Contingent Recruitment

What is contingent recruitment?

Contingent (or contingency) recruiting is where a company uses a recruitment agency or contract recruiter to find candidates to fill a position. Outsourcing recruitment can save a business time and resources, making it a more efficient way to hire employees. It can also be more cost-effective than in-house recruitment, which can come with higher operational costs, according to Forbes.

With contingency recruitment, compensation follows a pay-for-performance structure, where the recruitment agency or contractor will only get paid if a candidate they find is hired by the organization. The recruiting fee is typically around 20% of the salary of the position being filled.

How does a contingent recruitment agency work?

Contingent recruitment agencies work as contractors for organizations, with the understanding that they won't be paid until they find a candidate who accepts the open job offer.

Not all contingency recruitment agencies operate in the same way, but there's often a general five-step process they will likely follow:

1. The client (your company) sends a job description for an open position to the recruitment agency.
2. The agency negotiates a fee that your company will pay if the agency successfully finds a candidate.
3. The agency begins searching for the right candidate.
4. Once viable candidates are found, the agency sends their information to your company.
5. If any of those candidates are hired, the agency will receive the agreed-upon compensation.

It’s worth noting that contingency recruiting agencies are usually not the only ones looking for good candidates. Often, these agencies are competing with your company’s recruitment specialists (if you have any) and applicants who apply directly to your job listings on your website or LinkedIn, for example.

Additionally, you may choose to hire multiple contingency recruiters to improve your chances of finding a candidate in a shorter period. This means that agencies may also compete against one another.

What are the advantages and disadvantages of contingency recruiting?

While the pros of contingency recruiting can be significant, there are also a few potential cons. We explore both below.

Advantages of contingent recruitment

Contingency recruitment can be a valuable strategy when it comes to finding potential applicants quickly and efficiently. It can:

• Reduce fees. You only pay the recruiters if you hire the candidate they found.
• Provide a quick turnaround.  Thanks to the payment structure, contingency recruiters are motivated to fill the position quickly.
• Reduce in-house recruiters.  Using a recruitment agency means you don’t need to accommodate in-house recruitment specialists. However, it’s worth noting that in-house recruitment teams can be helpful if your business regularly hires.
• Requires no long-term commitment.  You could switch contingency recruiting agencies for each role, if you prefer. As they are likely to operate on a project-by-project basis, you don’t have to commit to any single agency.

Disadvantages of contingent recruitment

While outsourcing your candidate search may sound appealing, there are some shortcomings to using a contingency agency:

• May waste time.  It’s not guaranteed that the recruitment agency or contractor will find a suitable candidate, and you could be waiting a little longer if they don’t feel an urgency to find a hire. Don’t forget, you won’t be the only company using them to recruit candidates, and others might be offering a higher payment and bigger incentive.
• No quality guarantee.  Because contingency recruiting works with a “no hire, no pay” fee structure, they’re incentivized to source large quantities of candidates. This does not mean all of these candidates will necessarily be of high quality themselves, however. This could then lead to further time and wasting of resources.
• Can be inefficient.  Contingency recruiting only finds potential hires, it doesn’t outsource the entire hiring process. Your company will still need to review resumes, decide who to interview, and perform the interviews.

What's the difference between contingency recruiters and retained recruiters?

The main difference between contingency and retained recruiters is how the agencies are paid:

• Contingency recruiters  are only paid after successfully finding a candidate that accepts a job offer.
• Retained recruiters  are paid a fixed amount upfront and additional compensation after they find a candidate. This upfront payment helps incentivize them to find a candidate who's a good fit for the open position.

Because of these different incentives, retained and contingency recruiters are often used to fill different positions, for example:

• Contingency recruiters  are more often used to find candidates for entry-level positions.
• Retained recruiters  are typically used to fill senior-level or advanced skill positions, plus entry-level positions.

What to look for in a contingency recruiter

When looking for contingency recruiters, you should make sure the agency does the following:

• Uses up-to-date tools:  You want your candidate search to be data-driven—that’s the best way to find the perfect person to fill the role. A tech-savvy contingency recruiting agency is a sign of competence.
• Works with your teams:  To find the proper fit, recruiters need to know the exact needs of the team. That means looking beyond the written job description and interviewing people in your business to understand exactly what’s needed in a candidate.
• Represents your company well:  When you outsource your recruitment process, you’re relying on other people to represent your company positively. Make sure your contingency recruiting agency treats every candidate with respect.

What does a contingent job offer mean?

A contingent job, also known as a conditional job offer, is where an employer secures a potential employee while they perform any necessary checks. Some reasons you might want to give a contingent job offer include to:

• Confirm qualifications. If you’re hiring for a job that requires a certain skillset or qualification, you might want to give a contingent job offer while you carry out these checks.
• Perform reference checks. You’ll likely want to contact previous employers regarding a potential employee’s history.
• Check criminal history. Some jobs may require a criminal background check. A contingent job offer can be made to hold the role for them while this is carried out.
• Conduct health checks. If the job uses heavy machinery or requires long driving hours, you may need to conduct some health checks.
• Confirm if relocation is needed. A candidate might have applied for a role in a new city and you want to give them a contingent job offer while the move is in process.

What is a contingent worker?

A contingent worker is hired to work for a company but isn’t their employee. They are someone who provides as-needed work, such as on a project. A contingent worker could be:

• A freelancer
• An independent contractor
• A consultant
• Agency staff on temporary contracts.

Note that a contingent worker isn't the same as a contingent job offer.