In today's plight for the
right talent most competitive organizations are dealing with the challenge of
securing the right mission critical, key contributor and next level leadership
people.
Below is an overview of what differentiates the Executive Search providers, Contingency and Contract Recruiters; it is a good reference sheet, so fee free to share it with your clients and your team.
Who Do They Represent?
Retained: Represent employer clients only, learn about their client and establish a solid foundation for the future.
Contingency: Can and do represent individuals seeking placement, they are more like sports agents, representing and pitching the latest and greatest.
Contract recruiter: Work for one company, and represent them but....share candidates from previous gigs, mostly they are loyal to themselves.
How They Work?
Retained: Conducts assignments on an exclusive basis only.
Contingency: Are usually in competition with other similar firms or agencies for the placement.
Contract Recruiter: Work on site at the customers’ office working on as many or as few assignments as are needed.
How They Are Paid?
Retained: Professional staff tends to be compensated on salary, bonus, profit-sharing basis with incentives for client business development.
Contingency: Professional staff tends to be compensated on commissions for placements made.
Contract Recruiter: Professional contract recruiters are typically paid on an average of $45.00-$85.00 per hour.
Who Do They Report to?
Retained: Typically work at higher organizational levels, C or Executive VP.
Contingency: Usually work at lower organizational levels, take their directions from HR or Contract Recruiters.
Contract Recruiter: Most of the time they report to a CEO of a start up or report through the Director of Talent Acquisition. Companies report much better results when a CR reports to the C level.
How They Work?
Retained: Must know client organization and position responsibility/requirements thoroughly before implementing work plan and beginning the search.
Contingency:Tend to spend less time on initial research and specification; may not even meet company management and deal solely on telephone. Often start, stop and restart because the wrong candidates are surfacing.
Contract Recruiter: Do what they are told. Typically are not comfortable challenging the status quo, even if the status quo is not working.
How is the Recruiting and Sourcing done?
Retained: Focus recruiting and evaluation efforts on broad targeted range of potential candidates, most of who are not in active job market; the sourcing and searching is very process and result-oriented. It begins with building a list of ‘like’ candidates and should ends with a very specific vetting process.
Contingency: Focus primarily on applicants/candidates actively seeking new employment; mostly use job boards, very candidate placement-oriented. Mostly contingency recruiters do not spend time vetting and evaluating candidates the way Retained search does. I believe this is because they are not being compensated to do this. I do not often find contingent recruiters that spend time headhunting, as they need to go where the quick dollars are.
Contract Recruiter: Focus is primarily on staying in the parameters of what has been done at their last job or what the company has done before. Most of these recruiters are not cut from the mold of head hunting and mostly do not build passive lists. Some very strong seasoned contract recruiters will call a pre built sourcing list.
What is their typical workload?
Retained: Search consultant personally handles only about three to five assignments, on average, at any given time, given these professionals are paid to focus, they do.
Contingency: Work with multitude of job orders in hopes of hitting the industry average of 25% fill ratio. This means that 75% of the time they do not fill their clients requests.
Contract Recruiting: Most contract recruiters are hired to fill 10 or more positions within a given period of time. They work in a focused manner to fulfill their employers’ requests.
How Much Time Dedicated to Recruiting?
Retained: Most Search consultant invest 40 to 50 hours per month per client assignment depending on their workload and the size of their team.
Contingency: Without a guarantee of payment for services performed, cannot afford to invest much time, most high performing contingency recruiters generate as many candidates as possible to assure a higher fill ratio. The concept is the more send outs, the more placements. It is the law of numbers. In 90% of contingent placement firms 65% of the recruiters’ time is wasted working with candidates who will never get hired. This model is extremely inefficient.
Contract Recruiters: Operate very much the same way as the contingent recruiter, often they are spread too thin and out of necessity need to process as many candidates as possible.
How Many Candidates are Typically Submitted?
Retained: Usually recommends two to four qualified candidates to client.
Contingency: Known to submit substantially more paperwork and candidates to increase probability of placement, they extend their inefficiency to their customers’ HR teams.
Contract Recruiter: Unfortunately, unless the company has a very specific hiring process that maximizes recruiting efficiency the exact same behavior as a contingency recruiter is modeled.
How Much of Management’s Time Is Required?
Retained: Once the initial time investment is complete and the role is clearly defined the right search firm requires minimal client, HR and general management time investment
Contingency: Given the way they are paid and have to work, it requires considerably more HR time in screening, interviewing and evaluating candidates.
Contract Recruiter: Unless the company has a very specific hiring process that maximizes recruiting efficacy and efficiency most Hiring Managers must spend their time evaluating candidates, and most Hiring Mangers complain that too much time is wasted looking at unqualified candidates.
What Are The Placement Guarantees?
Retained: Reputable firms offer a professional guarantee, in stronger search firms guarantee their hires from 90-180 days; they can afford this because they spend their time carefully vetting and evaluating their candidates.
Contingency: Reputable firms under no obligation to guarantee or produce results due to contingency fee arrangement (paid only on placement); however most agencies guarantee their candidates 30-45 days.
Contract Recruiter: There are no standard placement guarantees when using a contact recruiter.
How Do They Charge?
Retained: Most Search fees are based on percentage of salary, time or flat quote plus expenses; these fees average 30 to 35% of individual’s total compensation
Contingency: Most contingency firms charge similar fees and reputable, successful firms charge between 20% to 25% range
Contract Recruiters: Contract recruiters typically get paid on a bonus based on number of hires.
Who Do T
