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The differences between "retained" and "contingency" recruiters, while important for those seeking finance jobs to understand, are far from black and white.
David McCann, CFO.com | US
April 7, 2008
I've worked for MRI which is predominantly a franchised contingency recruiting company. I only worked retained search with them however and in our own firm since 1998. This article does not lay out the key division of services represented by Retained versus Contingency in my opinion. Our business is what we refer to as Client-Side representation which may include retained or contract search - but does include contingency placement where opportunity presents itself. We don't search on contingency however, but we do make contingency placements. My definition of the difference in these two business models is simply this: as a contingency recruiter you are essentially a candidate broker. As a retained, or contract search firm, you should be working on paid assignments to represent the recruited positions to a relevant candidate market for one client at a time. Clients buy and get the first right of refusal among other handy benefits that insure candidate loyalty on their search and we stay on task until successful completion of the search - on our dime if necessary. On contingency, you "search" for job openings in verticals and present qualified candidates to all the companies you are representing to maximize your potential for a placement and therefore a fee. To do otherwise is simply not very good gambling skills. The real issue is time. When you have the time to fill a position, contingency may be your best recruiting strategy. When you don't have time, or the position is sensitive in any way, finding a firm that specializes in client-side-representation is your best bet, as they should offer a more polished search of the best-of-breed in the market, not just the recruiter's datafiles and they should stay on task to successful completion. That's our playbook anyway.
Posted by David Musgrove | April 06, 2009 04:35 pm
If you're seeking a management or executive level individual for your company then the best solution is likely not a "one size fits all" approach. First, retained solutions come in several forms. If you're only being presented one solution then you should challenge the company to present options to you. The most effective solutions for every aspect of business should focus upon the client and the solution which best supports their specific business need for that situation. I can think of few businesses where a "one size fits all" product can be successful on a sustainable basis. We have countless examples of them. I commonly share with companies that, "You should take a retained approach on this search, regardless of whether it's us or another firm." There is definitely a place for contingent search in the world of recruiting, especially where an ongoing relationship exists. If you're reading this it's because you're a strategic member of your organization. Folks, in medicine they realized long ago that specialists in any area are the best approach for the patient. I was again disappointed this week to hear that a major retailer had hired a "big name generalist firm" to fill a position requiring very specific talents. The candidates the firm has presented to the executive team reflect their "generalist" orientation and lack the "specialist" knowledge and training that will ultimately maximize the company's success. We often tell our retail clients, "If retail is not important to you then we may not be your best resource." Working with highly focused specialists will deliver a higher caliber of talent from your recruitment process and a higher performance against your strategic financial objectives. Further, if you're looking for a specialist in retail finance, the person who spends their entire week speaking to retail candidates will deliver a more timely and targeted result than a generalist who speaks with finance people across multiple industries. This methodology applies to virtually every industry. Further, looking for credentials from the Society of Human Resource Professionals or National Association of Personnel Services will help assure that your recruiter has been tested on laws, ethics and industry best practices. Gerald Mitchell, CSM President & Managing Partner Retail Search Group retailsearchgroup.com
Posted by Gerald Mitchell | April 11, 2008 02:29 pm
I am former Heidrick & Struggles but my first exposure to recruiting was with (for a very short time) an MRI franchise. Having been in both environments I can attest that retained search and contingent recruiting are not remotely related. Retained search is a specialized management consulting service. The industry is an outgrowth of services offered by McKinsey and Booz-Allen that evolved in the 1950's. True retained firms deliver market assessments and recommendations for client companies who need a strategic solution to a business problem. Sometimes that even includes assessing internal candidates and sometimes the internal candidate is the best choice given the business situation. In critical situations (say a Fortune 100 CEO search) clients may engage two global firms simultaneously to ensure a thorough examination of the market. Companies will pay for this as a professional service because the result has a material impact on their financial and operational performance. Contingent recruiting is a product sale in which the product happens to be a person. Recruiting at this level provides a commodity that has little to no strategic impact on the company. The contingent recruiter has a vested interest in the hire so their real "client" is the candidate, not the company. A retail analogy is comparing NeimanMarcus with WalMart. Both serve their purpose in the market but they do not deliver the same products and services. There are no one-stop shops.
