Legal Law

Difference between retained and contingency contracting companies

Companies have several options when it comes to selecting the right type of recruiting company. Should you go with a retained or contingency-based business? We will give our opinions on both services. So how do you decide, as an employer, which type of company is right for your needs (?)

Recruitment retained

Retainer-based firms establish contractual relationships with their clients for strategic search assignments. Since there is a contractual-based relationship, a company based on advances will work exclusively on one opportunity until a successful candidate has been identified.

As the name implies, advance-based businesses will require an up-front fee to perform the search. This fee is typically 50% of your total fee for the assignment. The contracted companies operate exclusively, which means that the position will be filled through this recruiting company. They operate with processes and methodologies agreed between the client and the search company. As a customer, you also have the peace of mind of having a contractual agreement to protect your interests.

Retained search companies can establish a higher level of credibility with passive candidates. Because a held search receives a higher priority, most candidates are more likely to take the recruiter’s call. The contracted companies will share the company name at the beginning to establish credibility. When talking to candidates, you don’t need to be evasive in explaining your purpose for calling or sharing information about your client. For high-level assignments, retained searches are more attractive to executive-level candidates. No need to randomly search for the dreaded purple squirrel.

We have found that many senior executives will only work with retained firms. Your application is also less likely to be published on national job boards, especially when they want your search to be confidential. A retained company shows a level of seriousness on the part of the company to fill the position.

Contingency recruitment

Contingency-based recruiting firms will work similar assignments while also working on other projects at their recruiting table. Recruiters working for contingencies will often compete with the client’s internal recruiting department, job boards, and typically other staffing firms that received the same search assignment. The trick is to present the best candidate before the competition beats you. The result can sometimes mean quantity over quality.

As noted above, companies that use contingency recruiters generally open up the task to other recruiters as well. This intention is to allow recruitment companies to compete to see who can present the best candidates to show up for interviews more quickly. This sometimes results in a no-win-no-pay approach from the recruiter. Situations have arisen in which various contingency companies have claimed to have presented the selected candidate. These disputes will escalate to the point where the employer simply decides that it is easier to walk away from the whole situation. Contingency companies will be much quicker to send candidates their way, knowing that the more candidates who apply, the greater their chances of placing a placement. For some easy-to-fill jobs, this may be ideal.

The results

When your company needs to hire a low or mid-level candidate, you should use a contingency-based company. If the job description is generic in terms of the skill set you are looking for, then you should use a contingency-based recruiter. Companies looking for a unique candidate in terms of leadership skills and qualities will hire a consultant. The consultant will provide true objectivity in recommending the one that best suits your needs. This is the ideal situation to use an experienced contract based company.

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