The advantages of contingency recruiting
Recruiters often get a bad rap. Annoying calls, prying e-mails, frustrating response times, recruiting is a tough business. Still, the need for recruiters is evident—in small and medium-sized businesses (SMBs) in particular.
There are two normal types of recruiting. The most common is called retained recruiting. This is where a company will hire a recruiting agency, sign a contract with them for a certain time period, then pay them based on their recruiting efforts. These are often called contract recruiters.
The other type of recruiting is called contingency recruiting. This is where a company will hire a recruiter to find a single candidate. They sign no contracts and make no payments to the recruiter unless they successfully place a candidate.
Both of these types of recruiting have their pros and cons. Today we are going to go over the basics of contingency recruiting and why it can be such a valuable tool for SMBs in particular.
The pros and cons of contingency recruiting
- Pay for results only.
- Zero up-front costs.
- One-Time Fee.
- Reduce in-house HR needs.
- Results-oriented recruiting.
- No exclusive contracts (aka you can utilise multiple contingency recruiters at one time.)
- Saves time and money going through resumes.
- Interviews, compensation negotiations, and feedback on candidates provided by recruiters.
- If the candidate isn’t successful within the first two months there can be a fee reduction or removal.
- It can produce a number of candidates instead of quality.
- One-times fee is high, Anywhere from 10% to 35% of the annual salary of candidates.
- No exclusivity of candidates, they are presented to multiple clients.
- No exclusivity for recruiter, recruiter works for multiple businesses at once.
- Subpar candidates who only stay at your company for a matter of months still need to be paid for.
When to contact a contingency recruiter?
Steve Jobs was one of the most successful businessmen of his generation. Often called a visionary, Mr Jobs built Apple into one of the largest companies on the planet. He did this by, above all else, recognising the value of hiring the right people. Don’t believe me? Take it from the horse’s mouth:
“The secret of my success is that we have gone to exceptional lengths to hire the best people in the world.”
– Steve Jobs, chairman, CEO and co-founder of Apple
With this Jobs quote in mind, I think the answer to when to contact a contingency recruiter, becomes very obvious. Hiring is the most important thing you can do as a business owner, so whenever you feel you need help in the process, it’s time to hire a recruiter.
Choosing a contingency recruiter, in particular, is a different matter. Contingency recruiting, as you can see from the list of pros and cons above, is best for SMBs who are seeking to hire only a couple of candidates and want to save money on HR costs.
SMBs often don’t have the time to do in-house recruiting or the funds to pay for retained recruiters which makes contingency recruiting a great option. When managers are tired of scouring regular job boards for qualified candidates and you can’t afford a full-time HR professional or retained recruiter, then it’s time to contact a contingency recruiter.
Remember, the most important thing you will do as a business owner is hire. Do it right. Use all the tools available to you and your business will surely thrive.