When you decide to hire and select a recruitment firm an important factor in choosing is often the model of cooperation the firm is working with. Meaning: when do you as a client have to pay for the provided services. It’s often the first question when we’re contacted to present our offers. By asking just this one question the client is comparing only one type of agency and usually only one way of providing recruitment services. In this article Ewa Adamczyk from NAJ International, IESF Poland, shares her vision: “Sometimes clients are not aware that recruitment can be done better and more effectively if the model is well matched to the specific problem and recruitment need of the company. It is like walking down the same road all the time and expecting different views.”
There are several models of cooperation with recruitment agencies on the market. Also, within IESF there are different options, but always with one non-negotiable factor: all IESF partners only work on exclusive assignments on a retained basis. But even within this spectrum there are several possibilities which are good to be aware of. Let’s not forget that quality really matters, sometimes it requires a little longer time, more experienced specialist. Therefore, during meetings with the agency do not be afraid to thoroughly analyze the valuation of services, or the stages of the recruitment process.
Success fee model
Which is the payment of 100% of the agency’s fee at the end of the recruitment process. This is a model that does not require prepayment to the agency. This model encourages very fast presentation of candidates by the agency because the agency wants to receive payment for the work done as soon as possible. Usually, it is the speed of presentation of the candidate’s CV that is a magnet for the client. It often happens in this model that the agency quickly finds the most responsive candidate and presents his CV to the Client. The agency waits a shorter time for responses from less active, sometimes better candidates because “time is money”. This model often assumes that the project is carried out by a young consultant who must efficiently send to the client in the fastest possible time cv candidates.
It would seem like the perfect solution – no risk to the company – “I’ll pay when I find a good person”. But are you sure? What if the project turns out to be difficult at some stage because the candidates, for example, do not want to accept the client’s offer, do not respond to the consultant’s contacts, or maybe they are not on LinkedIn? Will the agency paid for the hired candidate be able to persistently work on the project without considering its own liquidity? Or will the project be left in the pipeline in favor of another project that just came in and that is easier, faster to close? Agencies, just like clients’ companies, have their own budgets and keep records of which project can be closed as soon as possible – they also calculate the risk. Consultants are accounted for “placements” in each month. This model of cooperation often justifies the approach: “I haven’t received payment, so my commitment is time-limited”, or “if it works, it works”. There will, of course, be recruiters for whom this model fits very well (large group of responsive candidates) and there will be those for whom it is not recommended.
Mixed model (semi retainer)
In a mixed model agencies usually ask for a prepayment around 10-40% of the project value and the remaining amount payable at the end of the project. Some people also call this model “success fee with prepayment”. This model gives the agency more confidence that the client will not withdraw from the recruitment and allows them to work on the project more persistently.
Most IESF partners normally work with this model for an extensive and exclusive search. The payment schedule is usually divided into 3 (but you can also find solutions with 4) installments. The remuneration is paid to the agency after completing the following stages in the process: after starting the recruitment process, after presenting the candidates and after closing the process and signing a final candidate.
Are usually applied in more difficult projects, where the risk of a longer search is greater, where an experienced Consultant is needed or where we need to have a guarantee that the project will be closed within a specified time. Where we cannot risk frustrating the agency with difficulties in finding a suitable candidate profile.
The last two models of working with a recruitment agency tend to attract more experienced consultants. They are willing to undertake recruitment where their knowledge of many recruitment processes, sometimes business and industry knowledge is useful, and they are credible in the marketplace Typically, these agencies also have a proven track record The models of cooperation with installments are also models in which, in case of complaints or subsequent orders, the clients usually go to the same specialist, because consultants work at the agencies for a long and stable time. These models also tend to offer a longer guarantee on the candidate than in the success fee model – this is often due to a more thorough assessment of the candidate by the consultant, who has assessed the candidate so well that he is not afraid of the risk that the candidate will not fit into the client’s company culture.
Last important tip
Even if the recruitment agency works on a prepaid or retainer model, it is always open to negotiate the fee amount. It may happen that the final price of services in the retainer or semi retainer model will be lower than the agency’s price in the success fee model, where the risk that the project will not be closed on both sides is higher, so it is also priced higher. To check whether the agency’s price for a success fee is lower than in the installment models, it is worth asking this first question: ‘What does the recruitment process include?’ Asking about the content of the recruitment process is especially important because it allows you to compare similar products (services). It gives an opportunity to consciously choose the elements you’re searching and willing to pay for. Sometimes an element of the process will be so important that it will determine the choice of a company. Each new cooperation or recruitment process is individual and needs its own way of choosing, so it will create its own history. Happy hunting and good choices.