This question is not something that job seekers usually considers when beginning their search and the reason is greatly due to lack of public knowledge of the difference in methodologies, approach, search process, and attention dedicated to the incumbent between Retained and Contingency recruiters. The link below is to an article articulating the differences between Retained and Contingency firms from the Financial Executives International website and gives a very fair and clear understanding of both.
http://www.fei.org/download/Retained.pdf
The following are my personal impressions and insights into the industry as I have worked on both sides contingency and retained. This is not constructed to be divisive or to undermine Contingency recruiter’s service, but to simply act as guide and way to avoid the pitfalls that can come of working with contingency firms.
Many job seekers in the market place have deep seated stigmatism and reservations when choosing to use a search professional to facilitate their job search. Many believe that by using a search professional that the salary package is lower than if they were to pursue the role independently. Many also believe that when working with a search professional that there incumbents interests are secondary to the “fee” that or recruiters interests. There is also a lingering notion that incumbents will not receive the attention or dedication to assisting their job search, as search professionals are only interested in the number of candidates they can get in front of client in order to satisfy their obligations to their client.
These concerns are valid in many cases and have been born out of exceptional professionals receiving sub par treatment from a “Contingency Recruiter”. What is a Contingency Recruiter you might wonder? These are firms that are also considered “vendors” in the Human Resource world. Why vendors you might query? Well the way that a contingency firm works is that you have a large operations department “recruiters” and a large sales team or Account Executives who have secured the opportunity to be one among hundreds of vendors for a particular hiring need or position. With a contingency firm they are not paid until they have hired the candidate and after they have satisfied their guarantee period which is typically a 90 to 120 days after the hire on date. Meaning that if the incumbent fails to perform or is not to the clients liking they are “let go” and the contingency firm receives no payment. This results in a “shotgun” methodology to all positions they recruit for, and that is to get as many people in their door and in front of the client in as short of time as possible. The result is that many of the incumbents using this service feel slighted or that they were not given appropriate chance to interview for the role as they were presented among hundreds of other resumes. And they are 100% right to think this way. There are far more damaging effects of working with a contingency recruiter that will haunt you for the rest of your professional career and explained below as a cautionary guide to working with contingency recruiters. This is not to say that contingency firms do not provide job opportunities or that they may assist an incumbent in their job seeking, but merely to give a full understanding of the service and the forces driving it.
CV/ Resume exposure – when using a contingency search firm your credentials and professional background are basically “spammed” to every client that the account executive sees as being a match for your desired career move. Sounds great right? I’m going to get my resume to every possible person that would be interested in hiring me. Well take a moment to think about this. Have you ever filled out a hiring application and read the section that asks “Have you applied for a position with our firm previously?” Well guess what, whenever a contingency recruiter sends your resume to their client, yep you guessed it you formally applied!! And this is recorded by Human Resources for future reference. Here is the kicker many contingency firms will not tell you who their client is or if they have sent your credentials to their client, nor do many keep track of where they have sent it. This action may have or will prevent you from being considered for a role with a company in the future as you will be considered in a lower standing as you have already applied and been denied an interview.
Personal Attention – Contingency firms operate on the ideology of time is money to the extreme and so are unable to offer personal attention to you as job seeker. More often than not when going through a contingency recruiter you are only useful to them if their client is interested in your candidacy for a role. If not well then any question you may have about; Interviewing, CV/Resume presentation, alternate career options, career advise, etc. This leaves many with a feeling that they are not good enough or –and most often the case- the recruiter did not care about me.
Be weary of the W-2 on a contingency recruiter’s application- Many contingency firms make the incumbent sign lengthy paper work and W-2 prior to ever being seen by a recruiter. And why do you have to give your social security number, date of birth, educational background, and fill out a W-2? There really is not a valid reason other than the one in which the contingency firm ultimately uses that information for. The W-2 is so that you are now an employee of XYZ staffing and if they can’t find you a job right away well they can always hire you as a temporary employee for contract work. But wait I just came here to speak about the role you contacted me for!? Well that is not why you are there, in fact unless that XYZ firm has a specialized need for your skill set they have got you in the door with the hope that they can fit you with “many” jobs. This is not to say that you are qualified for many jobs but an incumbent who may fit more than one opportunity is better than one that is exclusive to a solitary role. In fact if you have been brought in for a specific skill based position once you are no running for that role, forget about them calling you again, remember time is money and if you’re not making them money at that instant well you are negligible.
