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The Pros And Cons Of Having A Recruiter On Retainer?

The pros and cons of having a recruiter on retainer?

What is retained recruitment?

Retained recruitment occurs when an amount of money (a retainer) is paid to a recruiter in advance of work, therefore securing a commitment and agreement between the recruiter and client.

Retained recruitment is most often associated with harder-to-recruit executive-level positions. These positions require a skilled and highly experienced candidate, and the talent pool is usually relatively small. The amount of the retainer varies but is typically somewhere between 15-30% of the total projected fee.

Different types of recruitment agencies

There are three main types of recruitment agencies, each with a different focus or speciality:

  1. Temp agency
  2. Traditional recruitment agencies
  3. Executive search agencies (retained recruitment)

Temp agencies specialise in sourcing and providing temporary workers. Temps are a valuable solution for companies that have busy seasonal periods (Christmas or a tourist season), provide cover for extended absences (illnesses or maternity and paternity leave), or need to complete short-term projects. The temp agency earns a fee on top of the worker’s hourly rate and if a worker becomes a permanent employee.

Traditional recruitment agencies usually work on contingency and get paid only if the company hires a candidate they put forward. A replacement or rebate scheme may be in place to protect the company if the candidate leaves soon after employment (usually three months).

Executive search agencies provide a retained recruitment service, and the upfront fee is typically non-refundable. The process usually requires the recruiter to invest a significant amount of time in activities such as head-hunting.

Pros and cons of retained recruitment

The pros of retained recruitment include:

  • High priority – compared to commission-based placements
  • Less risk of bad hires – the focus is on finding quality candidates for crucial roles
  • Source rare skills – by head-hunting candidates that may already be employed elsewhere in niche roles
  • Deal with fewer recruitment agencies – saving you time and removing the scenario of too many un-vetted and ill-fitting candidate suggestions
  • Access to resources companies don’t have otherwise – with a recruitment agency working to a business model where quality trumps quantity

The cons of retained recruitment include:

  • Upfront retainers – requires paying for services before they are received
  • Higher fees – with the total recruiting cost being greater than contingency commission-based fees
  • Higher risk – with no guarantee that a candidate will be found
  • Long contracts – which may not facilitate changes as the company responds to their market or industry
  • Low accountability – it is hard to measure recruiter actions, effort, and time

There are downsides to both types of recruitment, and the cons of retained recruitment are the pros of traditional recruitment and vice versa. For most companies, the advantages of fixed-cost recruitment outweigh the disadvantages.

Advantages of fixed cost recruitment

Fixed-cost recruitment services allow you to grow and expand your team without the hassle and costs of managing the entire recruitment process. Fixed-cost recruitment can include CV filtering, telephone screening, shortlisting, and interview scheduling and planning.

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