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When to go retained?

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This post first appeared as a guest post on The World As Perpetual Beta.


There two basic recruiting models when dealing with 3rd party recruiters. They are:

Contingency: In which the recruiting firm get’s paidcontingent upon a successful placement. In this case the hiring company has no obligation to pay the recruiter a fee unless they make a placement. The hiring company can work with as many contingency firms it likes.

The recruiting firm too has no (real contractual) obligations to the hiring company and basically works for free until they make a placement. They can choose to put as much or little effort into filling roles as they like.

Characteristics of contingency model

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Retained Search: With retained search, there is skin in the game. All engagements are exclusive and the firm gets paid a portion of the fee up front to launch.

Retained search was traditionally targeted only at the highest level roles. These days, anything Director Level and above is fair game. Because of the exclusivity, and payment model retained search firms are not in competition with other recruiters or the client. They are therefore incentivised to do a thorough be-spoke search execution.

When to retain and when to go contingency?

When it’s a key transformative role, retained is the way to go (Director level and above) Think of it as sending in Seal Team 6. It’s essential you partner with the right firm. Not all retained search firms are equal. Referrals from trusted sources are always a great way to go. Ideally domain expertise within the role and industry vertical. Understand the firm’s process and execution timeframe. Is the search going to be run by a partner or an associate?

It usually doesn’t make sense to retain on individual contributor roles especially when there are multiple openings (i.e. engineers), although depending upon the situation, there are exceptions to this rule.

If you’re a small startup and want to leverage your network, by all means make that the first step. However you need to ask yourself upfront how much time you can afford to commit.

If you decide to go contingent: There are many decent contingent firms out there who take pride in their work and provide an good service. Giving one exclusivity for a fixed time period can incentivise them to focus on your role. I would suggest forging a relationship with a couple of trusted sources vs. engaging with half a dozen firms.

Ultimately remember hiring is a very people oriented affair, and people are the most important asset at any company. Choose a recruiter that will represent your company carefully and wisely.

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