Avoid Contingent Search Pitfalls with These Three Questions
Recently, we were invited by Brooke Moran of the Western Colorado University MBA program to talk with recent grads about executive search in the outdoor industry (check out the video here!). The outdoors are a big business in Colorado, and many of the fresh MBAs know they may find their way into the industry sooner or later, so it only seemed to make sense that we’d prepare them with a look at how companies in this sector generally make executive hires.
We had a blast working with these world-class MBAs, and along the way as we worked to explain the differences between retained and contingent executive search, we realized we might be so close to this issue that we hadn’t really taken the time to talk about those differences outside of that classroom setting.
To be certain, contingent search—a search format where your recruiters aren’t paid a retainer to find the right candidate for an opening, but can earn a contingent commission if and when one of their candidates is selected for a position—is a big part of my own history. When I first started Highline, I engaged in contingent searches for some of my clients. I personally believed there was a better way to partner with my clients and after proving my model, I began to evolve Highline into a fully retained model. Not only did our client partnerships grow, but Highline’s business also grew to an entirely different level.
And while I learned contingent search wasn’t for me, I also learned that there are situations where a contingent search simply makes the most sense. With that in mind, allow me to walk through three absolutely critical questions you should be asking to make sure you get the most out of any contingent searches in your future.
Question 1: Are my current hiring needs a good match for a contingent search?
Some search assignments are a great match for contingent searches, but not all of them. When you’ve got a mission-critical position you need filled by someone with tons of experience, a retained search is going to be a superior option to get you the kind of high-quality candidates you need. On the other hand, sometimes hiring managers find themselves with several seats they need filled in a quick time frame.
Say, for example, you’re looking to expand your design team for a new product. You have fifteen designer openings and not enough time in an entire year to seek out enough qualified candidates to fill them. A contingent recruiter could have a database that includes 100 qualified designers, so working with that person to see if any of those designers are a good fit is a really ideal situation.
The same could be said whenever your biggest concern is having a well-filled pipeline of candidate leads. If you’re facing down a considerable amount of churn, or maybe just know big growth is on the horizon for your team, building a relationship with a contingent recruiter can help you build your own database of candidates for the foreseeable future.
Question 2: Does the contingent recruiter I’m talking to have a track record of success?
Back to that point about databases—a contingent recruiter’s entire professional capital is tied up in the database they’ve been able to grow through years of working in a particular industry. If you’re hiring in the outdoor industry, you’ll want a contingent recruiter with years of experience specifically in the same industry. Their massive database of candidates would be worthless if it wasn’t relevant to the outdoor industry talent you’re looking for, but instead is a smattering of workers from outside the industry.
Another way of looking at this is to think about contingent recruiting purely as lead generation. The work of a contingent recruiter is to build a massive list of leads that hiring managers like you are looking for. The more leads a recruiter has available to share with you, the more likely it is you’ll find that diamond in the rough you need. This becomes even more likely when you can get a sense that a recruiter not only has a large, industry-specific database, but also continues to get work from big names in the industry. That speaks volumes to their ability to not just overwhelm with a bloated list of candidates, but to identify real potential and make good on their searches.
Question 3: What else is my contingent recruiter working on right now?
A final reality of contingent searches has to do with the nature of the deal you’re making with a recruiter. You aren’t contracting with that person to focus on your search and yours alone, but you’re inviting them to throw their hat into the ring and deliver candidates for you to review. That means there’s no exclusivity in the relationship—and that goes both ways. You might be seeing other contingent recruiters, and they might be working with your competition.
That sort of relationship results in a few challenging situations.
First, it means contingent recruiters are going to shop their rockstar candidates out to anybody who is listening. Maybe you activated them by seeking out a candidate they have a lot of faith in, but there’s nothing stopping them from calling your competitor and seeing if they can’t get a better deal and earn a bigger commission placing that candidate elsewhere.
Second, it’s more important for a contingent recruiter to be first, not to be best. That’s not a slight—it’s just a side effect of this field of work. When a contingent recruiter brings you a candidate to consider, they’ll “own” that candidate for the remainder of your hiring process for that job. They’ll know that other recruiters could be working for you, and that there could be some overlap between databases. That incentivizes recruiters to bring you as many candidates as quickly as possible so they have dibs if you decide to hire one. This results in more of a shotgun blast than a focused hiring strategy to find the absolute best fit for your position.
Finally, the question of incentives has a second factor to it. If a recruiter has 15 open searches going right now, that means you are only going to get 1/15 of that recruiter’s time. If one of those other searches offers a higher potential commission, naturally they are going to prioritize that search over yours. And that can happen at any time, pushing your job further down the list.
All of this is not to say that contingent recruiting has no place in your hiring activities; it just means that you’ll want to make sure you have a good understanding of a recruiter’s current workload and how they’ll prioritize your search to bring you the candidates you need.
Are you looking for the “right now” candidate or the “right” candidate?
I’ll leave you with an enlightening statistic: In a contingency model, a recruiter’s candidate will get hired 18% of the time. In a retained model, a recruiter will finish a search with a hire 97% of the time. At the end of the day, that means your job as a hiring manager is to weigh your need for a candidate fast with your need to find that one-in-a-million candidate that could be a game changer for your organization. You’ll get more leads quicker with a contingent model, and in cases where that’s the top priority, you can use what I’ve shared here to make the most of a contingent search.
But always remember: To make their nut, a contingent recruiter is going to need to work on about five times as many jobs as a retained recruiter with a close rate as low as 18%. When it’s important that you find the right candidate for a position, the money and time invested in a contracted, focused, and retained recruiter will be worth it, well, 97% of the time.
==========
About the Author: Tony O’Neill is the Founder and President of Highline Outdoor Group — the purpose-driven executive search firm for forward- thinking outdoor industry and sporting goods companies and brands.