You probably know that there are different types of recruiting services, but you may not realize that each type has its advantages and drawbacks. Knowing which type fits you best and which type a given recruiting firm uses can make a big difference in your career choices as a recruiter. Further, recruiters that grow up in a particular recruitment strategy might consider extending beyond that strategy to expand the market segments they can appeal to.
Contingent Recruiters are paid only after they find a candidate whom the client hires. Fees are generally based on salary or expected total compensation. Traditionally a full desk model bringing in new business and finding great candidates. Most US based firms pay a draw with commissions between 40-60%. Most international based firms pay a guaranteed base with a smaller commission rate usually between 10-30%.
Retained Recruiters agree in advance to set recruiting fees, which are generally paid in stages, starting with a retainer fee and the remainder at agreed intervals. Retained search generally involves a long-term relationship between the recruiting firm and the client and works well for mid- to upper-management up to and including the C-suite. Some retained recruiting firms also work almost as an external HR team. They will conduct all or most interviews, take care of scheduling, handle drug testing and background checks, etc. It really depends on the firm and the client’s needs/requests.
Retained searches are normally deep, systematic and stringent – the recruiter will pull out all the stops to find the best candidates. Traditionally a split desk structure with the Practice Leader responsible for business development with a team made up of Account Managers, Recruiters, Sourcers, and Researchers. Typical compensation plan is guaranteed base with discretionary bonuses based on contribution and team performance.
Engaged Recruiters receive a percentage of the fee at the start of the search, and the rest only if a candidate the recruiting firm finds is placed. This is the hybrid model that seems to be gathering steam recently. At the surface it most closely resembles the contingent model with less structure and client activity targets than fully retained. Compensation model also is most similar to contingent with full desk model, draw and more aggressive commission plan.
For individual recruiters, one, two, or all three of these may work well – you need to look at your personal style and preferences. For example, if you want the freedom of casting a wide net and a series of one-off assignments where you manage your own search and don’t have the client looking over your shoulder, you might prefer to work with a firm that does contingent searches.
If you know you are good at cultivating long-term, partnership-type relationships with clients, then a retained search firm might be a good fit for you, but look for a firm where clients are assigned to a recruiter rather than one where, though the firm is retained, you may be moved from client to client.
Finally, engaged search firms offer a hybrid of the other two – engaged search will give you an opportunity to discover where your strengths lie.
If you are interested in recruiting for very senior-level roles you might be best served by finding a firm that practices a full retained model, where mid-level and more junior level roles have traditionally been more contingent.
However, bear this in mind: contingent fill rate is usually around 20-25% on average while engaged is closer to 80%+. The reason is often the mindset of the hiring manager. If they don’t have “skin in the game,” they may hire a less qualified candidate to avoid paying a fee. The hiring manager needs to be invested in hiring the best of the best, alongside a partner in the recruiting seat. Clients working on a retained basis, traditionally are committed not only financially, but have an urgent need to hire quality professionals.