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An HR Glossary for HR Terms

Glossary of Human Resources Management and Employee Benefit Terms

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Contingency Recruiting

Contingency Recruiting

What Is Contingency Recruiting?

Contingency recruiting is when an organization hires a recruiting agency or contract recruiter to find candidates for an open position. The recruitment agency or contractor only gets paid if a candidate they find is hired by the organization. The recruiting fee is typically around 20 percent of the salary of the position filled. 

What Does Contingent Mean in Recruitment?

In the context of recruitment, contingent means that the recruiting agency’s pay is contingent (or dependent) on successfully filling your company’s open position.

How Does a Contingent Recruitment Agency Work?

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

Not all contingency recruiting agencies operate in the same way, but there is a general five-step process they will most 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 your company will pay if the agency successfully finds a job candidate.

  3. The agency begins searching for the right candidate.

  4. Once viable candidates are found, the agency sends their information to the client.

  5. If any of those candidates are hired by the client, 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.

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

What Are the Advantages and Disadvantages of Contingency Recruiting?

Though the benefits of contingency recruiting can be significant, there are also a few potential downsides.

Advantages

Contingency recruiting can be an advantageous recruiting strategy for these reasons:

  • Reduced fees. With contingency recruiting, you only have to pay your recruiters if you hire a qualified candidate they found for you.

  • Quick turnaround. If your company needs to fill a position quickly, contingency recruiters are motivated to  deliver within your timeframe.

  • No need for in-house recruiters. Outsourcing your recruiting efforts means you don’t need to upscale your office to accommodate recruitment specialists.

  • No long-term commitment. Contingency recruiting agencies operate on a project-to-project basis, so you don’t have to commit to any single agency if you have a bad experience with their process.

Disadvantages

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

  • May waste time. There is no guarantee that the recruiting agency or contractor will find a suitable candidate.

  • No quality guarantee. Because contingency recruiting is based on 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 high quality, however.

  • Can be inefficient. Contingency recruiting doesn’t mean outsourcing the entire hiring process. Organizations still have to do the time-consuming work of reviewing resumes, determining who to interview, and performing the interviews.

What Is the Difference Between Contingency Recruiters and Retained Recruiters?

The main difference between contingency recruiters 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 to take the open job. This upfront payment helps incentivize the retained recruiter to find a candidate that is a good fit for your company’s open position. 

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

  • 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 as well as 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 is hiring. That means looking beyond the written job description and interviewing your team to know exactly what it’s looking for in a candidate.

  • Represents your company well. When you outsource your recruitment process, you’re relying on other people to represent your company in a positive light. Make sure your contingency recruiting agency treats every candidate with respect.

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