We offer four different types of services: Executive, Standard, DIY and Campaign, each with their different services and price points. We are concious that you know exactly how much our services cost up front. The other question to consider is whether to do contingent or retained search, so below we have included an amended article that will hopefully answer some questions.
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To someone who isn't from a recruitment background, the terms 'contingency' and 'retained' probably mean very little. Here we'll explain what they mean, and the pros and cons that would make you choose one over the other, depending on your situation. But first, let's look at why you would want to use an agency over the other methods available:
Why use a recruitment agency?
Recently, an article looking at the methods used by candidates to find employment indicated that over 50% of candidates used a recruitment agency as their preferred method, and that agency usage was on the rise - up 10% since 2016 - whilst job board use appeared to drop by 27% in the same period.
The main benefit of using a recruitment agency (from the employer's perspective) is that the bulk of the work will be done for you. No more mountains of CVs you've been trying to get the chance to read through for the past week slowly sliding down the back of your desk. No more getting excited over a seemingly great candidate who then goes off the radar for no apparent reason. The list goes on - someone else handles it all for you.
When you do decide to take a candidate to interview, you'll be fully briefed by someone who's already spoken to the candidate in person - so there'll be no nasty surprises.
Then there's the fact that for many smaller companies, dedicated HR personnel are simply out of reach. Not only does this mean that someone will have to be taken away from their normal work whilst a candidate is sought, but also that you're going to be reliant on whatever people-skills they might have acquired in life to select that person. This is a hit-and-miss approach - as few people have the experience to tell a bad candidate from a good one.
Using a recruitment agency will mean that not only do you suddenly have an extra pair of hands to sift through all those applications, but also that those hands belong to someone who's done it all before. When you do decide to take a candidate to interview, you'll be fully briefed by someone who's generally going to have spoken to the candidate in person already - so there'll be no nasty surprises. Recruitment agencies aren't for everyone, but if you like the idea of saving time and effort, all whilst having candidates professionally matched to your business's culture, an agency is well worth a shot.
What is contingency recruitment?
Contingency recruitment is that the recruiter doesn't get paid by you unless you choose to employ a candidate that they put forward. The power here is very much in the hands of the employer - and it's fairly normal practice to see multiple recruitment agencies trying to fill a role all at once. This might even involve competing against an employer's internal HR department, who are also searching for a candidate. As you can imagine, this can all get very competitive, very quickly.
If by any chance a recruitment agency operating on contingency should send you candidates you don't feel are suitable, you simply don't have to pay their fee.
Generally speaking, contingency recruitment tends to be the more mass-market of the two approaches. The role you'd be filling could be anything - ESL teachers, Pre-K teachers, the list goes on. It's not limited to teaching positions either - and you'll often find juniour administerial roles being filled in this way.
Benefits of contingency recruitment
The benefits of this 'no win, no fee' method for the employer are fairly obvious. Firstly, you're getting all the benefits mentioned above - but secondly, you're in charge of the whole process. If by any chance a recruitment agency operating on contingency should send you candidates you don't feel are suitable, you simply don't have to interview them. This means that it's in the agency's interest to send you the best candidates they can find - and as quickly as possible.
Contingency recruitment is an excellent choice when a candidate is required quickly - or if you have multiple positions to fill. The candidates an agency puts forward will fit the bill, and be capable of doing the job in question to a high standard.
Downsides of contingency recruitment
As for the potential downsides of contingency recruitment - well just think about the benefits and then put yourself in the recruiter's shoes. If you know, or get an inkling that there are multiple firms working on a job, or that you're up against internal HR, are you really going to expend your considerable resources on that project?
Unless you're not very busy (meaning that you're probably not very good either), then of course you aren't going to. Your effort will instead go into sourcing a top-quality candidate for a job that you know you will get paid for. This means that it often pays to limit the number of recruiters working on a contingency job - and to make the fact that you have done this clear to them. This way, you get less people on the job, but they are working far more effectively.
Pricing structure of contingency recruitment
As we mention above, the pricing structure of the contingency recruitment process is a basic concept. If the recruiter does not supply the 'winning' candidate - the candidate who gets the job - then they simply do not get paid. Apart from a few exceptions, in most cases in the UK, it is illegal for a recruitment agency to charge a fee to a candidate (under the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003).
The actual price you pay to a contingency recruiter will reflect a percentage of the candidate's starting yearly salary, and varies by agency. This fee is typically anything between 15-30% of the salary (although it can vary) and here at ERE, we charge a flat fee of 20,000 CNY for junior positions and 20% of the candidate's annual salary package for more senior roles.
What is retained recruitment?
Retained recruitment is really the opposite of contingency recruitment. Here, you are paying to 'retain' a recruiter - guaranteeing them exclusivity and an income from the job once they find a suitable candidate. Whilst you will be giving up some control over the process here, that's not necessarily a bad thing.
