How to Transition Your Recruiting Practice from Contingency to Retained

QUESTION: I am currently working as a contract recruiting consultant on an hourly basis, but am looking to transition back to working in semi-contingency. I work on assignments with engagement fees or retained versus straight contingency. What are the best ways to identify and market to those types of companies and what are the best places to hire sources and researchers? Timothy – San Francisco, CA  

ANSWER: There are a couple questions here to tackle.  

The easy one and perhaps the question I get asked most often, is where to find a great researcher. You are already at the source where we have found our best resources which is Upwork.com. As you probably know since you have done it, you have to kiss some frogs before you find your prince or princess charming. What I always recommend doing, Tim, in that situation is hiring 4 or 5 researchers at once because it is torture trying to hire them one at a time.  

Here is exactly how I would do it. Let us say I hired three researchers. I would have a joint Skype or Zoom call and present the assignment. I want a list of 50 engineers with this type of background and go through it specifically, maybe even send each one of them a spreadsheet of what you want and put on there they are companies that would compete with companies like this and they would have titles like this. I want their name, I want their email address, and I want a phone number. Give them all 3 or 4 hours and see what they come up with. You will probably get rates anywhere from $5 to $20 an hour. So this whole project is going to cost you less than a couple hundred dollars.  

In that you might have 3 people that really just do not come to the bar and you start over again. You might have one that is kind of close or any kind of combination. I also recommend, by the way, also having more than one researcher.  That way if you have one that is really good, start to groom another one because if they get too busy or they fall off.  These are contingent workers, contingent on the quantity of the work you give them.  

On the other part of your question, there is no best type of company that pays engagement fees. The whole market is a great prospect base to sell engagement fees. Most of the companies I sold engagement fees to had never paid engagement fees on the level of positions I was recruiting on for them. We are talking positions that paid $50,000, $60,000, or $70,000 a year on the low end. They were all the ones that were used to paying 10% or 15% contingency. Actually some of those are your best prospects because companies that pay low fees and have terrible terms do not play with recruiters in this economy are probably some that are very, very frustrated.  

I am always going to convert a fraction, less than 50%, to do business my way. So when I talk about “my way” and it really, really works I mean that from the bottom of my heart.  It works on less than 50% of the people, but when it works you find and identify companies that you can do 2, 3, 4, 5, 6 placements a year with. Think about how many of those do you need to really have a substantial impact on your business.  

We really go into great depth about the process in our coaching programs because it is really about performing a great diagnostic. You want to find out what is not working and what the impact of that not working in their organization is. Then when they say, yea, I know it is a painful for us and we want to find somebody else to work with, but we have all these other recruiters that we are paying 18% to, non contingency. What I am hearing is, Mr. or Ms. Employer . .  .  (You have to be a little bit blunt sometimes) this is kind of Einstein’s definition of insanity. You want to continue to do the same thing over and over again and expect a different result. I am telling you I can get you a different result. Here is my process. Here is how we are going to uncover the talent. Here is how we can work together. That represents an investment of 20.6% of the individual’s first year base salary and a deposit of $4,000, $5,000, $6,000, or $7,000.  

Great question! Thank you for submitting it. 

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