In selecting a search firm, it’s wise to look first at their track record and their understanding of your business needs. Always ask for references from their clients and call them!
But then, when you start comparing search firms, you will see a broad array of business models, involving when you pay (retainer, contingency, or hybrid pricing); how much you pay (flat fees, fees as a percent of annual compensation, or contract recruiting by the hour); what you pay for (interview questions, reference checking, education verification, etc.); what performance is guaranteed by the search firm; and how long placements are guaranteed (1 to 3 months typically). The recession has only spurred more innovation, and all kinds of new business models are sprouting up. With all these variations in search firm terms and conditions, it is perhaps no wonder that so many buyers are confused about which firm to engage, and on what basis.
Unfortunately, some employers try to simplify their decision making by implementing a search firm policy, as in “we will only work with search firms on these terms and at this price.” These policies essentially put the cart before the horse, selecting pricing terms over search firm competencies – as if search services were all interchangeable. And while these policies may appear to make things simpler and perhaps even more cost effective, all too often they backfire in expensive and unpredictable ways.
I find that most search policy decisions are based on misconceptions and outdated information. For example, many HR professionals think retained search firms always cost more than contingency search firms. Many people think contingency search firms are faster, and retained search firms are more thorough but slower. Some people think retained search firms are better for senior level hires and contingency search firms are better for mid-level hires. Some people think retainer firms are more ethical than contingency search firms. And of course, many people are wrong.
Retained versus contingent search is simply a choice of business models. Neither one is inherently more thorough, or expensive, or faster, or more ethical. While these misconceptions are common, they are not facts you should make business decisions with, or worse, base policy decisions on. With a retained search you pay significant fees before you even know if you will find a candidate you’re excited about. With contingency search you pay nothing until you’ve actually hired a candidate. With retained search the risk is basically on the hiring manager, with contingency search the risk is basically on the recruiter. At the end of the day it all comes down to how committed the recruiter is to seeing things through to the end. I know if a client is counting on me to deliver I always do.
With all the innovation occurring in the search business, it pays to be flexible with your search firm policy, re-examine your assumptions, and understand the implications of the new and innovative business models that are emerging.
At the end of the day – the recruiter you’re working with should understand the position your looking to fill and have a very strong network and relationships with the talent your seeking. A good recruiter will bring you talent you would never be able to find on your own and convince that talent to speak with you. And many times, you actually end up saving money by using a recruiter – and in many cases the savings can be substantial over a 5 year period.
The key to a successful relationship with a recruiter is the same as any other relationship: honesty, transparency and communication.