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Retained Search – Why Pay in Advance?bigstock Future Expectations 3181101

Given that we’ve just been through a year of pandemic, lockdowns and many recruitment businesses are struggling as a result, why would you opt for retained search? When you are recruiting, why on earth wouldn’t you just call as many recruiters as you can, negotiate the lowest possible fee rate and wait for the candidates to roll in?

Human nature, that’s why. You’re quite likely not to get the best candidates, but rather more likely, the candidates the recruiters happened to know about. And if they have another client working at a higher fee rate on a no win, no fee basis you’re not even going to get those candidates first. If you manage recruitment like this you are only really getting the candidates your suppliers have available and that have been easy for them to contact. These recruiters then may work against you, taking a candidate elsewhere if they have another client that will benefit them more.

For certain candidate requirements, at certain times, this approach might work. If the supply of candidates is high and the demands of the role are low then it would make sense to get a decent enough candidate at the lowest possible rate. But in order to get a recruiter to really work for you then you need ensure that their risk is managed. If they feel they are one of ten recruiters, or even just one of a few but working at a low fee rate, then the potential reward for the work they put in is minimal, or at best only a small chance they will receive any award at all. However, if you ensure that the reward is more likely, more lucrative, or both, they will be much more inclined to proactively look for solutions. This doesn’t necessarily mean retained search, of course. There’s a halfway house of exclusivity arrangements or accepting higher fee rates that can go part way to managing these risks. Nevertheless, recruiters will still prioritise roles that are easier to fill, as there’s a greater chance they will get paid for the work they put in.

It is a fundamental issue with the prevailing model for the recruitment sector that much of the work we do, we are not remunerated for. We have to play the odds, increase our chances of invoicing by being carefully selective as to where we spend our time. However, on a retained search many of these difficulties drift away as the recruiter has a guarantee of compensation as well as the added desire not to let the client down by taking money and then not fulfilling their end of the agreement.

There are a few varieties of models for a search campaign. Some recruiters charge a third of an anticipated fee at the start of the project, a third on providing a shortlist of candidates and a final fee once a candidate has accepted an offer. Others offer a two-stage charging process – one fee in advance (generally at a rate of 45-50% of the anticipated total fee) then the rest once an offer has been accepted. Both have their benefits and disadvantages, we work with the second model, largely because we believe that a delay in finding a final candidate(s) for a shortlist can have an impact on the project unnecessarily and if the first candidate we find is perfect for the role, we don’t wish to risk losing that candidate whilst looking for alternatives.

What are you paying for when you engage a consultancy on a retained basis? Primarily it is focus and proactivity. We dedicate our time to the project, spending hours following leads and speaking to contacts that might refer someone. Not only do we hunt through social media, but we search for and find other information online that can lead to potential avenues. We find candidates that are exclusively yours, that were not looking for another job but have their interest piqued by us on behalf of you. We don’t neglect candidates that are looking for a job either and we can run a targeted cross-media campaign entirely focused on your project (instead of a generic job advertisement that could describe lots of different positions). A retained recruiter is the equivalent of using a Private Detective on the case to find your lost thoroughbred dog, instead of just putting posters up around the neighbourhood. Both have a chance of success and failure but we would massively increase the odds.

Retained doesn’t mean more expensive, it simply changes the way you are charged. In fact, it can be less expensive and much easier to manage than dealing with multiple suppliers all at once. It can also reduce the noise. If you are finding that recruiters are approaching you on spec with candidates that you don’t want then telling them that all unsolicited candidates will be sent to your retained consultant for review can reduce the volume of calls very quickly.

Retained search has a shroud of intrigue to it, ‘I was headhunted for the job’ can be a flattering thing to say but at its heart, it’s just about faith. And having faith that a search will be successful rewards you with a much more dedicated approach and a greater chance of success. Any good consultant should give you a sense of the risks and pitfalls of any project, so you can have an understanding of the chances of a positive solution. But you are paying for the work, not the result so an advance fee would be forfeit if the project failed or you withdrew the search. But this is why it an effective model - you are paying a fair price for the work being done.

Pete Fellows




61 Bridge Street
HR5 3DJ 
+44 (0) 207 903 5019
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