How long can Contingency continue?

Contingency vs Retained. Quantity vs quality. In recruitment it’s long been the case that most agencies work on the Contingency recruiting model – competing with others and even the employer to fill a particular role, on a ‘no-win, no-fee’ basis. The alternative – where a client exclusively retains the services of one agency to fill its vacancies – is, from a business point of view, far preferable. So why is Contingency Recruitment still so prevalent?

Let’s take a closer look at the pros and cons of both.

From a client’s point of view, Contingency recruitment is easy – they don’t have to pay anything until they appoint a candidate, they have several recruitment agencies competing so get to see a broad range of candidates, and they can fill a position quickly. On the downside, clients are left with a long list of candidates to narrow down and interview (many of whom won’t be suitable), candidates are often put forward for positions that aren’t right for them and the recruitment agency and its consultants have to work hard for potentially zero gain.

Retained recruitment, on the other hand, is a much more measured affair. Knowing they’re working exclusively on a retained fee allows the recruiter to work closely with the client, using an agreed methodology to find the right candidate for the job and eventually presenting a shortlist of suitable people to choose from. For candidates it’s far better, as they’ve been through a more rigorous process and have a much clearer idea of the role they’re being put forward for. For clients it means they get quality candidates to choose from, but at a price – sometimes as much as 50% of the successful candidate’s first year salary. And for recruitment agencies, it gives them a chance to do their job properly, knowing they’re being paid however long it takes to fill the position.

In a nutshell, for recruiters contingency means reacting quickly and putting forward more candidates to increase the odds of success; retained means taking time to get things right, coupled with the sometimes lengthy process of finding the right candidate.

So, going back to our original question, are the days of Contingency recruitment numbered? On the face of it, it’s a flawed business model that does no-one any favours. The fact that technology such as online ‘candidate delivery’ systems, with more in-depth information about each candidate and even video introductions, is making it easier for agencies to cost-effectively adopt a retained approach, looks like another nail in the Contingency coffin. And yet…

A straw poll around the Back Office team brought an interesting consensus, with most people agreeing that, for all its faults, there’ll always be a need for Contingency recruitment. The over-riding opinion was that for employers, there’ll always be someone who offers to come in and do it faster and cheaper – and that leads you to Contingency recruitment. Besides, there are quite a few clients who enjoy having agencies compete for their business, believing it keeps everyone on their toes.

So, flawed though it may be, it looks like there’s life in Contingency Recruitment yet.

What are your thoughts on Contingency recruitment? Has it had its day? Is it still a worthwhile business model? Join the conversation on Twitter or LinkedIn #BackOffice #ContingencyRecruitment.

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