What does ‘Retained Recruitment’ really mean?
Most recruiters like the idea, in theory, of retained recruitment; being retained by a client.
For the avoidance of doubt, a retainer is an amount of money that is paid/received in advance of work done, to secure the commitment of both the client and the supplier.
Why do recruiters like retainers?
Recruiters generally like the idea of being retained because, when it happens for the first time, it signals the beginning of that part of their career where they stop being a hopeful wannabe and start being a pro. It’s a bit like losing your virginity. After your first time, more people start to find you attractive.
I speak to and meet a lot of agency recruiters and recruitment agency directors as part of an extra-curricular project I’ve embarked on to train them how to convert some of their clients to the retained model.
Nearly all recruiters would like to win less of their business on contingency and more of it on retained – but many don’t really know why they’d like that to happen. Quite a few seem to like the fact that it means their fee income becomes more forecastable.
Surprisingly, few see retained recruitment as a way to double their fee income, however many do see it as a way to generate bigger fees – but primarily by working on jobs with higher salaries.
Which brings me to the question;
What does Retained Recruitment really mean?
The payment of retainers is still widely associated with executive search.
It’s still assumed to involve the payment of the recruitment fee in 3 stages (at the start, on delivery of the shortlist and when the offer is accepted) and to only really be applicable for those hard-to-fill roles where the target candidate audiences are relatively small.
The thing is, this is how things were before the Internet came along. Before LinkedIn, job boards and social media democratised the availability of candidate information.
And before the advent of the twenty-something “International Head Hunter”.
But despite the recruiting landscape changing so much in the past 15 years, most people still see the paying of retainers in these old-fashioned terms.
A consequence of this is the lines between headhunting and contingency recruitment have been blurred by this wider availability and easier access to candidate data.
What were once considered hard-to-fill roles are now the staple diet of large numbers of niche agency recruiters – nearly all of whom will promise to find candidates on the success-only business model. The downside to this is the fact that 80% of the time the agency will not fill the job they take on.
From the client’s perspective, they’re basically buying a recruitment raffle ticket with each agency they give permission to work on a vacancy.
So, if retained recruitment no longer means senior search with staged payments, what does it mean in todays very different trading conditions?
Its new meaning can be summarised in just two words;
Guaranteed Delivery.
Retained Recruitment means Guaranteed Delivery
Where contingency recruitment has moved into the traditional Executive Search Consultant’s territory by becoming niche, so too has the paying of retainers moved in the opposite direction to invade the traditional Agency Recruiter’s territory.
Now some companies are seeing the benefit of them paying money upfront in exchange for the guarantee that their vacancy will be filled.
If you need proof that this is true, just look around you at all the companies that have invested a hell of a lot of money in building internal recruitment functions. This is simply a demonstration of their willingness to invest time and money upfront for a superior level of service and commitment.
How much should a retainer payment be?
It just needs to be a payment of between 15-30% of the projected fee, with the balance being paid on successful completion. In other words, enough money to keep both parties honest and committed to the process.
But be careful. Once you take money upfront, there has to actually be a successful completion, so make sure the job is actually fillable.
As an example, the lowest salary I have taken a retainer on was for an Accounts Assistant position paying £23K. The retainer was just under £1K, the job was filled inside a month and I only had to run one job advert. The client’s reason for paying me this way was so that he didn’t have to deal with 5 or 6 agencies all pitching 10 inappropriate candidates to secure 1 or 2 interviews.
He also paid me a retainer because I was the only recruiter who asked for it and because I was able to show him why it was in his best interests.
I’ve also worked on a sales role paying 25K plus commission with a very small company who paid me 30% of the fee upfront.
If you still think a retainer is what happens only when a job is considered difficult to fill, think again.
Companies are crying-out for real recruiters to sell them guaranteed delivery.
But you’ll need to start writing more job adverts, not job descriptions, if you want to make Retained Recruitment worth your while.
Try starting with one of our job advertising copywriting courses.
