Organizations don’t shy away from outsourcing recruitment to agencies; one of the most common forms of outsourced recruitment is contingency recruiting. You might have heard the term and come across it before, and here is what it means.
Contingency recruiting is when a company hires a recruiting agency or individual recruiter to headhunt potential candidates for a position without agreeing on upfront payment. In this case, the payment of the agency or individual depends on the company hiring one of their submitted candidates, hence the use of the word “contingent” or “contingency”.
The process is simple. The agency or recruiter is made aware of the opening and invited to submit reasonable candidates to fill it. However, they only get paid if any of their candidates secure the job. The one caveat is that the hiring company can contract many other agencies to join in the headhunting process. As such, an agency or recruiter offering this service could compete with individual applicants, a company’s recruiting officer, and other recruiting agencies. It’s a competitive gig.
Reduced cost of hiring. Companies only pay the recruiter if a candidate of theirs gets the job. Thus, they save money if an agency cannot find a suitable candidate. In addition, a company that recruits this way could do away with an in-house recruitment team.
Extra motivation. These recruiters work extra hard to find the best candidates because their pay is contingent on their candidate getting hired. Companies can use this extra motivation to their advantage by hiring multiple contingency recruitment agencies to cover ground faster and increase the number of candidates they receive.
Lack of quality recruitment. Racing against other agencies and recruiters can encourage agencies to submit an extensive list of candidates rather than doing the groundwork and finding fewer, more qualified candidates. Such long lists could, in turn, translate into a lot of work for hiring managers.
Lack of guarantees. There is no guarantee that companies would get an ideal candidate from this type of recruitment. Hence, it could be a big waste of time on their part.