Different Ways of

Working with Recruiters

---

 

As people move up in their careers into senior management, their hiring practices naturally evolve to meet the new and more complex requirements.

Junior managers tend to hire entry level employees whose attributes are often specified and assessed much like those of a commodity. Since the hiring process is similar to buying a product at a department store, recruiting relationships are similar. Contingency recruiters (also called employment agencies, staffing suppliers, personnel recruiters) are utilized to provide candidates meeting stated attributes and receive payment only if a placement (a sale) is made.

At senior management levels, the hiring process becomes exponentially more complex because the number of attributes expands greatly as does the difficultly to assess them. There are far fewer suitable candidates available to be considered so the stakes are high if any are lost due to mistakes. They are also highly experienced and wily, and will use all their skills to maximize their advantage.

The recruiting relationship to handle such complexity becomes comparable to engaging an accountant, lawyer or other skilled professional. Recruiters are "retained" exclusively and compensated on a project basis or for time spent. Management recruiters don't even use the word recruiter and call themselves search consultants or similar names instead.

At its most basic, there are 4 methods of working with recruiters (and search consultants). Let's describe each of these, starting from the one that is simplest and used for most junior positions and moving up to those used for recruiting senior managers.
 

 
Contractual Arrangement 1:

Simple Contingency Recruitment
 
EXPLANATION:

This arrangement is what most managers first come into contact with. Clients provide job openings and recruiters send off whatever resumes they have immediately available or can source quickly, and hope that somebody might be hired. A client pays a fee only if a hire is made. There is no responsibility on the part of either the client or the recruiter to do anything.

Candidates are sourced through various online job boards and resume databases. Typical candidates are actively seeking employment either because they are not happy at their current employer, out of work or change jobs regularly. There is little time for digging out hard to find passive candidates since their greater stability and employer loyalty requires more effort to find and attract. There is no exclusivity, so highly suitable candidates that are found are sent to multiple clients simultaneously to increase chances of a successful placement. Clients often find themselves in competition with other hiring managers through the same recruiter. 

 
COMPARISON:

Contingency recruiting is similar to buying a product at a grocery store. Customers pay only if they make a purchase and suppliers offer the same products to any customer who will pay.

 
USE:

Contingency recruiting is used widely for junior level positions since it is easy to enter into and can achieve fast results.
 

 
Contractual Arrangement 2:

Exclusive Contingency Recruitment
 
EXPLANATION:

Hiring managers typically enter this arrangement to give a chosen recruiter incentive to devote more time to source candidates who are stable, loyal and not under urgent need to change employers. The recruiter is made solely responsible for sourcing candidates within a defined period (often 30 to 60 days) until it lapses and the job requirement becomes open to all. Highly placeable candidates found through the work of the recruiter will usually be sent to other employers simultaneously and clients often find themselves in competition with other hiring managers through the same recruiter.

 

COMPARISON:

Exclusive Contingency is similar to working with a listing agent in a real estate transaction. The agent is granted sole responsibility to sell the property within a period.

 
USE:

Exclusive Contingency is used for positions that are urgent and somewhat more difficult to fill than used for Simple Contingency.
 

 
Contractual Arrangement 3:

Commencement Fee
 
EXPLANATION:

In this arrangement, clients grant an exclusive relationship with the recruiter (now called a search consultant) and pays an up-front initial retainer but the bulk of the fee is paid only if a candidate is successfully placed. The initial retainer is non-refundable but sometimes can be applied to other searches if the first is not successful.

Since some of the search consultant's costs are covered, he or she can justify spending the time required to source and attract difficult-to-find candidates and passive candidates, especially those who are stable and happy in their careers and highly successful in their current roles. Other names for this contractual arrangement are Engagement Fee, Initial Retainer and Up-front Retainer.
 

COMPARISON:

Commencement Fee is used by highly skilled professionals such as engineers, architects and corporate finance professionals to cover initials costs of an engagement with the understanding that if the project is successful, full payment is due.
 

USE:

The arrangement is widely used for high priority management level positions where filling the role within a narrow period of time is critical. It seems to be more popular in emerging countries than Retained Search below for various cultural and affordability reasons.
 

 

Contractual Arrangement 4:

Retained Executive Search

EXPLANATION:

The typical Retained Executive Search is paid in 3 instalments. The first is the initial retainer or engagement fee to start the search process. The second is paid on the 2nd month or after a short-list of candidates are provided. The final retainer is paid on the 3rd month or after reaching an agreed performance milestone such as when an offer is made or a suitable candidate accepts. The client must be very confident in the search consultant's ability to fill the position within the agreed upon time horizon. 

 
COMPARISON:

Highly skilled professionals such as trial lawyers, project engineers and tax accountants bill on a monthly basis for time spent whether the services they provide produce a positive outcome or not.
 

USE:

The arrangement is used almost exclusively for the most senior executive level positions. It is most common in wealthy, industrialized countries and less commonly used in emerging countries.

  

 
None of these approaches are better than any other. It is between the client and the recruitment professional to determine which is most suitable for both.
 
 
 

---

 

 

Hiring Leaders

 

 Download this e-book to learn all you need to know to

get the best people on your bus and drive it to greatness.

A global manager's failsafe guide to dominating any industry

by employing its dominant people. 

 

DOWNLOAD Hiring Leaders now!

 

New sections are being added so check back regularly.

Send your comments and suggestions to

hiringleaders@chalre.com

 

  

---

 

 

 

 

 

Click for

information about

Our

Guarantees

 

SPECIAL DOWNLOADS:

 

Media organizations throughout the world call upon the Principals of Chalre Associates for thought leadership.  Below are some examples of published material written by our consultants or international journalists who refer to them.  For a complete list of published work, Click Here.  

 

 

Getting Ready For The Deluge: Outsourcing in Philippines

by Chalre Associates senior staff

 

Download [PDF file, 62KB]

 

The Economist Intelligence Unit of the Economist magazine asked Chalre Associates' Chairman, Richard Mills, to write a chapter about the Philippine outsourcing sector in its annual Business Guide Book.  The material provides a Executive Briefing on the progress and major issues facing this industry that is certainly one of most significant growth stories in the world.  more

 

---

Asia Pacific Mining Conference 2007 - Report

by Chalre Associates senior staff

 

Download [PDF file, 28KB]

 

The 7th Asia Pacific Mining Conference put on by the Asean Federation of Mining Associations was perhaps the largest such event in the region.  Richard Mills, Chairman of Chalre Associates gave this report on what was said by the prominent mining people who presented. more

 

---

The State of BPO in Philippines: Dan Reyes Speaks

by Chalre Associates senior staff

 

Download [PDF file, 31KB]
 

Richard Mills, Chairman of Chalre Associates, interviewed Dan Reyes of Sitel for ComputerWorld (US) recently to get his views on the state of the BPO industry in Philippines. Dan presented US readers with compelling information to support his view that Philippines is currently seen as the "Number 1" option by global companies sending BPO work to offshore destinations. 
 
Dan Reyes is easily one of most experienced Business Process Outsourcing (BPO) managers in the Asia Pacific region and the world. He is head of the extremely successful Philippine operations of Sitel, the world's largest call center organization. Among other things, he is a founder and former president of the Business Processing Association of the Philippines.    more