The following is a guest post authored by Allen Ackerman.  Allen is a principal at A-List Search, and was the first recruiter to customize his out-reach and build a relationship before trying to place me.  I asked him to write a guest post because he is one of the good recruiters out there.

_____________________________________________________

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

Contingency: In which the recruiting firm get’s paid contingent 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

• Transactional: Contingency recruiters are not incentivised to do a thorough screening job because they need to get the resume submitted before the next guy.  
• It’s a numbers game: The contingency model incentivises a lower quality ‘Spray and Pray’ type of approach.  Therefore there’s often more of a throw paper against the wall and see what sticks mentality.
• Lack of consistency and accountability:  Contingency firms need to always pursue the lowest hanging fruit, which may or may not be your role at any given time.

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.  

• Getting to know your company and role:  A retained search recruiter can (and should) take the time to get to know your company and the specific role.  A deep dive into culture, company direction, and specific objectives for the role.

• Accountability:  Weekly calls to synch up on search progress and refine objectives as needed.  
• Representation: Retained search firms don’t need to hide the client name with outreach or postings.  Furthermore they act as ambassadors for your company who are able to speak intelligently not only about the role but about the company and industry as well.  We’re able to tell your story and properly pitch the role.    
• Credibility: Hard to reach candidates respond to our outreach and take our calls.
• Consultative vs. Transactional:  With retained search you are getting a true partner; one who brings a depth of experience in building companies and industry specific experience to the table.

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.