Posted by Larry Mendez | April 11, 2008 10:22 am
Accountability of the search firm... That is a key factor for candidates to consider when dealing with a search firm regardless of whether they are retained or contingency. A key fact to consider is how long is the search firm willing to guarantee the tenure and performance of the successful candidate. The longer the placement guarantee the better the chance that candidate interests will be carefully evaluated. This has nothing to do with whether the search firm is working on a retained or contingency basis. It has everything to do with their client relationship and the depth of their screening process. Contingency firms working on a non-exclusive basis do not have the time to conduct in-depth analysis of the client's business and the specifics of the position. It is just the nature of their business model. But this critical failing in senior level assignments is not confined to contingency firms. Last year I saw a position overview for a very political, complex position in the San Francisco area. It was prepared by one of the global leaders in the search industry. The document was 12 pages, double-spaced with narrow margins. It was stunningly short on the details that smart candidates should know before they ever consider pursuing the opportunity. Some search consultants feel their job is solely to find a panel of qualified candidates. While the candidate does have an obligation in the process, they have a more limited opportunity to drill down to understand some of the critical issues, the cultural DNA, political alliances, hidden agendas, etc. Search firms have an obligation to provide candidates with a comprehensive Position Prospectus, an abbreviated version of what investment bank's disclosure document. Frankly, that is one of many reasons there is so much mediocre recruiting in today?s challenging business environment. At times it seems that recruiters are engaging in a game of don?t ask, don't tell. The most telling factor is the placement guarantee. A 12-month placement guarantee for tenure and performance is a reflection of the search industry's risk adverse mentality. A new breed of search consultants,next-level recruiters, are changing the business model. They offer candidate a detailed Position Prospectus, a 40 to 60 page document outlining the great, the good, the bad and the ugly of the opportunity. They are using candidate screening models like Topgrading, they employ a candidate vetting process that incorporates extensive background/resume checks, the use of former FBI investigators to check on the candidates' real performance (personally and professionally) numerous referencing interviews, a behavior and values assessment, and they provide clients with a video summary of their interviews with the candidates. Most importantly, they are not afraid of accountability. Next-level recruiters are creating new value and they are starting with a 36-month placement guarantee for c-suite assignments. The devil is in the details. John G. Self Chairman, JohnMarch Partners
Posted by John Self | April 08, 2008 01:00 pm
I was sent this article by Mr. Dowd, with whom I worked for several years. He is one of the most solid and straightforward people I've ever worked with - not to mention a great boss! In any event, I would like to add to the points the other recruiters made regarding contingency v. retained. After leaving Dowd Associates, I worked in a healthcare recruiting organization that was primarily contingency, but in a division that performed retained search exclusively. I tend to agree that some organizations either don't have the funds or are simply not comfortable with signing a contract with one recruiting company and paying up-front fees for the work performed on retainer. However, it is like paying an attorney a retainer - would they work for nothing? And, what is the public perception of those attorneys who aren't paid "till you are"? Ambulance chasers, right? Throwing the spaghetti up against the wall to see if it sticks? Most likely this is what the perception is, but it isn't necessarily the full truth. What Rich taught us and his clients, many of whom come back to him year after year, is that it's all about education and teaching clients and candidates about the process, and the benefits of retained v. contingency, especially at the senior levels. As much work as is put into preparation and research on retained searches, it's the few retained firms who take the money and don't do the appropriate work for their clients who damage the reputations of those who are digging in their heels and putting their noses to the grindstone to do the right thing for clients and candidates. The contingency firm which was the parent company of the retained firm I worked in did have a practice of spaghetti throwing, it didn't leave them with a good track record, and damaged a lot of client relations that needed constant patching up. However, this isn't the practice with all contingency recruiters. I think in both cases for retained and contingency firms, it's the few who give the majority a bad name. Advice? Do your homework and ask lots of questions. Get referrals from trusted colleagues. This goes for prospective clients, as well as candidates.
