process-contracts

When choosing a consultancy to hire employees, supervisors, managers, directors or C-Level Executives, organizations may choose different contracts. Each type of contract provides benefits and disadvantages, and very different processes are to be implemented. Selecting an agency is always a difficult task involving risks and hidden-costs.

It is important for clients to precisely know in details the wording, the terms, and to get the tips to understand the executive search and recruitment industry, to master how their suppliers really work.

The (obvious) Greatest Secrecy …

1) Clear, Strong, Extensive and Rigorous process gets the job done efficiently

2) Experienced consultants trained to implement a proven process get results

3) Process and consultants expertise must be united in a company whose policy is “commitment” first.

Different Contracts, Different Terms and terminology.

These terms apply for Management positions, individual recruitments, not for mass recruitment contracts

RETAINER + EXCLUSIVITY contract

Initial retainer fee when the search Kick-off
Exclusivity, duration vary from 4 weeks to 12 weeks
Dedicated team: 1 consultant + 1 researcher designated on a full-time basis during the whole assignment
Commitment from the supplier to succeed a search, until a candidate to be hired

Fee (% from successfully hired candidate gross annual package)

Europe: 18 to 30%. Lower fee can exist from suppliers struggling to survive, due to weak economy and low volumes of recruitment.
USA: 18 to 30%
Japan: 35 to 38%
China – Asia: 20 to 33%

In Asia, in a candidate driven market, especially in China where candidate can select their next employer, organizations are facing high difficulties to attract and retain talents. Because of huge recruitment needs, a lot of fresh suppliers and freelancers try to get a part of the business. It results to be very challenging to find a reliable supplier too.

EXCLUSIVE contract

No retainer fee
Exclusivity, duration vary from 4 weeks to 12 weeks
No obligation from the supplier to be successful
Same fee than Retainer

SUCCESS FEE / CONTINGENCY contract

- No initial retainer fee or deposit
- No exclusivity
- No real search duration
- No obligation from the supplier to be successful
- Same fee than Retainer, sometimes little bit less from suppliers in need.

Very often, clients believe success fee assignments to be billed less than retainer or exclusive ones. In fact, the rates are practically the same, process and terms are different, but success fee assignments may have hidden cost like long delay for a position before to be completed, unsuccessful hire to replace, high turnover of candidates.

OUTPLACEMENT contract

Consultants target precise companies in specific industries (according to the selected candidate’s expertise) and will approach the targeted companies (Board / Headquarter or Country Manager or Asia HR Director or Country HRD).

No initial retainer fee or deposit
No exclusivity
No search, only introducing selected profiles from the consultant network
No obligation from the supplier to be successful.

3 Different Processes

1 – Executive search / Retainer
2 – Success fee / Contingency
3 – Outplacement

1 – EXECUTIVE SEARCH / RETAINER mode

- We evaluate the feasibility of each potential search: if we are able to guaranty the delivery, we will issue a proposal.
- If we evaluated the search to be unrealistic, we explain why we can’t handle it, to avoid wasting our time and client’s time.
- We prefer not to accept an assignment if we are not 100% confident.

We assign a dedicated search team

- - 1 Senior Consultant is selected according to his/her expertise recruiting in a precise industry or for a precise position.
  - 1 or 2 researchers support the consultant.
  - Time spent by consultants + researcher per search is about 230 hours at total.
  - Dedicated Team is allocated until success, managing only 1 case at the same time.

We must be the sole agency for this precise search during the contract duration: 4, 6 or 12 weeks.
We issue a PSS (Project Scope Summary), document to be approved by client that will direct the search.

- - It summarizes the Job Description and all verbal exchanges between client and us, describes precisely the profile to be hunted,
  - It is the very precise profile of the targeted candidates
  - We elaborate a list of target companies (including or not an off-list companies) in some very precise industries according to client requirements, at least 50 companies, sometimes only 3.

Search team start the search, directly approaching target companies and target candidate in a one to one relation,

There will be a mid-point (middle of the search): we report to the client if some special issues have been discovered on the market (target salary matching with market, company reputation, how many good potential candidates in the pipeline),

Target candidates (for some searches 50 to 100 companies and 50 to 150 candidates must be identified as potential targets).
Sometimes, there are less than 10 relevant candidates worldwide.

First, we evaluate them during phone or visio-conference interviews, we ask them to update their resume.
Then we meet them face to face prior to short list them (or visio-conference if candidates are far away or not available rapidly to come for face to face interview).

Candidates are evaluated by at least 3 different consultants (team leader, senior consultant, consultant, client’ manager).
We are not “CV forwarders”, we act as investigators, hunters; such approach is extremely qualitative and need time to be completed.

We introduce a short list of RELEVANT candidates: at least 3 (contract), and very often 5 to 7 candidates.

The precise date of short list introduction to our client is guaranteed from the beginning when signing our contract: we work under precise deadlines.

Guarantee period 6 months. In China, most of recruitment agencies guarantee only 3 months. Strong process, deep technical and personality evaluation, and our consultants’ expertise enable us to allow such guarantee without risk.

2 – SUCCESS FEE / CONTINGENCY

Statistics in China

- - “Best” Contingency agencies’ average success rate is 20 to 22% (1 successful case each 5 cases handled).
  - “Most” of contingency agencies can’t reach more than 11% success rate (1 successful case each 9 cases handled)
  - In Contingency, statistics demonstrate the time spent by consultants (average in China): less than 15 hours total (per case).
  - In comparison, in Retainer mode, time spent by consultants + researchers per search is about 230 hours at total for an assignment.
  - Contingency business model is based on speed (to be the first supplier to provide a resume to client).
  - Contingency is very frequent in China and all around the world because it doesn’t require any commitment from client to recruitment suppliers.

ARA’ team policy (Acropolis Associates Group)

- - - When working under contingency mode, our ARA’ team select our searches to avoid wasting our time and our client’s time.
    - Our contingency success rate is 32% (1 successful case for each 3 cases handled).
    - To avoid wasting time-consuming resources, we reject searches if we are not 100% confident.

3 – OUTPLACEMENT

- - - Acropolis Associates Executive Search and Active Recruitment Asia’ consultants are conducting hundred of searches, meeting every year several hundred of candidates face to face.
    - Short-listed candidates are excellent, but for each assignment, it will be “only 1” finalist candidate hired for 1 position.
    - We may decide to “push” some candidates in some cases.
    - Our consultants target precise companies in precise industries (according to selected candidate’s special expertise) and will approach targeted companies (Board / Headquarter or Country Manager or Asia HR Director or Country HRD).
    - It is “reverse” headhunting, implementing same process and same knowledge to approach companies than hunting candidates.