Is the contingent recruiting model broken?

Well nothing like asking a leading question is there?  The short answer is 'No, but . . .

Recruitment is not a complex process.  The client is looking for talent.  The recruiter finds it.  Simple.  The problem is that that simple relationship is always in a state of flux depending on market conditions.  In highly candidate driven markets the contingent method works well for the good recruiter.  The good recruiter can find the candidates the client wants and gets paid when the client hires them.  So far so good.  Unfortunately in a less buoyant market where headcount is fragile and subject to change the contingent model becomes less effective.  Clients initiate searches and then halt them if a quarter's sales figures do not match forecasts.  With more candidates in the market some roles will be filled by personal applications and the recruiter will not get paid.  In markets where clients perceive there to be a large number of candidates - which is often not the case but this game is all about perception! - they are lulled into a 'devil may care' attitude to candidates - "if we lose this one there'll be another two along in a minute."  In short the recruitment process becomes unpredictable and the interests of the client and recruiter diverge.  The contingent model becomes less effective.

For any business model to work it has to meet the needs of both service provider/vendor and client/customer and in market conditions where opportunities are few and candidates are many the contingent model is too skewed in favour of the client not the recruiter.  Simply put the client has to have some 'skin in the game' to make recruitment effective.  When candidates are in short supply the client is keen to fill their open headcount quickly and efficiently - they have that vested interest because filling headcount affects their profitability - they will lose business if they do not recruit.  In slack markets the same should apply of course but doesn't.  Clients often open headcount tentatively:  "If we find an absolutely excellent candidate we'll hire them, if not, it won't cost us anything."  Managers arguing for headcount will say, "If next quarter's targets aren't met we can always pull this role."  And if the recruiter is on a 'replace or refund' deal as well then the client can even hire then fire a candidate should things take a turn for the worse.  The poor recruiter no matter how much they qualify the new client is at the mercy of the market and placement numbers drop.

So 'poor old recruiter' I hear the world cry - NOT!  Who cares except the recruiter?  'Stop bleating and take the rough with the smooth!'  Well yes, I can understand that response but like many attitudes to recruitment out there in the big wide world, it is flawed.  The client suffers too.

In candidate driven markets I mentioned good recruiters succeed.  I love it when candidates are hard to find as I know I have the network built up over many years and the skills and expertise to find the most talented candidates and persuade them to join my clients' expanding businesses.  Yes, those candidates will be in demand but I back myself to win out against the competition.  Clients recognise the service I provide in comparison to other recruiters and stick with me.  Everyone is happy.

In client driven markets clients become lazy, and almost exclusively cost driven.  Because their motivation to recruit is less urgent and often contingent on price (in terms of both candidate salary and recruiter's fee) their attention to the recruitment process becomes haphazard and inefficient.  As a result good candidates lose patience and go elsewhere.  As a result good recruiters become frustrated and forced to act like bad ones.  When placement ratios drop they are faced with a choice.  Do what all those other recruiters do - fire off random CVs, make countless (often unwelcome) cold calls to clients offering their services for cheaper and cheaper prices and generally treat recruitment as 'a numbers game' or simply pack their bags and take a long holiday.

Good recruiters are being forced to become bad ones or simply exiting the industry and this is bad for the client now and certainly in the future.  Good candidates are good candidates in any market and always hard to find - trust me!  Good companies realise this and when things get better economically it is those companies that will be best placed to expand and grow.  But even in the here and now I would argue that bad recruitment begets more bad recruitment and that cannot be good for clients.  I have often said companies get the recruiters they deserve and this is as true now as it ever was.  Good recruitment is an art - much undervalued - and the best companies realise this.

This is why now that despite working for start-up companies where my ‘sharing of the risk’ was always 'part of the deal' I will be only working on a modified retained basis - I get paid a proportion of my potential fee up front - for all new clients.  I am a good recruiter and want to stay that way!

Views: 313

Tags: Agency Recruiting, Human Resources

Comment by Daren J. Mongello on September 5, 2013 at 8:37am

Dyll,

100000000000% agreed.


Good article. I wish that you spent more time on the solution (container fees) than on the problem.

------

"yeah....schmuck-head contingency recruiter.....go pound the dirt for A-level candidates. Sadly you don't know that I really don't have an approved req but some of my sales guys are not hitting their numbers this quarter and maybe I'll upgrade. Or maybe not. Yeah ....schmuck-head recruiter.....go spin your wheels and when you come back like a happy little puppy with your excited candidate I will *** crush *** both of your spirits by saying something like:

"Oh....who are you again?"
"Oh.....ummm....the job has been put on hold."
"Oh....yeah....so we really can't pay a fee after all?"

The truth is (from someone who's been on both sides)
MANY OF THE JOBS YOU'RE ASKED TO WORK ON WILL ** NEVER ** GET FILLED .... BY YOU.
Which ones? That's the problem; you'll never know in a pure contingency model.

And if your point of contact is the internal recruiter, your odds of filling any role just exploded.

For unproven customers; get ANYTHING upfront....I don't care if it is $500. Having Accounts Payable cut you a check for ANY amount is more of a commitment that you will ever get from a first time "customer" in a pure contingency model.

It also assures that you're not wasting your most precious commodity:
YOUR TIME !!!!!!!

Comment by Daren J. Mongello on September 5, 2013 at 9:19am

"No skin in the game."
I think this is why I am somewhat ambivalent when it comes to SPLITS too.

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