Top Things You Should Know About Contingency Recruiting

Contingency recruiting is the best way to market your available positions. It expands your horizon and helps you reach out to the wider candidate base. Plus, it provides you with a level playing field as multiple recruiters are working for you cumulatively.

When your company experiences growth, it is but natural that you plan to go on a recruiting spree to hire fresh as well as experienced candidates for entry-level as well as higher-level positions. In general, there are two types of executive recruitment processes — contingency recruiting and retrained recruiting. However, you are not quite sure which form of recruitment to undertake.

You seek some advice from peers, and they suggest one of the options as contingency recruiting. Now, you are left pondering — what is contingency recruiting? How does it work? Let us find out some of the most important aspects of contingency recruiting.

What is a contingency recruiting?

Contingency recruiting is a type of outsourced recruiting service, wherein the recruiter gets paid only on the successful hires they do for the company.
contingency recruiting
contingency recruiting

In simple terms, the client pays the recruiting firm only when the candidate they offered for selection gets the job. It is a “no placement, no fee” kind of arrangement between the client and the contingency recruiting firm.

In contingency recruiting, the hiring process is done on a project-by-project basis, wherein the recruiter works to find as many available qualified candidates as possible in a short period, and present them to the client for recruitment. Contingency recruiting firms are not attached to one particular hiring client. They work with multiple hiring clients at the same time. Contingent recruiting firms are driven by the motivation of marketing the most number of prospective candidates to multiple hiring clients at once.

How does a contingency recruiting firm work?

The contingency recruiting firm is not involved in an exclusive agreement with the hiring company to hire candidates for that one client alone. Neither is the client bound by any agreement to seek the consultancy services only from a particular contingency recruiting firm. Therefore, the client can avail the services of many contingency recruiting firms simultaneously to achieve their hiring objectives. Similarly, the contingency firm also works for multiple clients simultaneously.

The typical workflow of a contingency firm is as follows:

  • The hiring client gives a clear description of the open position to the contingency agency.
  • The agency and the client come to a consensus on a particular fee and service period for every successful recruitment.
  • The agency then begins its sourcing by using its extensive network of databases, advertising and referrals to find the right candidate for the job position.
  • When the agency finds the right candidate, they perform the initial screening to ensure that the candidate is the best fit for the role. Once approved, they submit the candidate application to the hiring client.
  • The client or the employer will then conduct their in-house round of interviews. If the candidate succeeds in these rounds, they are selected for the job.
  • The employer makes an offer to the candidate.
  • If the candidate accepts the offer and completes a specific period of service with the company, the employer then pays the contingency agency the pre-decided fee.

Contingency recruiters may work for a specific industry to fill up skilled positions or work in multiple industries. They put in considerable time and efforts to gauge the work culture of the client to ensure they provide a skilled culture fit candidate to the client.

How are contingency recruiters paid?

The hiring client pays the contingency recruiter only when they hire the right candidate provided by the agency. It means that the services of the contingency firm are for free until their candidate accepts the client’s job offer and completes a stipulated period working for the hiring company.

Usually, clients pay at the time of hire expecting that the candidate would stay with the company for the stipulated period. However, if the candidate leaves the company before completing the stipulated period, the contingency recruiter then has to refund the fees to the client. The fee is generally a percentage amount of the first-year salary of the candidate.

When should you use contingency recruiting?

Contingency recruiting is generally used to fill up entry-level, junior and mid-senior level posts for a company. The concept of contingency recruiting is mostly about finding the most suitable candidate for the job, who may not necessarily be the best candidate.

It may be inefficient in recruiting top executive-level job roles, which require a certain degree of confidentiality and expertise, such as CEOs, Presidents, General Managers, and other executives. You can also avail contingency recruiting for roles that require highly specialised skills, which very few possess.

Usually, you can consider the use of a contingency recruiting firm in the following cases:

  • When the available job position is for entry, junior or mid-senior level roles
  • When you have many eligible candidates for the job position
  • When, as a client, you want to be involved in the process of recruitment
  • When you wish to do in-house evaluations of the candidates
  • When you don’t want your recruitment process to be confidential
  • When you have an urgent need to hire staff due to an immediate requirement

Therefore, identify your requirements in detail before partnering with a contingency recruitment firm.

Benefits of contingency recruiting

Contingency recruiting has some benefits. They are as follows:

  • The fees are less.

The fees are usually less in contingency recruiting in comparison to any other form of recruiting. Plus, you pay the recruiter only when you get a successful hire. Therefore, you are only paying once you get an established result.

The fee is generally about 25 to 30% of the annual salary for the candidate for the first year. There are no upfront payments like with retained recruiter firms. Plus, if the employee leaves the position within the stipulated time, you will get the entire amount as refund.

  • It ensures quick recruitment.

Contingency recruiters will ensure you find suitable candidates in a short period because that is where their profits lie. They know that they have not been hired exclusively in finding the right candidate, and they need to be a step ahead of the competition. Not only that, but they also need to ensure that the candidate is credible and reliable and stays with the company for the stipulated period.

Contingency recruiters have a wide database of active job seekers to tap into. Plus, they have a network of other sources and recruiters working for them, who help them find the right candidates through job advertisements, portals, job listings and social media websites. Their expansive reach ensures quick and efficient recruitment.

  • It has no contractual obligation.

Hiring clients don’t need to enter into a long-term contract with the contingency recruiters to seek their services. Contingency recruiters work on a project-by-project basis. Moreover, they take the responsibility of providing the right candidates during the hiring process. Their fees depend on them finding you the right candidate, and therefore, you don’t owe any liabilities or obligations to the recruiter.

On the other hand, you are required to enter into a long-term contract along with an upfront payment when partnering with a retainer recruiting firm.

Contingency recruiting is the best way to create a buzz in the job market about your available positions. It expands your horizon and helps you reach out to the wider candidate base. Plus, it provides you with a level playing field as multiple recruiters are working for you cumulatively, allowing you totally on to the best human resource available. Finally, it works out to be the most cost-efficient, as you only pay the recruiter on successful hire.

However, you also need to actively control the quality of candidates that are entering the pipeline. You need to have an efficient in-house selection process in place to get the best fit candidate for the job. After all, the selected candidate may be with you for the long run, and you must make sure the candidate is capable enough to become an asset for the company.


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  1. comment-author
    Manav Verma

    Knowledgeable input, great learning. Have a look at more more, it has an interesting feed. You might want to read more about similar topics

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