They Pay Me Now or They Pay Me Later

Recruiters have an infinite number of specialties-those industries or professions they serve. However, there are essentially only two types of search organizations, the distinguishing factor being the payment plan: Contingency (payment at the end of a successful search) and Retained (payment up-front-either partial or in full). And believe me, how they are paid impacts directly how you are paid (whether you get a job through them so as to get paid). Each form of recruitment organization operates under a different context or set of eyes and ears. Consequently, your approach to them must be different. The following breakdown will shed light on the vital differences between contingency- and retained-search firms.

Contingency

• Paid for services only after successfully placing you; in effect, your recruiter works for free until the time their client firm hires you
• Usually offer some "guarantee" period to clients, which means that their fee payment only becomes free and clear once you prove yourself by staying with a company for a certain time period-akin to a manufacturer's warranty
• Deal with a variety of assignments (positions to fill) at the same time
• Includes organizations from the "employment agency" level, placing more clerical and support staff, all the way to executive search firms placing only upper management
• Conduct searches for positions with base salary levels of $18,000 to $100,000 or more
• Focus on serving the client company, yet more likely to press them on your behalf: because they only get paid when someone is hired, they may work a bit harder to get a marginally appropriate candidate seen by the client, on the off chance that there could be a fit
  

Retained

• Paid for services up-front, either partially or in full
• May not offer guarantees to their clients, so once a position is filled, they are off the hook
• Concentrate on fewer assignments with a more limited client base
• Operate as a "consultant" to their clients-hired to render advice, not just resumes
• Place specifically high-level executives at salary levels usually above $100,000
• An "exact-fit" candidate is already paid for by the client, therefore they are less likely to press on your behalf: though retained recruiters would like to complete their assignments as soon as possible, they won't present marginal candidates
  

Now, at first blush, it may appear that retained search is the way for recruiters to go: apparently more security in payment, less guarantee liability, and more of the client's ear. However, first impressions don't always reveal the full picture. For many practical business reasons, there are viable numbers of both types of search firms in today's world. Many contingency-search firms are exactly that because of the freedom it affords them to work with whomever they want/when they want, without being tied to specific assignments or agreements. The Directory of Executive Recruiters, 2000 Edition by Kennedy Information, Inc.-commonly referred to in the search arena as the "Red Book"-listed 3,337 firms categorizing themselves as contingency and 1,667 as retainer. Though this listing is in no way exhaustive, it gives a sense of the broader issues pertaining to the benefits of each style of organization. Over the past 20 years, more contingency firms have been presenting themselves to clients as retainer organizations. They are just as capable of conducting retained searches, but of course don't have the reputation of such retained-search icons as Korn-Ferry, Heidrick & Struggles, or Russell Reynolds.

The point is not to debate the merits of recruiters operating in either contingency- or retained-search structures. For you, the candidate, it is simply important to know that this distinction can impact your success with a particular firm. Here is the deciding factor in knowing which type of firm will best serve your needs:

Don't worry much about working with retained-search firms if you're below a 6-figure salary level. These firms are not organizations you would necessarily "go sign up with"- they deal with whomever they choose. If you are a 6-figure professional, you might submit your resume to a retained firm for inclusion in their database. However, the general rule for dealing with them is: don't call them-they'll call you. They are paid up-front to go out and find specific talent. Rarely has anyone in their "files" fit a particular assignment. If they need you, they'll find you.

On the other hand, contingency recruiters focus on professional positions with base salary levels ranging from $18,000 to well over $100,000. Even if they engage in some of the same assignments as retained-search firms, their operations are generally more open and less exclusive. It is far easier and possibly more fruitful to get into a contingency firm's database. They work on a greater number of assignments, necessitating greater dependence on their files. Since contingency recruiters are only paid when the placement is made, they don't enjoy the retained firm's luxury... lots of time to focus on fewer assignments. They must quickly locate as many people as possible with the potential of filling any opening-before being beaten to the punch by some other contingency recruiter. Therefore, they search their database and consult their files regularly. And because of the drive to get paid, contingency headhunters are more apt to stretch for you, hopefully to get you on interviews for positions for which you may have been overlooked by retained-search firms. This is not to say contingency firms do sloppy work-it just means that, because they enjoy no payment until after the placement, they may be more prone to find possibilities or angles to present a candidate who doesn't fit the client's standard profile.

All of this simply says: for the average professional - and of course there are more professionals in the $18-100K range than in the over-$100K range - a contingency-search recruiter is going to provide a greater probability of success. Don't let this general rule throw you off, however: if a firm claiming to do retained search wants your resume, send it.

Send it to anyone expressing interest, provided they meet the selection criteria in the following chapters. Know, however, that you're simply not going to be contacted or placed by a bona-fide retainer firm unless you lie in the precise crosshairs of their sight. A contingency recruiter's "scope" may view a slightly broader target.