...for recruiters and clients.
Why do people get married? While there are a variety reasons, ranging from religious to legal rights to “that’s just what you do,” the main reason is commitment. Marriage is both a tradition and a legal contract that binds both parties to a higher level of obligation. It shows that everyone is vested in the relationship. Sure, you can break this commitment, as many do, but it’s not easy, and it sure is a lot harder than just breaking up with someone you are dating.
Contingent search (where the recruiting firm is only paid if there is a placement) is then the recruiting equivalent of casual dating. Until that placement starts, no money changes hands. There are little to no repercussions if the position isn’t worked on by the recruiter, or if the hiring company isn’t responsive. In fact, the hiring company isn’t even a customer of the recruiting firm. This is why 80-90% of contingent searches don’t end in a hire. There is no commitment on either side.
Hence, the creation of the “engaged search” model. This is essentially a hybrid of contingent and retained search. The recruiting firm asks for a small flat fee up front to ‘engage’ their services, with the remainder paid when their placement starts. For the recruiting firm, there are several benefits to this model:
- They know from the start that they are getting paid at least something for their efforts
- They have greater confidence that their client is serious about the search, and their efforts will end up in a fee
- Engaged search clients are significantly more responsive to their questions, candidate submittals, interview feedback, and other communication because they have invested in the process
- Clients tend to back off working on the position, or having multiple recruiters work on it, because they have paid the firm to work on their position
- Placement rates can be as high as 80-90% or more, as opposed to 10-20% for contingent. This means engaged search recruiters spend significantly less time spinning their wheels on dead-end searches
Now most of these benefits to the recruiting firm are pretty obvious. What might not be so apparent is that engaged search is also much better for the hiring company!
Because so many contingent searches result in no payout for the recruiter, they make up for it by working as many searches as they can. This results in cherry-picking the easiest ones to fill, spending what time they have left on others they think they might be able to fill, and ignoring the other ones. Many contingent recruiters work on dozens of orders at the same time. By contrast, engaged recruiters can focus on 5-7 positions, devoting more time and attention to each search.
Let’s say a proper search requires about 40 hours of the recruiter’s time. An engaged search recruiter with 6 active searches can devote an average of 5-7 hours a week to each search, whereas a contingent recruiter with 20 positions only has an average of 1 ½ to 2 hours available for each of their searches. This is a big reason why most contingent searches don’t end up with a hire, and why many recruiters resort to cherry-picking orders, or doing job board searches and postings for more active candidates to get a quick submittal.
As I mentioned earlier, in contingent search there isn’t a true client/vendor relationship until the placement occurs, as no money exchanges hands until then. This obviously reduces the commitment on the hiring company, but it also means less commitment from the recruiter. I’ve had many conversations with recruiters where they have admitted they actually prefer the contingent recruiting model, because “I can decide whether or not I want to work on a position.” Without receiving some sort of payment, the recruiter doesn’t feel the obligation to work on any particular order. The thought process is that if I don’t perform, it’s no big deal – they aren’t technically a client anyway. Hiring companies think their order is being worked on, but it’s possible that no one is, and quite likely it’s not being worked on to the extent it needs to be for a successful hire.
In an engaged search, the hiring company has made a commitment by paying a fee. But just as importantly, the recruiting firm is now committed to their new client! They have been engaged to focus on filling this new position, and have a greater sense of obligation. They also are more confident and energized to work on the position because the new client has proven they are serious about hiring someone.
All of this results in a greater level of commitment from the recruiter (and their manager), ultimately leading to a better outcome for both parties.
Another benefit of engaged search for the client is that their order receives priority over contingent searches. They jump to the top of the firm’s list because they are a paying customer. But just as importantly, they jumped to the top of the recruiters’ list because the recruiter knows their chances of filling the position are exponentially higher than the contingent searches they’ve been working on.
So, if engaged search is better for both parties, why doesn’t everyone do it? Well, partly because old habits die hard. Contingent search has been the standard for decades in the market. Another reason is that there is hesitancy on the part of hiring companies to pay an upfront fee without the guarantee of results. And lastly, most buyers don’t fully understand how little attention their positions oftentimes get.
However, we are seeing a significant shift to the engaged model. I have attended the last 7 NAPS (the premier search association in the US) national conferences, and almost all attendees I talk with are at least offering it as an option, with many scrapping contingent search entirely in favor of the engaged model. As the labor market continues to tighten, and talent becomes more and more difficult to attract, we can expect to see the engaged model emerge as the preferred search method for both recruiters and hiring companies.
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