Contingency or Retainer fees for your next Digital Marketing hire?

 

People who have worked with a headhunter before are usually familiar with the terms Contingency and Retainer. But let’s summarise these concepts over here anyways for those who might be new to them:

 

Contingency versus Retainer

 

Contingency Recruitment: My headhunters only get paid when the job’s done. It’s great because I can get as many recruiters to work for me as I well please (even if they send me candidates who don’t know the difference between SEM and SEO). Which doesn’t matter anyways since I only need to pay the one recruiter who successfuly places someone at my company.

 

Retainer Recruitment: My trusted headhunting agency partner, whom I believe are an expert in spotting true Digital Marketing talent, ask me for an initial fee to start working. Not so good at first sight, because who knows if they’ll manage to dig out the Digital Guru that I’m looking for. And in case they don’t, my company will have to live with the fact that we’ve lost a fraction of our yearly HR budget over a failed recruitment process.

 

These probably aren’t definitions you’re likely to find in a HR college course, but rather an insight from someone who’s been in the industry long enough to know how companies typically reason when trying to come up with cost-effective recruitment strategies.

And quite often, what HR managers (wrongly) understand to be the“zero risk” option gets the upper hand when choosing between Contingency and Retainer models…

 

 

 

Why Contingency Recruitment isn’t so great after all

 

There are a number of reasons why companies end up losing time (and money) over Contingency recruitment processes. Let’s discuss a few of these…

 

Less commitment

Headhunters who only get paid after the job’s done are unlikely to have the same level of commitment towards their clients. To give you an example, it’s quite frequent to see Contingency recruiters refer the same candidate to different clients at the same time, especially since they know that their clients probably also work with several Contingency recruiters simultaneously.

And seeing your favourite candidate suspiciously turn down your offer at the last moment surely isn’t the best possible outcome for your hiring process …

 

Less trust

A recruiter who has placed someone at your company inevitably has a fairly strong relationship with their candidate. This makes it easier for recruiters to reach out to the same candidate again (who is now your employee) and place him elsewhere, causing your company inevitable losses.

When it comes to putting everything on paper, Contingency recruiters might be less enclined to sign no-hire clauses which prevent them from taking your employees away from you. The same applies to signing deals that makes your company eligible for refunds or credits in case a candidate ends up leaving the company early.

In other words, the low level of trust between the parties in a Contigency agreement will result in deals that give your company less guarantees in the long term.

 

 

Less filtering

Contingency headhunters tend to easily refer anyone who vaguely fits the profile, as they haven’t committed to any quality standards through a Retainer fee. This means the money you thought you were saving by avoiding initial fees ends up being wasted through countless hours spent by your team reviewing (and possibly interviewing) bogus candidates.

Time is worth more than money. Don’t let your team go desperate dealing with lazy Contingency recruiters who’ll make your most motivated HR manager regret the day she chose HR as her career path…

 

 

 

Ok, but how can I trust a Retainer proposal?

 

No one likes putting money upfront… unless they have good reasons to believe that’s an investment worth making. Here are a few things you should consider before going for a Retainer deal with a recruitment agency.

 

Look for references

If you’re going to put money upfront, make sure it’s with a recruiter who’s gained recognition in the industry. Check the clients they’ve worked with so far (these should be listed on their website), are they well-known companies in your industry? Check out their blog and social media presence, are they a reference in their area of expertise? Make sure you read a few of their blog posts to get an idea of how much industry knowledge they have.

 

 

Work out your remuneration model

Going for a Retainer deal doesn’t mean you need to pay huge sums of money upfront with little guarantees. A cautious move is to negotiate a fixed fee per candidate you decide to interview, which will then be deducted from the final commission once you’ve hired a candidate. This ensures you’ve at least seen the candidate’s CV before deciding to go ahead and book the interview. In Pay-Per-Interview Retainer models, headhunters typically refer CVs where the candidate’s contact information has been crossed out, so that the client can’t reach out to candidates without paying first.

 

Request guarantees

The fact that you’re paying money upfront means recruiters will be more prone to giving you contractual garantees than if you’re going for a Contingency deal. When drafting up your contract, you should make sure the partner agency agrees to refrain from referring the same candidate to other clients while your hiring process is on.

Similarly, you should also request no-hire clauses in your contract to ensure your recruiting partner doesn’t end up stealing human ressources away from your company. Also, refunds and credit notes will be easier to negotiate in a Retainer deal, to cover your back against potential early droppers that you’ve hired through your recruiting partner.

And last but not least, you can also negotiate a deal where part of the initial Retainer fee is reimbursed in case the recruiter fails to complete the assignment within a certain amount of time, although this type of guarantees are normally reserved to agreements where the recruiter requests the exclusivity over the hiring process.

 

 

 

Contigency models still make sense for mainstreem, non-specialised recruitment (think call-center, sales rep jobs, etc.), as these profiles are normally cheaper to acquire and easier to replace.

But if you are looking to hire highly skilled Digital Marketing talent such as SEO/SEM, RTB or CRM profiles, you should clearly consider going for Retainer recruitment deals. Not only will this allow you to receive highly qualified CVs right from the start, but it will also give you room to negotiate better guarantees and establish a trustworthy, long-lasting relationship with your recruiting partner.

 

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