Working with boutique Executive Search Firms (part 1)
Understanding Retained vs. Contingency Search Firms:
The single most important factor that will determine the ultimate success or failure of any organization is the energy and direction provided by its leadership. Hiring the right executive is more critical than ever, and with the intense focus on honest, prudent and responsible leadership, the stakes are even higher. Because of this, employers in need of senior executives with proven ability to make a real difference have turned to professional recruiting organizations for help when traditional recruiting methods fail to produce the best candidate for a specific job.
Traditional recruiting methods, such as relying on networks, running ads or posting positions on the internet, are reactive methods at best. They often fail to uncover the high-caliber talent not actively seeking new opportunities. It may come as no surprise that the Association of Executive Search Consultants (AESC) has reported a steady increase in retained executive searches over the past 10 years, with the temporary exception of the 2000-2001 economic downturn. The war for talent continues and for some jobs, the demand has been even more dramatic.
Using a professional recruiter is an effective way to seek out and attract star-talent within competing organizations and from other industries as well. The search industry has more than tripled since 1993 and, while the tools of the trade have changed, the time-tested methods of the true search professional remain constant.
The growth of the recruiting industry has spawned two major types of recruiting organizations – contingent agencies and retained search firms.
Contingent vs. Retained Recruiters
Recruiters with contingent agencies are truly in sales and are compensated based on creating a transaction with a client. Their fee is “contingent” upon a hire being made. While they are under no obligation to fill a position, their incentive is to place candidates and maintain a high level of sales activity.
Contingent recruiters rarely conduct research or spend a great deal of time hunting for the best candidates. They instead rely on their storehouse of candidates available at their fingertips. These agencies receive resumes every day from job seekers and use advertisements and internet tools such as job boards and resume databases to identify candidates.
Due to the nature of their compensation, contingent recruiters must focus on the positions with the highest probability of a placement being made quickly and easily, often shying away from “hard to fill job orders.” They have the freedom to do so since there is no up-front mutual commitment from either the client or the recruiter to fill the position. Companies who use contingent recruiters run the risk of the position not being filled or being presented with less qualified candidates since every candidate is fair game for every client. Due to the nature of the agency relationship, clients may be in competition with one another for the same candidate. A high-quality candidate may be hired away by another client of the agency before you have a run at them.
That being said, contingent agencies are especially useful on lower level, low impact “commodity” positions where there is a greater amount of turnover and a smaller monetary impact to an
organization if a bad hire were to be made. Typically contingent recruiters are used to fill positions below $75K in annual salary.
Retained search firms are utilized to fill high-impact, management and executive level positions that require much more extensive research and the attraction of accomplished leaders who are not currently seeking new employment. Retained search firms take a focused approach in approaching key individuals on your behalf and take a great deal of care in assessing interested parties. Because they are put on a retainer with a portion of the fee paid up front, a retained search consultant has the ability and incentive to be completely objective in their assessment of every candidate, and truly recommend the best fit.
Working on a retained basis also allows the search firm to expend time and resources on research to identify and contact every possible source and potential candidate for your management position. Further, any candidate surfaced through a retained firm”s recruiting efforts is solely assigned to that client, and is not available to interview for any other clients of the firm until your search has come to a complete resolution.
Retained firms are often times utilized to fill very difficult positions that other firms would not spend the time to fill. Because they are under a retained agreement, there is a high-level of commitment and obligation to get the search done. Retained firms survive only if they complete the work they are engaged in and produce the best quality candidates for their client companies. Due to the comprehensive nature of their work, retained firms are often able to guarantee their results for a much longer period of time.
High-quality retained firms employ consultants who know their respective industries and who take the time to advise their clients on trends in hiring and compensation. They are paid for the work they do, not just to complete a search.
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