A contingent search is a recruiting arrangement where there is no remuneration paid to the staffing agency until a hire is made. From the client perspective, upfront financial risk is virtually nonexistent. While this may sound attractive, there are a number of downsides worth considering.
From the staffing agency’s perspective, contingent recruitment is a high risk business. To stay profitable, contingent firms need to juggle many searches and not surprisingly their focus goes to the searches that offer the greatest likelihood of success. When working with a contingent firm or firms, one needs to be aware that there is no guarantee that the necessary time or care is going into candidate sourcing and vetting. Industry observers accept that up to 75% of searches performed by contingent firms are unsuccessful.
Contingent recruitment is an expensive proposition. Fees range between 20% and 35% of a first year salary depending on the industry and difficulty of the search. It has long been argued that the right candidate will deliver a return on investment many times over, however five-digit placement fees are worth serious consideration.
Contingent recruiters want to ensure that they are compensated for their work, and will often withhold their client’s identity during the sourcing phase to prevent candidates from bypassing them and contacting the hiring entities directly. While the reasoning behind this is understandable, this practice does very little to benefit the hiring entity’s talent brand. In some cases, prospective candidates may be future customers or employees and therefore transparency of the hiring entity’s employer brand would be both valuable and desirable.
We actively encourage hiring managers to take a look at Talon RPO's hybrid recruitment model - a one-page overview is available at this link. We find that contingency recruitment is only worth it in about 5% of the searches we tackle and the rest of the time, Talon is able to deliver a far superior service at roughly half the expense of contingency arrangements. Who wouldn't want that?