Contingency Recruiting is Unsustainable for Most Firms

I started my recruiting career as a contingency recruiter in 1992. It was much easier then. My fill ratios were high, and I was doing very well. There was no reason to move away from contingency during this era in the recruitment industry.  

Gradually things changed. Multiple forces conspired to make contingency recruiting a commodity. These forces included:

• The internet allowed everyone to have potential access to the same candidates and clients.
• Many people joined the recruiting business due to the earning potential and low barriers to entry.
• Many companies tried to force recruiters to work through HR, cutting them off from the information and influence they need to succeed.
• The push to hire through internal recruiters and employee referrals to save money.

The impact of these changes

The above pressures caused me to experience lower fill ratios, higher expenses, and greater frustration. I attempted to adapt to the change via the below actions:  

• Bringing in as many job orders as possible, even if they are low quality. This is a quantity over quality numbers game approach.
• Quickly submitting candidates to try to gain a “speed advantage” over my competitors. 

Do any of these efforts sound familiar to you? Many contingency firms have adopted similar strategies and tactics. Most of them have concluded that it’s almost impossible to consistently win in the contingency recruiting game.  It’s also costly and exhausting.

My epiphany
Eventually, the “light bulb went on” for me. I concluded that the contingency model was not the answer. The pros and cons of contingency search vs retained search was no longer an issue for me. I was convinced that I had to move from contingency search to retained search...period! 

My internal question of retained recruiter vs contingency recruiter was easy since retained recruiter was the best option, hands down. But now I needed to talk to my clients and prospects about contingency vs retained recruitment. I realized that convincing them was going to be harder than convincing myself. With persistence and experimentation, I eventually learned how to shift my clients to a mutually beneficial model with an upfront retainer (also called an engagement fee or container) along with an exclusive. This retained search  model provided the following benefits:  

• Higher quality job orders with client commitment, and our search costs covered. Now we could invest more time, money, and resources into our searches. This resulted in dramatically higher fill ratios and happier clients. 
• Greater client engagement, collaboration, and respect. This was a game-changer! When the client’s regard for you is low, it’s tough to succeed. When it’s high, you’re set up to excel!
• No more financial losses. When a recruiting firm properly executes a search and doesn’t fill the job, it’s almost always related to issues on the client’s part. For example, the client decides not to hire, promotes someone, fills the job internally, or has unrealistic specs. We stopped taking losses for things out of our control which took out much of the sting that plagues contingency recruiting firms.
• Enhanced ability to hire and retain recruiting staff. We had a better offering with a retained model than we did when we were contingency, This advantage was clear to people we were recruiting to work at our firm.

Final thoughts 

To move from contingency to retained is initially a scary thought for most people. It’s likely to elicit a host of “yeah buts,” “I don’t think” and similar fears that can keep you stuck in contingency. Fortunately, I  regularly see firms that recruit in various industries, occupations, and levels successfully make the change. I’ve never them wish they remained in contingency.

I offer a recruiter training course to teach you a proven methodology to move from Contingency to Retained.  This course helps recruiting firms quickly make this shift with much less client and prospect resistance.