You may have heard of prepayment or success, or what is the same, retained or contingency fees. But what is the difference between them and what is the best option to outsource the selection processes?
In this article we will not only explain what both concepts mean, but we will also assess the pros and cons of each, depending on the situation in which you find yourself. We will give you the main tips so you can choose which of the two payment methods is best for you.
In a retained search process, the recruiter charges the customer a fee in advance to perform the search. In these cases, the recruiter works exclusively for the client, who “retains” him with partial payments as he moves through the process and until he finds the right candidate.
What methodology is followed by a recruiter who works with partial payments?
These recruiters work very close to the customer. They spend a lot of time getting things right, using agreed processes and methodologies. They know that they will eventually close the position and that it is essential to ensure the quality of the candidates (who are most likely passive).
They usually provide the client with 4 or 5 candidates, which will have been evaluated in depth. The only thing the company should do is select the one you like best.
This recruitment methodology usually carried out for critical jobswhere wages are very high and the chances of finding a profile that fits the position and culture of the company are very slim.
Unlike the previous format, in a process of contingency search the recruiter will only charge at the time the client hires one of their candidates. In this type of search, several recruiters are often competing at once to get their candidate finally selected. Therefore, a process of contingency search is also popularly known as “model of payment for success”.
What methodology does a successful recruiter work with?
In successful paid searches, recruiters work much faster and with more open positions at the same time. They know that the key to success is to present the best candidates, and that they must do so before their competitors.
This model is perfectin case you need to fill a vacancy quickly or have multiple vacancies to fill and, in addition, you want to ensure good quality candidates.
Which payment model should you choose: retained or contingency?
The cost of service is one of the most decisive factors in the choice. As you probably know, the price usually varies depending on the annual salary of the hired candidate. The higher the salary, the higher the feethe recruiter earns.. If you want to know more about fee we recommend you read our article Variable fee vs Fixed Fee. Which one to choose?
It is not surprising, then, that usually retained search are of a higher price. As we have said, they are mainly used for senior management, whose salaries are higher.
However, we want to emphasize that, for the same position, the least expensive format is the prepayment. This is because recruiters are usually willing to work for a minor fee if they have greater security of earnings.
Theretained searchtherefore, can help us to reduce the cost of the service. However, in theory, we will slightly increase the risk and time for hiring; although it does not have to be so if the recruiter with whom we collaborate is trusted.
In short, if your priority is to reduce hiring time, a contingency search is your best option. If, on the contrary, you want to fill a position of great responsibility, or you intend to reduce the cost and have no urgency to close the vacancy: a retained searchwill give your better results.
In any case,the best thing is to work with a recruiter with a good reputation: strive to understand your needs and help you select the best options; whether you work with partial payments or success. If you want to know if the recruiter you work with is a good professional, we recommend you read our article How do you know you’re working with a good recruiter?
And you: What payment method do you normally choose when you outsource your selection processes? Why do you choose one method or another?
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