingency Recruitment?
Contingency recruitment is when the recruiter works without a fee under the premise that they will be paid in full when the vacant position is filled with the correct candidate. Typically, the recruiter is working alongside the Human Resources department and incoming responses to any advertisements. Usually the cost of this service is a percentage of the successful candidates’ yearly income.
Contingency recruitment is success orientated, and it is in the best interests of the recruitment service and the client to find the best-fitted client as quickly as possible. This methodology is the best option for skill-based jobs (such as an IT profile), mid-level professionals, and professional roles.
Benefits of Contingency Recruitment
A company’s in-house recruitment is generally done by Human Resources, and so a lengthy search for the perfect candidate is not always practical or feasible. Generally speaking, in-house recruitment does not have the resources, or connections, that a recruitment agency has.
Since the use of contingency recruitment lessens the demand for in-house work, a client can expect the recruiter to take care of everything from finding potential employees, to salary negotiations. Other benefits to using contingency recruitment are the following:
- Reduced times. It is not time-consuming for the client company, because the recruiter spends all of the time looking for the perfect fit. There is also a visible reduction in in-house needs, and the recruitment process is usually much faster as the agency can put much more resources and effort into finding the correct candidate.
- Flexibility. If the company does not like any of the resumes or think that none of the potential employees is a good fit, they simply don’t have to hire them. Since no fee is charged until the position is filled, the employer really can simply wait until the recruiter finds the perfect candidate.
- Success guaranteed. The fact that the fee is partially refunded if the employee does not stay in the role for a set amount of months (two on average) also means that there is a guarantee that the recruiter will work hard to ensure highly qualified candidates.
- Lower costs. Contingency recruiters receive payment only after the role is filled. Generally, the fee of the service is a percentage of the annual pay of the candidate, and if the candidate does not stay in the role for an agreed amount of time the fee is refunded in part or in full, depending on the contract.
Disadvantages of Contingency Recruitment
While there are many benefits of using a hired contingency recruitment agency, there are some downsides as well. Usually, there is no exclusivity clause, and so your recruiter or the talent that they are working with may opt for another company if they receive a better offer or if they feel that another company can offer them a better working environment.
There is a level of competition within the recruitment process, particularly if more than one recruitment agency is hired. This competition means that it is more likely that a candidate who is not the right fit will be hired as each company does their best to get the position filled first.
For less highly skilled roles there is also a broad talent pool to explore, which means that while a company may be presented with someone who is highly qualified for the job they may not be a perfect fit for the cultural environment within the office.
What is Retained Recruitment?
Unlike contingency, retained recruitment is much more appropriately used while looking for high profile jobs, such as managers and CEOs. With this method, recruitment firms charge an upfront fee and take sole responsibility for finding the person to fit the role, working alongside the company, agreeing on different methodologies of searching to do this.
Some of its main advantages are:
- Agencies are invested in the client’s relationship and its success, so they are committed to finding the best fit for your company.
- Retained recruitment saves senior management time and effort.
- There is minimal Human Resources management time invested.
- It provides in-depth knowledge of the market, as usually an expert recruiter or specialized in the industry will be assigned to the process.
- It uses passive candidate sourcing techniques, which means more exclusive candidate pools.
However, because retained recruitment is used for senior roles within the company, it takes longer to find the perfect candidate and the service is much more expensive than that of contingency recruitment.
Which is my Best Option?
Whether retained or contingency recruitment is right for your company depends on many factors. It is important to consider how much time your team can dedicate to the recruitment process, company budgets and the type of candidate you would like to attract.
All these factors should be analyzed together. For example, companies with a limited budget and time, and where the role is not key, can choose contingency recruitment. However, for companies with a bigger budget looking for key players and need a more in-depth knowledge of the market, the best option is usually retained services.