You are currently viewing What is Contingency Recruiting: Employers’ Guide to 99% Success
  • Reading time:9 mins read
  • Post category:Services
  • Post published:April 9, 2022

When your company grows, it is quite evident that you will go on a recruiting spree for both experienced as well as fresh candidates. Usually, there are two kinds of recruitment processes- contingency recruiting and retained recruiting. If you want to market the available positions in your company, the right approach for you will be to go with contingency recruitment. This will help you widen your reach and get a broader base of candidates.

What is Contingency Recruiting?

An outsourced recruiting service where the recruiter gets paid only when the company gets successful hires. In other words, the client will make payment to the recruitment firm only when their candidates get selected.

The hiring process is carried out on a project-by-project basis in contingency recruitment process. The recruiter works to find a number of eligible candidates in a limited period of time and makes them appear before the client.

Contingency firms work with several hiring clients simultaneously. They are motivated by marketing as many candidates as possible to enable bulk-hiring of clients at once.

How does a contingency recruitment model work?

There is no exclusive agreement between the clients and the recruiting firm regarding the hiring of candidates for one particular client.

Nor is the client bound by any agreement for seeking consultancy services from a single recruiting service. So, the client is free to get such services from any number of contingency hiring firms at the same time to meet the target hiring.

Similarly, the contingency staffing firm also works for various clients at the same time.

Although, every recruiting firm will not function in the same manner, here are some common steps in which the contingency recruitment model works.

  • The client provides a detailed description of the job role to the contingency firm.
  • A certain amount of fee and service period is decided between the contingency agency and the client for every successful recruitment.
  • The contingency firm will then start sourcing through advertising, their extensive network of databases, and using the referrals for the right application to this job role.
  • An initial screening is performed when the recruiting agency finds the right candidate for this role. If approved, they submit the application of the candidate to the client hiring.
  • The in-house round of interviews will then be conducted by the client or the employer.
  • The winning candidate is offered the job by the client.
  • If the qualified candidate takes the offer and finishes the specific service period as had been determined with the client, the employer will make payment to the contingency search firm as per prior discussions.

These are the Benefits of Contingency Recruitment

Fewer Fees

As opposed to other kinds of recruiting, the fees are much less in Contingency Hire. Moreover, you have to pay the recruiter only after getting a successful hire. So, you are going to pay only once after getting the desired result.

Usually, the fee will be about 25-30% of the candidate’s annual salary for the first year. No upfront payments are required as it is done with the retained recruiting agencies. And if any employee quits the job within that stipulated period of time, you can get a complete refund.

Rapid recruitment

Contingency recruiters will ensure that you find suitable candidates within a short time for this will be more profitable. They are aware that they have not been exclusively hired for finding the right candidate and that is why they have to always strive hard to face the fierce competition.

Apart from this, they will also have to make sure their candidate is credible enough and is reliable to last in the job for the specific time period decided between the recruiting firm and the hiring client.

These firms have a large database of active job seekers which they can use here. They also have a network of other recruiters and sources working for them to seek the right people via job portals, listings, advertisements, and even social media websites.

Contingency based recruitment has an expansive reach that leads to rapid and efficient recruitment quite easily.

No contractual obligation

You do not have to get involved in a long-term contract when it comes to the contingent recruiters in order to enjoy their services.

All contingency recruiters work on a project-by-project basis. They are also responsible for finding suitable candidates during the process of hiring. Their payment depends on their ability to fetch you the right candidates within a short span of time. This is the reason why you do not have any obligation or commitment towards them.

Disadvantages of Contingency Hiring Process

There are some shortcomings of contingency recruiting as well even though it sounds quite appealing:

Wastage of Time

Since the recruiting firms cannot guarantee a suitable candidate, it might seem like a waste of time by hiring them.

No Quality Assurance

Contingency recruitment firms are based on a ‘no hire, no pay’ model, they have a high incentive to source a number of candidates. But in order to do this, sometimes the quality of candidates suffers.

Insufficient Hiring Process

These contingency firms will only help you seek some prospective candidates but you will have to still carry out some functions like reviewing resumes, deciding on the shortlisted candidates for interview, and then taking the interviews. They cannot be trusted with the entire hiring process.

Contingent vs retained recruitment

There are some differences between retained and contingency search firms.

  • Contingency recruiters– These contingency executive recruiters are only paid after they find a successful candidate accepts the job offer. This is why they are mostly hired for entry-level positions.
  • Retained recruiters- These recruiters are paid a certain fixed amount upfront along with compensation after a candidate is found for the open job. These retained recruitment fees act like an incentive for the retained recruiter to seek the rightly fitted candidate for this position. This is the reason why they are hired for more advanced positions with senior-level skills.

This will help you get some insights into retained search vs contingency recruitment.

contingency recruiting

Contingency Hire: Contingency fees in recruitment & how they get paid

Only after the right candidate provided by the recruitment agency is hired by the hiring client, they will make the payment for the contingency recruiter. This means that the contingency services will be free until any candidate accepts the offer and completes the stipulated period of work for the hiring client.

Generally, the client pays the contingency recruiter fees with the assumption that the candidate would continue the service for the stipulated time. But if a candidate prefers to quit before the completion of this term, the contingency recruiter will have to refund the fees. Usually, their fee is a certain percentage of the first year’s salary of the candidate.

How to choose the best Contingency employment agency

Contingency Recruitment is used to fill up entrance levels and junior level roles for a company. It is not suitable for executive job roles. If it requires looking for candidates with specific skills, you can consider hiring these kinds of services.

Clients choose this kind of recruitment only when they need eligible candidates for a junior or entry-level role or when they want to be involved in the recruitment process and carry out an in-house evaluation.

This is also the preferred form of recruitment when the hiring clients have an urgent requirement.

So, how to make the right contingency hire?

Now, let us discuss a few points that will help you choose the perfect contingent employment agency. Take a look.

  • Updated technology

You should ensure that the search for the right candidate is driven by data. You cannot choose who will be the right person for the role until you have the records of people and their skills. This database can be maintained by a company that has an advanced level of technology. Contingency executive recruiters with updated levels of technology are a sign of competence and efficiency.

  • Teamwork

Another thing that you must take care of while choosing the contingency recruiters is the fact that they should work in teams. Teamwork is essential for proper coordination and collaboration which can help you seek the right candidates. As a team, it can get easier to start the screening process when looking for the right candidate. That is why you should hire a recruiting agency that has been working with teams.

  • Represent the Company

Outsourcing your recruitment process means relying on other people to be your representative. You need to ensure that your recruitment agency understands your company’s ideals and requirements which will help them select the right candidates for your open job positions.

This will not just help you get the most eligible candidates for your company but even help the candidates get familiar with your company before working with you.

Contingency recruitment is the right way to spread the word in the job market about your open positions. It widens horizons and helps you find a bigger candidate base.

It is cost-effective but you also need to work on the quality of hires sometimes. But overall, it can be a great approach to find a candidate which can become a valued asset to the company.