Retained recruitment jobs tend to take place almost exclusively at the top-end of the market - where salaries are high, and suitable candidates are scarce. Retained recruitment is often also known as headhunting, or executive search - and is associated with hard-to-fill job roles like HR Director, Head Teacher, Dean, or Chief Executive.
Benefits of retained recruitment
Exclusivity generally gets you a recruiter who will work much harder for your cause. They are motivated to do this because they know there is definitely something in it for them.
Because retained recruitment guarantees exclusivity, you know that the agent carrying it out is going to exercise consideration and due diligence in sourcing you candidates. This is a boutique approach, and suits the top-end of the recruitment market, where potential candidates are often not actively seeking new employment.
In this rarefied environment of large salaries, excellent benefits, and high degrees of responsibility, tact is essential - and when required, headhunters will go out of their way to ensure that confidentiality is maintained. This type of recruiter will maintain a large, informal network in order to go about their business - and it is this which can make a headhunter invaluable to a business.
A retained recruiter will generally provide their client with dossiers on four or five candidates who have been thoroughly researched and approached on their behalf. All that is left is for the client to select the one they like the best.
Downsides of retained recruitment
The main downside of the retained recruitment process when compared to a contingency approach, is that the client concerned is placing much more trust and investment of resources in the recruiter. As you will see below, the cost structure of a retained assignment is, by definition, different to the contingency method described previously - and means that a recruiter will be paid a percentage of the final fee before a candidate has been presented.
Whilst retained recruitment is generally a much slower process than using a contingency recruiter would be, the reason for doing it is that the candidates put forward will be expected to be perfectly suited (or as near as possible) for the assignment in question. It is important to use a headhunter who knows what they are doing, and who has a proven track record of delivering results.
Pricing structure of retained recruitment
As mentioned above, retained recruitment has a very different pricing structure to contingency. Utilising this method means that a recruiter can always be sure that they will make at least a minimal fee for their efforts. At what point this fee is paid varies between the different companies - but it will often include an 'up-front' charge in order to begin the process, a second installment to be paid upon receipt of a shortlist of candidates, and a final installment to pay once a candidate has started work.
The final cost of using a recruitment agency on a retained basis is a percentage of the starting salary the candidate can expect (as with contingency recruitment) - and once again this percentage is variable - and can go up to around 50%. The percentage price tends to be slightly higher in the retained context - and can vary dramatically depending on the role and agency concerned. Here ERE charge only 20% of the candidate's annual salary package for senior roles and a flat fee of 15,000 CNY for junior roles.
Which method should you choose - contingency or retained?
Now we've explained the difference between contingency and retained recruitment, which one is right for your vacancy? Well the answer at the top and bottom of the salary spectrum is fairly simple - for lower-paid job roles, contingency is best, for higher paid jobs, retained.
The rationale behind this has more to do with supply and demand than anything else - because where contingency recruitment will tend towards good results within a crowded labour market, a retained approach would be overkill. But try using contingency recruitment at the top end of the market, where qualified people are scarce, and you may begin to run into problems - especially if you are planning on assigning the task to more than one firm.
"Specialist recruiters come in many shapes and sizes - with some firms dedicating themselves entirely to a market sector such as education or engineering."
When you are recruiting towards the middle of the salary spectrum however, the difference is not so clear-cut. Whilst some roles at this level are relatively easy to fill - requiring skills that are widespread, others are not, and require a candidate with specialist experience.
At this point, there are a number of options available to you as an employer. You could continue with the standard contingency approach - which is likely to fill the role quickly, although perhaps not to the highest standard. You could go with a retained approach - which takes longer and is potentially more expensive, but should return a great candidate. Or, you could choose to go with a specialist in that particular sector/job role.
Specialist recruiters come in many shapes and sizes - with some firms dedicating themselves entirely to a market sector such as education or engineering. Often you will find that a large recruitment agency has an arm which deals solely with a certain specialism - and finally there are smaller firms with multiple specialisms. Which type of firm you select for this task is up to you.Summing up
So, now you hopefully have a much better idea of the difference between contingency and retained recruitment - as well as what that means for you. We've seen the benefits and limitations of both, as well as the different pricing structures that tend to be used. It's safe to say that in the recruitment world, there really is something for everyone.
When you consider all this, it really is amazing that so many businesses, in so many different industries, expend such a lot of time and resources on searching for the 'right' person. With the job market being what it is at the moment (packed to the rafters with eager job-seekers), why would you waste so much time and effort on CV-sifting? Our recommendation is to get a pro on the case. They'll do it quicker, they'll do it better, and most importantly, they'll end up costing less money in the long run than doing it yourself would.