Our industry adopts a number of varied solutions in order to solve a client’s recruitment needs, the most common being contingent and retained search, amongst others.
A popular comment in recruitment is ‘well, it’s not rocket science’. It’s true, it’s not, but some hard-to-fill searches are complex and recruiters have to consider all options when proposing a solution to a client to ensure successful delivery.
Simply explained, contingent search is a model whereby the fee is only payable upon the successful execution of a mandate. If they’re not engaged on an exclusive basis, the risk sits squarely with the recruiter as they may be up against internal teams or other agencies.
Retained search is a model whereby a client pays a portion of the fee prior to the completion of the search process. The most common structure would be a third of the fee payable upon the instruction to proceed, the second third upon the successful presentation of a shortlist of candidates and the final tranche is paid on the start date of a candidate.
Is one model better than the other? Absolutely not. They are simply different recruitment solutions. It’s all about proposing the most appropriate approach for the search you’re about to undertake.
I have not forgotten a question an early recruitment mentor of mine, Tony Seager, asked me. He said, “why don’t most recruiters win retainers?” I pondered but I had no idea at that early stage. The answer was pretty simple in the end: “because they don’t ask”.
So, when should you propose a retainer over contingent? In this article, we will focus on the situations where you should propose a retainer to a client, as opposed to the usual contingent option. There has to be very solid reasons and you must be able to demonstrate to the client the clear benefits they will receive from this approach.
On the back of a failed contingent search
Can that be true? Would a client trust and retain you if you had not delivered? Yes, is the answer.
Using my existing relationship with a UAE based international tobacco company back in the day, I leveraged the work I had done with them in the Gulf in order to continue the relationship in South East Asia.
To kick things off, they asked me to identify the country managers for, if I recall correctly, Indonesia, Vietnam & Cambodia. This sounded pretty exciting. I identified so many good candidates but I couldn’t get this one to come together. We have all been there too many times. It sometimes happens, however good you may be. You put your all into closing the assignment, but things just don’t go smoothly and you’re not sure whether you should risk more time and effort with something that is looking less likely to pay off.
I had to pull out of the search so I called the client and told him. He was far from happy, but he understood and asked me what I suggested. I felt the roles could be filled, but due to the complexity of the markets, it would be extremely difficult and risky for me to dedicate much more time without some form of guaranteed payment. This converted to my first ever retained assignment.
The absolute key to winning retainers on the back of a failed search is relationship and trust. If you demonstrate that you have done everything you possibly can, the client sees less risk in paying for a retained search. This is especially true if you have a tremendous amount of goodwill and trust with the client and they want you to go out of your normal specialisation or geographic area.
If you’re happy to do the search and you know you can deliver, but the assignment attracts a significant investment in time, just ask.
Market and research mapping
A contingent recruiter is nimble and moves very fast. One of the huge advantages to practice and geographic specialisation is economy of scale. If you are an expert in your field then your response could be immediate. Speed undoubtedly is an advantage in the contingent world, and more often than not, it can be the difference between a fee or no fee.
If a client comes to you and requests that you, not only to find suitable candidates, but also requests that you do a full market map and perhaps some competitor research in the process, then you are perfectly positioned to go down the retainer route.
A Robertson Smart market strategy was to win retained business utilising market mapping. We identified a very specific industry, Equity Research in Hong Kong. for instance and simply produced organograms of all the banks in the country. Armed with this information printed, we could quickly refer to it when sitting in front of a client.
We would then use this information internally to very quickly identify the relevant candidate in a contingent situation, but if the client wanted more access to our research, then we would ask for a retainer. In the example above, we converted a contingent search discussion into a retained search assignment to identify a Head of Equity Research for a well known Dutch investment bank.
I do feel that many recruiters have little idea of just how knowledgeable they are about their specialisation and the key players that work in them. All too often, we get so absorbed in our day to day work that we don’t stop to think about how knowledgeable we actually are and how we can leverage retained fees from clients.
Confidentiality and control
Some years back, I remember a client asking us to do a 100% confidential search. We were to identify a replacement where the current incumbent had no knowledge that a search had been ordered. Not pleasant, but it happens.
In this instance, the candidate source network was very tightly knit. This meant that if we were to reach out to the candidate base and reveal the client’s name, then the current incumbent would have found out very quickly.
We discussed it internally. The potential fee was lucrative, the candidate base easily identifiable, and frankly we already knew them all. The client could not make any form of direct approach as then it would have revealed their identity very quickly.
It actually was a very easy retainer to win. We explained to the client that there has to come a point where you reveal, in complete confidence hopefully, just who you are recruiting for. Sometimes that is even in an initial screening call, or perhaps you hold it back until you have managed to set up a face to face meeting with the candidate.
Our rationale for selling the retainer was that this was a complicated assignment and the approach would significantly slow things down. We argued, successfully, that it would be better to take a step by step approach, and not dissimilar to the three stage payment model as outlined above.
The additional benefit we sold the client was control. This is a significant shift in the nature of the relationship between a client and a recruiter. A contingent recruiter carries most of the risk. Not so in a retained scenario as the client shares the risk with you. This gives the client a lot more say, a lot more control over the process and the recruiter. In this example, the client seemed to feel more comfortable gaining more control by taking some of the risk.
The most important factor
In my experience, these were the three most common ways to convert a contingent assignment into a retained one.
I do say, however, the most important factor up and above all of these situations are the trust and relationship you have built up with the client.
As you build that trust, why not simply approach the subject with the client in an appropriate manner when the situation calls for it, and just ask for it?
Won your retainer? Now it’s time to deliver to secure the remainder of the fee.
Lastly, if you’re exploring recruitment opportunities in Asia, please do not hesitate to connect with me on LinkedIn for some advice and career opportunities.