Posted by Jen Fisher | April 08, 2008 10:23 am
Recruiters, both retained and contingency, are in the business of filling open positions for their client (the person or company who is funding the search). A candidate is in the business of looking for opportunities. One is looking and one is filling, and they are polar opposites. Since a recruiter will not make any money talking to candidates who need jobs but do not fit their current search requirements, they often will not talk to every candidate who is in active job search mode. At least, not until they have a requisition that does fit his or her particular background and experience. Relationships need to be built BEFORE you need them. Networking is most effective when you are gainfully employed, not in desperate job search mode. The easiest way to begin cultivating those critical future recruiter relationships is by building a branded and visible online presence in places recruiters search for prospects, so THEY can find and reach out to you. Building relationships with recruiters today can accelerate your search in the future. Cindy Kraft the CFO-Coach
Posted by Cindy Kraft | April 08, 2008 06:43 am
For those of us (Executive Recruiters) who have been around for many years with (credible experience), the difference between a Retained search and a Contingency search is simply for the comfort level of the client company working with you and or previous long-term relationships that are being forged or have been forged. Using myself as an example... I put forth the same efforts for my clients on a contingency search as I do a retained search. One major difference to me and many professional recruiters is: A retained search is money that is paid up front for a job that the client company wants you to focus on right then and now! Thus..it (job order) rises to the top of the workload. I will only schedule what can be handled properly in regards to retained searches as so they get the attention due them... On the reverse side.... Recruiters put in a lot of man-hours to secure the right people for clients and the fact that we (Client Companies and Recruiters) need to work side by side to insure the best fit is accomplished should also mean that client companies respect and value you?re time and efforts on their behalf. I too have seen many one and two person shops (recruiters) have outstanding contacts and work ethics, as referred to by Mr. Tom Gimbel? and agree with his comment ?An often-spoken rule of thumb is that retained searches are used for jobs paying $250,000 a year and up. But, Gimbel told CFO.com, "There are a lot of one- and two-people shops out there that have some good relationships with companies and will do retainers for any amount of money." I however must say that my team and many of the professional recruiters I talk to regularly do not follow the theroy "The retained process is more rigorous," said Barry Bregman, "That's really what the client is paying for: greater rigor, due diligence, review, and analysis of the market and the individuals in it." Although in fairness to Mr. Barry Bregman, I suspect there are recruiters who put less effort into their work product as a result, but then again I must also say those are usually the recutiers who are only in business for a short time and never work positions in the value range we are speaking of. Whether I am doing a 7 figure Chair/CEO/CFO/CAO or a 100K frontline manager, I allow multiple options for my client companies to select from to start the search. I at times will do things slighlty different and charge an egagement fee which is less intrusive for some companies. As a seasoned recruiter, it is our job to provide our full efforts no matter what or how we charge. If you are not, then why would anyone hire you for doing what you do. Be creative to help you?re client companies get what they need. Have you heard of Trial Basis? You say What ? Are you nuts ? Nope, if a client company wants to hire one of my candidates* on a trial basis and the candidate is in agreement, I will charge my client company a scheduled amount, put the employee on my payroll and they (client company) can review my candidates abilities for a set period of time and after a month, 90 days or a year, they can then decide they want to make a firm offer to have this employee on their payroll?or not?. I will then adjust the fee accordingly. *not on all positions. Must be agreed to by Client Compnay and Candidate as such! Should termination of employee be required, this is done by our office releasing the pressure our client company may otherwise feel. Thinking outside of the box is a necessary for us all, companies, recruiters and candidates especially with the needs of future leaders and how we prepare to meet their needs. Competition among all of us for Generation X is fierce and will soon become a major issue! Jim Hilzendeger 15 Years Experience Sr. Level Executive Staffing Jim@Jhilzendeger.com
Posted by Jim Hilzendeger | April 07, 2008 12:52 pm
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