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Contingency Vs. Exclusive Searches – What’s the Difference?

Author: Travis Peters

 

Oftentimes as recruiters, we assume the clients we work with understand their contract options with our search firm. The truth is, that is often not the case…and that’s our fault! It’s important to know that you do have options. You should ask your recruiter for more information and work together to determine what works best for your search and company. The world of recruiting is all about finding an agreement that works for everyone and keeps everyone committed to the search from start to finish.

 

One of those options is the choice between the contingency search and the exclusive search. Read on to learn more about the benefits of each and when to choose one over the other.

 

Contingency search contract

A contingency search is the search most frequently chosen—unfortunately, often for the wrong reasons. Companies like contingency searches because there is no risk to them and no commitment at any time other than the end of the process. If the recruiter finds a person and they ultimately turn out to be the right fit, then the company can hire them and pay the recruiter’s fee.

 

The company might also be working with several other search firms with a “may the best company win” mentality. The lack of commitment by both sides is perhaps the best feature of this kind of search. At the same time, it is also the worst feature. Think about that for a minute: Do you really want to pay a company just because they found the average candidate the fastest and was the first one to get the resume into your inbox?

 

The problem with this type of search is neither the recruiter nor the company is held accountable. How many successful outcomes ever happen when no one is held accountable? The recruiter may take the search and say, “We’ll work on it for you, Mr. Hiring Manager,” then quickly scan some contacts or job boards. If they get lucky and find a good fit, they’ll send them in. If they don’t find a good fit, the recruiter may move on to the next quick-fix contingent search.

 

Oftentimes a company will see a flurry of candidates (sometimes a fit and sometimes a stretch) in the first week of the search, because that is what the recruiter had in his back pocket. If none of those candidates work, the hiring manager often doesn’t hear from the recruiter for many weeks. Why? Because they are working on another contingent search somewhere else. You can’t really blame them. Recruiters work on commission, and if they aren’t making placements, they can’t pay for their kid’s soccer league. If you aren’t committed to them, why would you expect them to be committed to you?

 

Having said that, contingency searches have proven to be a successful search method. I will continue to work on contingency searches for my clients that prefer that approach. However, if you are truly dedicated to using a search professional to fill your role, there is a better option.

 

Exclusive—results guaranteed search

A second option we like to use here at ERC is the exclusive search. This is more of a collaborative search, where the company and the recruiter work together to locate and attract the person who is truly right for the job. The “exclusive” part of the agreement is just that: the position is exclusive to the search professional and can’t be filled by any other source during the exclusive period. Every search should be original and every search, if done right, should take some time.

 

This type of search requires an upfront deposit. That deposit is taken off the balance of the fee when the search is completed and is guaranteed. If the recruiter doesn’t locate a predetermined number of qualified candidates in a set amount of time (normally 2-3 candidates in 60-90 days), the deposit is paid back in full. That way the company knows that the recruiter is actually working the job and not just “keeping it in mind.” On the other hand, the recruiter knows their time spent digging into the marketplace is time well spent.

 

The upfront deposit is a guarantee by the company that they want to utilize the recruiter’s expertise in the marketplace to fill the search. It is also a guarantee to the company that the recruiter is dedicating whatever time and resources are needed to fill the position correctly. The recruiter and the company work together to attract the right person for the job—a team effort.

 

The end result is almost always a much more successful and enjoyable experience for everyone involved and virtually always results in higher-quality candidates being hired. When people work together for a common goal and both parties have a vested interest, the success rate and quality of outcome will be higher. This type of search doesn’t cost the company any more. In fact, sometimes a lower fee can be negotiated for exclusive searches. It is simply a commitment on both sides of the search. The recruiter becomes an extension of the company and its mission, rather than someone who is just trying to find an average candidate as quickly as possible.

 

If you have any other questions about recruiting contracts, even if we’ve never worked together and you’re curious for future reference, please call me anytime.

 


 

Travis Peters
Partner
Finance/Banking, Midwest
605-428-6152
travis@ercjobs.com

 

“Travis Peters is a Partner with ERC and is known as an industry leader in accounting/finance and banking search. His strong knowledge base comes from years of experience working with professionals in the business and a desire to make recruitment service valuable to everyone.”