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Contingency Recruiting – Explaining the Pros and Cons

Updated: May 30

In terms of managing the unpredictable hiring demands of business, contingency recruiting may be an option your organization is considering. Recruiters who work under this model source and present candidates who are potentially qualified for your open assignment, with the expectation that your company will hire them so they can collect a placement fee. This fee is generally a percentage of the new hire’s first-year projected salary, typically around 15 to 30 percent.

As compared to other types of employee sourcing and staffing, contingency recruiting is a popular choice with growing businesses because it requires a low up-front investment and limited time commitment on behalf of the business. But it can also be an expensive way to find suitable candidates, due to hefty commissions. Additionally, a contingency recruiter is financially motivated, which means they don’t invest the same amount of time, energy, and resources on hard-to-fill positions. This also indicates that a contingency recruiter’s agenda is not necessarily the same as the client’s agenda.

Yet, as with any recruitment campaign, working with contingency recruiters has unique pros and cons. Let’s take a brief look at what you can expect when using contingency recruiting.

Pros of Contingency Recruiting

  1. The placement fee is paid only when the position is filled with a suitable candidate.

  2. If a new hire doesn’t work out in the first few months on the job, these fees may be partially refunded.

  3. No long-term contracts or guarantee of work are required or expected from the recruiter.

  4. Contingency recruiters are generally independent agents who don’t use your internal resources.

Cons of Contingency Recruiting

  1. Expect that the quantity of candidates will usually supersede actual candidate quality.

  2. Fees can be high, from 15 to 30 percent of the assignment’s yearly compensation.

  3. No guarantee that a successful placement will occur, this is left up to your hiring team.

  4. Difficult to hold the recruiter accountable for results and weekly reviews.

  5. Candidates are generally presented to multiple clients in order to maximize the chance of earning placement fees (no exclusivity).

Obviously, when using a contingency recruiting model for sourcing new staff members, you will want to weight these pros and cons carefully. There are some determining factors you will also want to consider. First, how soon do you need to hire to replace or create a new role within your company? Second, do you have enough time to screen and interview each of the candidates presented by the recruiter? Third, are you prepared to pay the fee required by the contingency recruiter if you choose one of their candidates?

In some cases, you may find it easier to work with a team of highly qualified IT contract recruiters who will take care of many of the administrative tasks on a fee-based system. This is especially true in the fast-paced world of Information Technology, where you are required to hire and replace employees on a continual basis.

As part of due diligence while you make your final decision, give Emerge Talent Cloud a call to discuss our money-saving and efficient contract recruiting services before you settle on a contingency recruiter.

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