If you spend any amount of time talking to search firms, you will stumble upon what looks like a class war between contingency and retainer shops. Here’s how not to let the battle trip you up and put your next job search at risk.
Unlike contingency consultants, retainer firms receive a portion of their fee no matter what the outcome of a search. They consider themselves an extension of the client firm and may seem to look down their noses at their scrappier (and more numerous) contingency kin as something like ambulance chasers representing the hoi polloi.
‘Contingency firms have very loose relationships with a number of institutions that may hire job seekers,’ says Allan R. Starkie, a partner at New York-based executive search firm Knightsbridge Advisors, whose clients include UBS, Legg Mason and Commerce Bank. ‘They send out resumes like crazy to any company they think might be pertinent.’
Contingency firms offer their own spin on the matter. Susan Teeman, president of contingency-search firm Teeman Perley Gilmartin, whose past clients have included Goldman Sachs, Bear Stearns, and Morgan Stanley, says, ‘I’ve followed on the heels of many retained search firms that don’t fill a search. I know enough people on Wall Street that it’s not necessary to pay me up front.’
Why should you care? Because how recruiters collect their fee affects both their accessibility and your chance of landing the job at hand.
Contingency Shops Play By the Numbers
Contingency firms, whose fees usually range from 25-35% of a successful candidate placement’s first-year compensation, differ from retained-search shops in certain significant respects besides fee arrangements.
More often than not, contingency firms are hired on a non-exclusive basis. Competition with other firms can turn the candidate selection process into a numbers game: whoever gets the most resumes to the client first has the best chance of earning the fee. For this reason, contingency recruiters tend to be more receptive to receiving unsolicited resumes and may even bypass an introductory interview in their eagerness to forward your details.
If you’re seeking the broadest possible audience, contingency firms may be the way to go. But in their dash to the finish line, contingency shops don’t always seek permission to forward your resume. You may wind up overexposed and desperate looking-or even dropped by a potential employer worried about paying two fees after receiving your resume from two different recruiters.
Or, if your resume lands on the desk of a company you’re already networked into-a company enticed by the idea of hiring you without a fee-you could find yourself stricken from the hot list altogether.
Still, many (good) people find many (good) jobs through many (good and bad) contingency firms, and you’ll need to balance the risk of overexposure against the opportunity at hand and how fast you want to make a move.
Inside the aristocracy
Retained search firms operate more deliberately. They’re usually hired exclusively by a client firm for a guaranteed fee of around $50,000-$70,000, payable whether or not a hire is made, plus a hefty percentage of first-year’s compensation.
Unlike contingency firms, retained search firms only work with senior-level candidates whose earnings start at around $150,000-$250,000 per year and ascend into the multi-millions. Retained firms will turn a laser-like focus on you once you penetrate their inner sanctum. Says retained search consultant Starkie, ‘It’s almost as if you’re meeting with the person who’s going to give you the job.’
While that may sound good, you have to get a meeting first. Retained consultants tend to consider only candidates identified through their own research or referred to them by trusted intermediaries. Prospective candidates are winnowed to a small handful of perhaps five, and if you make the list, your odds of winning the position are substantial. To help the client firm decide, elaborate dossiers on each candidate are prepared.
Still, even if you’re in the position to choose among retained and contingency firms, the decision isn’t always clear. Rod Williams, a consultant with outplacement firm Lee Hecht Harrison, says, ‘While retained firms are able to put you on a shortlist of candidates, contingency firms can give you more exposure.’
Whomever you work with, one rule remains the same: Cultivate a long-lasting, give-and-take relationship with your recruiter and you may find the best prizes come to those who wait.