Chart retainer or success fee | Acropolis associates

Retained vs. Success Fe (Contingency), comparison chart

Success fee / Contingency firms	Retainer firms
1. Frequently represent individuals seeking placement.	1. Represent Companies employer only.
2. Are usually in competition with other similar agencies for the placement.	2.Conduct search assignments on an exclusive contract basis only.
3. Professional staff is usually compensated on commission for placements made.	3. Professional staff is usually compensated on salary and bonus with incentives for client business development.
4. Usually search for lower level organizational positions including but not restricted to individual contributors.	4.Usually work at middle to senior management organizational levels.
5. Tend to spend little time on initial research and specification; often never meet company management or prospects.	5.Must know client organization and position responsibility / requirements thoroughly before initiating search. Typically document this in a position description and precise profile chart (PSS, Project Scope Summary)
6. Focus primarily on applicants / candidates actively seeking employment; recruiting is placement-oriented.	6.Recruiting efforts are strategically focused on a broadly targeted range of potential candidates, most of them are not active in the job market; recruiting is process and result oriented.
7. Search consultant works concurrently with a multitude of open jobs.	7.Typically the search consultant is personally committed to 1-2 assignments at any given time and is responsible for the success or failure of each.
8.Search consultant and researchers typically invests 80-120 hours each per month per client assignment in recruiting, evaluation, screening and client interaction.	8.Search consultant and researchers typically invests 80-120 hours each per month per client assignment in recruiting, evaluation, screening and client interaction.
9.Usually recommends 3-10 highly qualified and ranked candidates to client company in 4-8 weeks.	9.Usually recommends 3-10 highly qualified and ranked candidates to client company in 4-8 weeks.
10.Requires minimal Human Resources and General Management time investment until interview process begins.	10.Requires minimal Human Resources and General Management time investment until interview process begins.
11.Reputable firms offer a professional guarantee of candidate success and are committed to thorough and ethical practices and results including an off limits policy.	11.Reputable firms offer a professional guarantee of candidate success and are committed to thorough and ethical practices and results including an off limits policy.
12.Fees range from 20-33% of compensation (or flat quote) plus expenses and are paid by company in installments.	12.Fees range from 20-33% of compensation (or flat quote) plus expenses and are paid by company in installments.
13.Authorization for search is usually made by company General Management and Human Resources Management with rigorous selection criteria.	13.Authorization for search is usually made by company General Management and Human Resources Management with rigorous selection criteria.

8 precise circumstances why organizations retain a supplier to conduct search as sole agency

1 – When high confidentiality is requested

Internal: Client wants to replace a person who is currently on board and who doesn’t knows he will be fired
External: Client enters a new market and doesn’t want all competitors from the same industry to be informed of this new strategic orientation

2 – When searching for a strategic position

Recruiting a key person is crucial for the future of any company.
High confidentiality and a very professional approach are mandatory.

3 – When searching for a profile with very accurate skills

When candidates are very few, very rare on the market and not open to new challenges

4 – When client want to control its company’ image approaching candidates

To avoid 3, 5 or 10 different agencies to approach people, with consultants whose style is not under control, contacting a lot of people in client’s industry repetitively, week after weeks, showing to competitors client’ difficulty to attract the right person or with poor professional approach

5 – When timing is important, guaranteed date for interviews is important

Contingency business appears faster than retained: to get the contract 1 or 2 weeks is frequently promised by contingency suppliers (success fee contracts).
It is not rare a position to stay vacant during 6 to 10 months using contingency/success fee methods.
The retained agency must provide a precise guaranteed timing (i.e. a precise contractual date to deliver the relevant short list).
“Relevant” means a short list including candidates whose professional expertise, personality and motivation has been evaluated.

6 – When scope of search is wide

Some search requires going deep in the industry to scan candidates. It needs time and resources.
Generally, non-exclusive agencies (contingency) will not invest the necessary resources (time and money) to conduct complex searches or do a thorough investigation of an industry. They prefer using a business model that consists of acting fast instead of profoundly.

7 – To avoid screening a lot of non-relevant resumes

Receiving hundreds of non-relevant resumes or candidates is a huge waste of time for HR and Hiring manager.

8 – When client wants to minimize risk

In a fast and competitive environment like China, timing is crucial. Your competitors are active and effective in their recruiting. Posting job-postings on job boards and working in a contingency mode is only suggested when recruiting for easy to fill positions. Otherwise, using contingency mode to attract star talent is considered a high-risk gamble.

… To summarize, companies decide to retain an exclusive agency when they decide to really master the recruitment process.