When you are managing urgent or unpredictable hiring demands of a growing business, contingency recruiting may be an option you depend on to find the top performers you need.
Recruiters working under this model source and present screen qualified candidates and present them for review. If your company hires them, they collect a placement fee that is generally a percentage of the new hire’s first-year projected salary, typically between 15 and 30 percent.
Contingency recruiting is a popular choice with growing businesses because it seems economical with low up-front investment and saves time to find and recruit candidates that busy managers and business owners may not have to devote to building a workforce. But it can also be an expensive way to find suitable candidates because of hefty commissions.
What busy hiring managers may not realize is that contingency recruiters are financially motivated, which means they don’t invest the same amount of time, energy and resources on all openings, especially the hard-to-fill positions. A contingency recruiter’s agenda is often not the same as the client’s agenda.
Yet, as with any recruitment campaign, working with contingency recruiters has unique pros and cons. Here’s a brief look at what you can expect when using contingency recruiting.
Contingency Recruiting Benefits
- No Upfront Fees: The placement fee is paid only when the position is filled with a suitable candidate.
- Partial Hiring Guarantees: If a new hire doesn’t work out in the first few months on the job, placement fees may be partially refunded.
- Not Tied To One Recruiter: No long-term contracts or guarantee of work are required or expected from the recruiter, leaving clients free to use more than one recruiter if desired.
- Independent Sourcing: Contingency recruiters are generally independent agents who don’t use your internal resources.
Contingency Recruiting Challenges
- Quality: Expect an emphasis of resume quantity over quality.
- High Fees: Fees are between 15 to 30 percent of the assignment’s annual salary.
- Hire Not Guaranteed: There’s no guarantee that a successful placement will occur.
- Low Accountability: It’s difficult to hold a contingency recruiter accountable for results and weekly review.
- No Exclusivity: Candidates are generally presented to multiple clients in order to maximize the chance of earning placement fees.
When deciding whether to use a contingency recruiting firm for sourcing new employees, carefully consider the benefits and challenges. Some important determining factors include how soon you need to hire, do you have enough time to screen and interview each of the candidates presented by the recruiter, and are you prepared to pay the fee required by the contingency recruiter if you choose one of their candidates?
When it comes to IT staffing, there are some additional challenges getting contingent recruiters to fill job orders that require specialized IT skills and credentials. Many recruiters are in it for their own financial gain. While they ultimately care about their clients’ success, they need to set their own agenda in regard to actual time spent on sourcing, screening, and selecting candidates suitable for each assignment.
An alternative to contingency recruiters is working with an On-Demand RPO. This may be a better alternative especially in the fast-paced world of Information Technology, where you continuously need to hire and replace employees for projects and major clients.
Why Contingency Recruiting Agencies Fail You
The main area contingency recruiting fails for employers and hiring managers is orders for niche skills or hard-to-fill positions. A difficult-to-fill assignment is not viewed as desirable by some recruiters for a variety of reasons, including the extra time and resources required to source qualified candidates with rare skills.
The three biggest reasons why IT contingency recruiters may not fill your orders for hard-to-find candidates:
- Time and Resources: Difficult orders take more resources and time to fill than standard assignments due to the complexity of sourcing and verifying information, a process that can take weeks instead of days. This makes returns a lot lower in comparison to quick placements.
- Ongoing Support: Clients who are particular about the candidates they will accept or those who have a high turnover rate often require more ongoing support from a recruiter. This can be undesirable for a contingency recruiter who earns primarily via hired candidates, not number of candidates presented.
- Split Placements: A position that is difficult to fill may cause an IT contingency recruiter to have to reach out to others in his or her network in a split placement arrangement, which cuts into the recruiter’s earnings.
Many times, an IT contingency recruiter simply doesn’t want to deal with the hassles of difficult-to-fill assignments and, therefore will put other less challenging placements in front. This can be a frustrating prospect for any business working with contingency recruiting to try build a workforce with top candidates.
Navigating the world of contingency recruiting can be both rewarding and challenging. While the model offers advantages like no upfront fees and flexibility in choosing recruiters, it also presents its own set of challenges, particularly when it comes to niche or hard-to-fill positions. For businesses in sectors like IT, where specialized skills are at a premium, it’s essential to weigh the benefits against potential pitfalls.
Remember, the ultimate goal is to find the best talent that aligns with your company’s needs and values. If you’re contemplating whether a contingency recruiting agency is right for your hiring needs, take the time to assess your specific requirements, the urgency of your hiring, and your budget constraints. And if you’re on the lookout for alternatives or more tailored solutions, consider exploring options like On-Demand RPOs. Whatever your choice, prioritize a recruitment strategy that positions your business for long-term success.
Want to dive deeper into the intricacies of contingency recruiting or explore other recruitment options tailored to your needs? Reach out to us today, and we can provide you with the custom service you need.
Page updated on November 1, 2023.