Contingency recruiting is a hiring approach where external recruiters get paid only when they successfully place a candidate. Companies often use this method when they need to fill positions quickly without upfront costs. Multiple recruiters usually compete to find candidates, which can speed up the hiring process.
What’s the difference between retained and contingency recruiting?
The biggest difference is how recruiters are paid and how they operate:
- contingency recruiting: Recruiters are only paid if they place a candidate. Multiple recruiters may work on the same role, and companies don’t pay any upfront fees.
- retained recruiting: The recruiter gets an upfront fee (a retainer) and is solely responsible for filling the position. This method is more common for executive or specialized roles that require a deep and focused search.
Contingency recruiting can lead to faster hires, while retained recruiting usually results in a more thorough and customized search.
What are the pros and cons of contingency recruiting?
Pros:
- No upfront costs: Companies only pay when a candidate is hired.
- Access to more candidates: Multiple recruiters working on the same job means a larger talent pool.
- Faster hiring: Since recruiters compete, they work quickly to present candidates.
Cons:
- Less recruiter commitment: Since they’re only paid on success, some recruiters may not spend as much time finding the best fit.
- Duplicate candidates: With multiple recruiters in the mix, the same candidate might be submitted more than once, leading to confusion.
- Speed vs. quality: Recruiters may prioritize quick placements over finding the ideal candidate.
How does contingency recruiting work?
- Company posts a job: The employer provides recruiters with job details, including required skills, experience, and salary range.
- Recruiters search for candidates: They tap into networks, job boards, and databases to find strong matches.
- Recruiters submit candidates: The employer reviews resumes and selects candidates for interviews.
- Interview and selection: The company interviews candidates and makes a hiring decision.
- Payment upon placement: If the company hires a recruiter’s candidate, they pay a fee (typically a percentage of the candidate’s first-year salary).
How are contingency recruiters paid?
Recruiters are usually paid a percentage of the hired candidate’s first-year salary—typically between 15% and 30%. The exact percentage depends on factors like the industry, job level, and recruiter’s expertise. Payment is typically made after the new hire starts working. Some agreements include a guarantee period, requiring the recruiter to find a replacement if the hire doesn’t work out within a set timeframe.
This pay-for-success setup motivates recruiters to work quickly while giving companies access to a broad pool of candidates without financial risk.
