CONSIDER WHICH ROUTE YIELDS BETTER BANG FOR YOUR COMPANY’S BUCK?

RETAINED OR ‘NICHE CONTINGENCY’.

At least a couple or three times a month (and certainly with alarming frequency during these leaner times where everyone is trolling in each other’s hunting grounds) in my 30+ years in the recruitment field, I hear from someone in my team about yet another company being convinced into handing over a wad of cash for a search that they absolutely shouldn’t do…That makes me pause and shake my head about how little companies still understand about how the search field really works. And I certainly don’t say that in a pergorative way at all. I mean it as a bit of a poke at some of my peers who manage to cajole companies into believing that parting with cash up front in a search is somehow going to give them better candidates and better results. 

So as I sit here at the end of a long week after all my staff have gone home, I think it’s a good time to tackle (well give you my opinion anyway) an important misconception; a time waster and what I consider a bit of a money grab on the part of some recruiters of those organisations who are looking to hire executives (Senior Managers but mainly Directors and VP’s I mean) in the Supply Chain Management, Strategic Sourcing/Procurement, Logistics & Retail.

Let me first say that I have a great deal of respect for First Class Retained Search Firms. I think there is an important need for what they do and they are certainly worth their weight in gold for very high level searches for senior level executives at the senior VP, President, C level or Board positions. Typically Retained firms work with roles where candidates earn 300K and above in base compensation. Their value is immense for their high level of confidentiality in very delicate situations which require much strategy and global research in identifying a very narrow group of talent often within a client’s competitor or competitors. The intention of a retained fee is exactly for these situations and is certainly well worth it because there are a lot of resources at work and the Search firm is a key component in the hire.

The Retained firm typically handles fewer searches because the research is intense, the stakes are higher (and the fees are big) and the searches require a team and the time commitment to meet the milestones and close the search which can be six to eight months.  

Retained searches for mid level roles such as Directors or Senior Managers have often been proven to end in disaster. For starters, who has time to wait for four to six months to put a Director in place when a company needs them now. That requires partnering with a niche firm which can immediately connect into a network where they are established.

And this isn’t just my opinion. Just Google this topic and you can read articles on this topic which demonstrate that Retainer firms are not as nimble and as responsive for mid management level roles as they are not as focused on relationships with candidates as they are with their clients.  Their focus is on the specific roles as they get retained not on the network of goodwill of referrals and contacts network which, working with the right Contingency firm, can deliver a shortlist of Executive candidates in one to two weeks rather than months. And all of this without having any money change hands. Neat and risk free for the customer. And efficient because the Contingency firm wants to get paid but will only do so when they achieve the result..

But here’s what happens again and again.  Companies get talked into paying an upfront Retainer fee (interestingly enough usually not by one of the big established Retainer firms – beware of the smaller up and comer Retainer types) for a search which isn’t really the right model for a retainer situation – that is for example, a Director of Supply Chain or a Director of Logistics. The company has been talked into believing that somehow they are going to get a better something by going this route – which requires the client make a financial and exclusive time commitment to one firm (that’s a big mistake because competition is healthy) which is open ended where the search often quickly gets bogged down because the search firm already has a portion of its money and the sense of urgency gets lost. Contingency firms, and a niche specialist at that, live for their network and their tenacity works in favour of the customer to get the result quickly and efficiently.

Contingency firms work very hard to “earn what they eat” and at that sweet spot – Directors/VP level and the like there is usually a huge strength if the firm are strong relationship builders and are very well known within the sector being recruited for. They know  exactly where the talent is and are geared to be responsive very very quickly. Because they know they don’t get paid unless they find the client someone for the role. It works in juxtaposition to the Retained model…. Regrettably, some recruiters have convinced some organisations that there is a certain cache, somehow a better level of service, a better level of candidate associated with a Retainer fee and a Retainer firm for a Director role. Let me dispel that misconception right now. That is just a sales ruse.

As much as we hear that Director and Senior Manager Roles in SCM have hit the Retainer circuit, we also hear the unfortunate stories about the upfront fees which were paid for no results. Companies who parted with cash only to turn to a niche Contingency firm like Argentus to mine the talent in their specialty and where we are so well networked.

That’s really rather sad but true. So next time your company is tempted to pick up and choose a Retainer firm (often a generalist) for a role that can be handled by a contingency specialist within a niche that is critical to that position (Logistics, Supply Chain Category Management etc). DON”T. There are way better options

 Over and Out

Bronwen