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 not necessarily 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 chance of earning placement fee.
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 Solutions Fail
A 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:
1. 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 than in quick placements.
2. 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.
3. 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, 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.
Andrew Greenberg’s roots in recruiting date back to 1996. He has experience both on the agency-side and corporate-side of the staffing business, with a focus in the financial services space at companies like Bloomberg and UBS. He also has core experience with information technology staffing, and has worked for major software companies such as SAP Business Objects and IBM/Informix Software. To get in touch with Andrew, you can reach him by email or by phone at (800) 797-6160.