When seeking new talent, companies oftentimes rush into hiring multiple search firms on a contingency basis to fill open positions. This might sound reasonable at first - considering that they will get more resumes in a short time - however, it can be more time-consuming, expensive, and less qualitative than focussing on one retained search firm.
Generally, companies can decide between three major recruiting options: managing the process internally through their in-house recruiting/HR team, engaging contingency recruiters, or using an executive retained search firm.
The main difference between contingency and retained search is the payment structure: a contingency recruiter earns a fee upon successful placement of a candidate, whereas a retained recruiter receives an upfront payment (part of the search fee) before starting the hiring process. Such an upfront payment grants retained search firms exclusivity, meaning that they are solely working on a specific search, which provides some great benefits for companies:
Saving Time & Money When Hiring at High Stakes
Engaging a search firm to fill a critical position usually involves high stakes - making the wrong hiring decision and placing the wrong candidate can become very cost-intensive, but at the same time, vacant positions can cause massive expenses, too. Therefore, it is even more important to have a search firm that knows how important this position is to the company's success and how false hiring decisions can influence their profits. Retained firms usually offer very thorough research processes coupled with great talent networks and extensive investigations before presenting a candidate to a client. Retained recruiters pay proper attention to a company's search and provide a more individualized focus. Due to the upfront payment, quality work is guaranteed and searches are completed quicker providing more highly qualified candidates at a lower price as recruiters ensure all their energy and enthusiasm is directed towards that specific project.
Most retained recruiters also have an extensive talent network, which enables them to not only engage with active candidates that are currently looking for new job opportunities, but also passive candidates, those that are currently employed and not "actively" looking for new challenges, however might be open to learn more about interesting vacancies. This approach ensures that a company can hire the best possible fit for their positions.
Expertise & Communication
Most retained recruiters possess very specific industry knowledge and talent information that allows them to engage with quality talent on narrow fields requiring thorough research. Information such as industry compensation, current opportunities, trends and others can be decisive factors when reaching out to passive candidates. Having a retained recruiter who knows how to handle delicate information and situations such as salary negotiations is very beneficial to companies and eventually saves them a lot of time. Recruiters usually handle all communication between the candidates and the company and are able to read situations and gauge how to move forward in decision-making. On top of that, most retained recruiters have excellent researching and people skills, which enable them to easily determine whether a person is qualified and also a personal fit.
We have mentioned this many times before - most hiring failures are caused by incompatibility between the candidate and the company, either on cultural or personal grounds, not from missing technical skills or expertise. Retained searches do not only probe for the appropriate skill set and experience of candidates, but also for the "best" possible fit.
Partner versus Vendor
Retained searches create a mutual commitment between companies and recruiters. Retained recruiters invest a lot of time in understanding their clients company culture and becoming an extension of their company, which candidates perceive as very positive. Retained recruiters know what competencies are critical to a specific job and what personality traits are important to fit into the company's culture.
Without a doubt, retained searches oftentimes are more expensive due to the initial outlay for the recruiter to start the search process. However, retained searches can generally be seen as searches that deliver the best results and eventually the best return on investment over time. Generally speaking, retained searches make sense for higher-level positions, where companies have pressing executive level needs that require the "best talent possible", or when positions require a very specific skill set or cultural fit, and confidentiality is important.
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By The Q Works Group