Here’s an insider secret. There’s one simple question you can ask a recruiter to get a sense of the odds of your winning the role. Depending on the answer, you could stand an 800% better chance of getting hired.
For many time-pressed candidates, this information can be crucial. Pursuing an opportunity presented by a headhunter represents a considerable time and emotional commitment that in most cases is not going to produce results. It makes sense to get some idea of your chances before investing heavily in the process.
What is that one simple question?
"How has your client engaged you?"
Depending on the answer, you'll know whether your work with them is a roll of the dice, or a meaningful first step in a process likely to result in being interviewed and maybe landing an excellent new role.
Companies work with recruiters under varying terms and conditions. At one end of the spectrum is retained executive search, in which clients work exclusively with the recruiter on a role, and the recruiter is paid something regardless of whether their work actually results in a hire. Usually there is an initial payment, a retainer to secure the recruiter’s services. Sometimes there are staged payments corresponding to particular milestones in the recruitment process – the delivery of the shortlist, for example, or agreeing on employment terms with the chosen candidate. Then there is a final payment that is usually tied to the new employee starting their role.
At the other end of the spectrum is contingent recruitment, in which the hiring company engages multiple recruiters to fill the role. The recruiter gets paid only if their candidate becomes an employee.
Many companies think that standard procurement practices should be used for recruitment services. These practices have sensible-sounding rules such as “don’t pay until you’ve received the thing you ordered,” and “put the work out to multiple suppliers to get the best price.” This thinking causes them to choose contingency recruitment
However, finding an executive for a critical role is not like finding a supplier for a widget. In recruitment, conventional procurement practices tend not to work well. Paying only on placement and working with multiple recruiters actually reduces the chances of finding the best or even a suitable candidate.
Over the history of the company, Executives Online has worked in both modes, contingency and retained search. Looking at over 10 years’ worth of data from recruitment projects we’ve worked on, the projects where the client paid a retainer and engaged us exclusively were 5.3 times more likely to result in a successful placement than contingent projects.
Our data also show that non-exclusive, non-retained recruitment projects are twice as likely to result in no candidate being hired at all. This happens because sometimes clients engage recruiters for a contingency search for situations where they have little or no intention of making a job offer, such as:
- to get outside candidate benchmarks to compare to an internal candidate who is being considered for promotion
- to test the market vis-à-vis salary or other aspects of a package
- to see if there just happens to be the perfect candidate out there, in order to tip the decision balance to go ahead with a project for which there is not yet a firm commitment
- to get some free consultancy by picking the brains of smart people who in other companies and roles have successfully delivered what the client requires
In such cases clients are usually unwilling to pay thousands of pounds for executive search services or be interested in developing good business relationships with the recruiters helping them.
This is why exclusivity and the payment of a retainer are good signs of the client’s intentions to proceed with a hire, and to work with the recruiter and the candidates in a committed, stand-up fashion throughout the recruitment process.
From the candidate’s perspective, the large proportion of recruitments that don’t proceed to a hire and the sheer number of candidates being presented to the client make participation in contingent searches look like a poor investment of time and energy.
As a company, that’s how we look at it, too. Based on our experience with contingent searches, Executives Online has moved to doing the vast majority of our work on a retained or exclusive basis. Now, in the few cases where we work on contingency, it’s because there’s a mitigating reason. Usually it’s because we’ve worked with the client multiple times before, and so we know the client, their commitment level, and how forthrightly they intend to engage in the process.
The reason the one simple question is such an insider secret is that most firms would never admit just how unlikely it is that a contingency candidate will land the job. Actually, our internal data show better odds than the industry as a whole, because of our selectivity. While data about the whole industry are unavailable, and probably will always be unavailable, odds can be calculated using some reasonable assumptions.
A retained, exclusive search firm might typically present their client with 8 candidates, one of whom is hired. Thus, each candidate stands a 12.5% chance of getting the job. Of course, sometimes searches are terminated before completion, due to unexpected things such as M&A activity and sales declines. Assuming that this affects 20-25% of searches, then each candidate’s odds are at best 10%.
When 6 contingent firms each present 8 candidates, each candidate stands just a 2.1% chance of being hired. However, assuming that 40% of searches don’t proceed to hire, each candidate’s odds fall to a mere 1.26%.
Comparing the odds between contingent and retained search shows an 800% difference in the chances of getting a new role. So unless you have time to kill, you may wish to pass up on these low-chance opportunities presented by recruiters working on contingent projects.
(A different, mathematically distinct way of comparing the likelihood of success under contingent or retained recruitment is to take the conversion rate which might be achieved by a contingent recruiter, multiply by 5.3 to get the retained rate of success, then factor those down by the relevant percentage of searches that do not proceed. This also shows an 800% difference.)
These dynamics similarly affect the contingent recruiter’s efforts. If the odds of a placement are so low, spending a lot of time searching for the best candidate is not a good investment of time. The recruiter will gravitate towards presenting whatever candidates are easily found. If the client ever becomes hard to reach, or not forthcoming with feedback, or isn’t progressing candidates to interviews, the recruiter may determine that the project isn’t worth any further investment of effort. It’s for these reasons clients and candidates get better results with retained search.
Some readers may wonder why we’re sharing this information. While our own results with contingent projects are well better than average, we’re not proud of them. In fact, we’re downright uncomfortable with them. It is because of this discomfort, not in spite of it, that we decided to talk about the problems with contingent recruitment. Executives Online is not like most recruitment firms. We have a laser-like focus on finding the best candidates for our clients, and doing so quickly and efficiently. To achieve this, we’re data-focused, analytical, technology-driven, and always looking for improvements that will help ensure that the right candidate gets hired. One area that certainly needs improvement is contingent search.
In our “Recruitment Insider” blog series, we routinely expose recruitment industry practices that most recruiters would prefer were not made known. On 9th October we’re hosting a networking event in London on how candidates use deception to get jobs. We’re serious about making executive recruitment better for everyone, clients and candidates alike.
As part of our mission to drive out wasted time and effort we recently launched executive-intro®, a recruitment platform for retained search that revolutionises the recruitment process – so much so that we can guarantee successful hires. executive-intro® adds technology accelerators to our traditional recruitment techniques to let us show clients a powerful and complete view of their shortlisted candidates. It includes candidate videos, behavioural profiles, references, answers to the client’s specific competency-based questions, and several other features that simultaneously save everyone’s time and increase the chances of a strong fit between the candidate and the job.
If your organisation is interested in finding your next great employee, contact us to discuss how this can be done for you in the most successful way possible. If you’re an executive seeking your next role, we hope this insider tip will help you decide whether it’s worth your time and trouble to pursue recruiters working on contingency roles. And if you’re presently open to considering a new role, we’d be delighted to see your CV.