Internal Communication- To be absolutely frank there is no communication among contingency search employees. Why not, couldn't’t they assist one another in filling their searches? Sure but then again anyone in the profession on the contingency side is motivated by one thing and one thing alone, lets just say its not the gratifying feeling you get from helping someone land that job they have always wanted! It MONEY! And they way that recruiters are compensated is central to this problem. Let me break it down for you and you will surely see why they do not communicate with one another, and will go out of their way to keep candidates confidential from peer recruiters. Contingency recruiters are typically given a base salary of 30-35,000k and receive a commission structure based on candidates hired. The recruiter works with an account executive and splits the fee with the sales person at about 2-3% for new recruiter and up to 7-10% for seasoned recruiters. At first glance this sounds attractive until you see how the break down actually works. So let’s use the example of a candidate earning $50,000. Ok, typically contingency firms receive 10-20% of the first year’s annual salary. So that comes to 5-10,000k fee on a single applicant. Ok sounds good right… WRONG! The 5-10k is the gross before taxes and before the “house” takes it share. The house usually takes the lion’s share of about 25%. Ok now our 5-10k fee is down to $3,750-$7,500. Ok still looking good for the amount of work that is applied here. Wait, no comes the split of the AE and the recruiter. Well the AE now has to split remaining with the recruiter- remember this is before taxes- and lets use the 7,500 figure for ease, and the AE takes everything but the average of 6% of the remaining fee. Ok so that means the recruiter gets about $450 for his/her efforts. Now taxes come in and you can widdle that number down to about $300-315 for one applicant. Still not too bad for a days work right? Well this is not a days work so to speak it’s about 12-16 days of work on one candidate who is may or may not get the job, and they have to wait out the 90 day guarantee period before they ever see payment. No what if 2 recruiters work on the job… now that number goes down to $150 to $175 based on the fact that they have equal bonus structures. Hmmm there is an inherent conflict of interest here huh!? And here is another factor that will further the lack of communication, if a candidate has been recruited and is not interviewing, that candidate is fair game to all other recruiters in the firm. This causes recruiters to go to great lengths not to share their candidates and stymie communication between members of a firm. Whereas the candidate may have had a wealth of positions to choose from, they are now stuck with what that particular recruiter has.
Ok so why go with a “Retained Search” firm and this answer is addressed in the following points below:
We are retained meaning we are already paid and thus are not soliciting, but have an exclusive opportunity that you can interview for that you would not get anywhere else.
We are retained which means the client we represent respects and values our abilities to identify and network with professionals that they are seeking.We work on high level executive positions and so work with very few candidates as they are experts in their respective fields and qualified for the role.
Each candidate is treated as if they are the only one interviewing for the role.
Salary negotiations are not driven by increasing the fee, our negotiation process is to facilitate your compensation needs, that is to say if we can not get you the salary you require, then you are not going to accept the role, and we have not completed the search.
There is no application process, W-2, or other personal documentation as that is taken care of by the client we represent unless requested by the client.
When going through a retained search firm you are dealing with a search professional that most often than not comes from the field you are in and understand both your needs as a candidate and that of the clients. How could you possibly determine if someone is genuinely qualified unless you were an expert in that field?
Hiring managers already know that you are stronger than a contingency candidate as they know the retained firm presenting you has already screened you extensively and is producing the ideal candidate not a candidate who made it through the HR screening process.
As a candidate you are made fully aware of all movements in the interviewing process regarding your status for consideration, and will act as a resource to facilitate your interview instead of keeping you in the dark in order to keep you strung along.
When working with an executive recruiter our contacts are actual hiring managers not an HR person managing the vendors, the feedback we receive and the insight we have is directly from the person hiring you as opposed to an HR person interpreting your interview performance from notes the hiring manager passed on.
Retained recruiters are well connected to line managers with all of their clients and provide ability to make introduction on your behalf even if the prospective firm does not have an immediate opening. Increasing your connectivity with decision makers and allowing you enhanced mobility in your job search.
Bottom line is Retained is much better than Contingency firms. The average pay increase that incumbents receive when going through an retained executive recruiter is about 30-35%, as opposed to 5-10% with contingency, which in simple math is a no brainer!
And if you have been contacted by a retained search firm it is likely they are very well aware of who and what you are and so will not be wasting your time, but presenting you with an opportunity that no one else has. This not only speaks to your professional prowess and expertise, but that you are recognized as a premium candidate and a person who can leverage their career significantly.
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