I’ve heard so many times from so long time, clients telling me that they usually give a search assignment to various agencies and when I ask them why, they all have the same answer:
“Because they will provide us the talent we are looking for faster”
Well it might be a reason but I’m not sure it could be the correct one or at least the one bringing your organization to make a hiring successfully.
Would you rather find faster the candidate you are looking for or would you like better to find the perfect talent that will match your overall requirements for the role as much as your company culture and values?
Now, let me explain you the difference between the most common business models in recruitment, the so-called Contingency and Retained searches.
To make it clear, it’s quite simple. A Contingency search firm is paid only upon a successful placement of the candidate they represent and there is no upfront fee for the client.
On another other hand, Executive search firm are acting on behalf of their client on more of a Consultant role. This will involve upfront fee generally to be paid by the client on a three time payment basis; first prior to engage themselves in a search, second before sending the client the shortlisted candidates and the third once the placement is done.
Some Executive search firm could agree with their clients on a two upfront payments or even on a one-time payment upon the successful placement but with full exclusivity on the assignment.
While some clients might think they are going to hire faster with a Contingency search, they might face a very detrimental wrong hire.
80% of employee turnover is the result of «bad hiring decisions»
What are the main benefits of working on a Contingency search?
First, it’s not exclusive so you can assign as many agencies as you want to work on the same assignment at once. Probably, the second is what the client feels it’s the most attractive benefit as there is no upfront fee and therefore no cost until the right candidate is placed.
Working with many firms will generate confusion amongst the potential candidates on the market while different agencies will probably contact them with a different approach on their messaging regarding the client.
Most of the time, those firms will only relate on the job description and requirements they received from the client, rather than spending time to assess the potential candidates and be sure they will fit the company culture and values.
The benefits to work with an Executive Search firm are that they will represent your company culture and values as its best and not only focusing on straightforward job description and requirements.
Having the exclusivity of the search, they will have time to specifically assess every potential candidate, understanding their will to move for a new challenge. Those firms usually approach candidates that we call “passive” and therefore not looking for a job and might be covering the same role the client is looking for at a competitor, which makes them a desirable talent pool from which to hire from.
Executive Search firms will use particular and specific assessment tools to assess any potential candidate as well as conducting behavioural interviews.
The strategy of the search is well discussed between them and the client to increase the chances of seeking the right talent on the market. Most of the time, this includes the firm to act totally confidentially and do not advertise on any job boards or social medias as they are not looking to attract “active” candidates but rather headhunting the best talents in the market.
This is the main reason why such firms conducing retained searches are usually paid over the process because of the most intense process and level of engagement towards their clients.
This service is offered to clients when they need highly qualified candidates for Senior-level and Executive roles (e.g., President, Vice-president, CEO and Non-Executive Directors) as well as for other highly specialized and/or skilled roles for niche sectors and/or when there is a strong competition in the market for such top talents.
Choosing one or another kind of service provider for your hiring needs depends on what you really need, the importance of the role itself and you must think very wisely about the investment you would like to do for finding the right talent.
We have seen many clients doing the great mistake to work on contingency basis for some key roles in their company without willing to invest to find the best talent with a more personal and committed Executive Search firm and guess what?
They faced the cost of a bad hiring which is far greater than any Executive Search firm fee.