Contingency Recruiters and the Job Seeker: Some Caveats

There are a few different fee structures that recruitment agencies utilize upon staffing job seekers in the United States.

For instance, many recruiting firms will work on what is called a contingency recruiting fee. This means that the recruitment firm is paid upon placing the job candidate. This is as opposed to a retained fee, which signifies that the staffing agency was paid up front and that the hiring client is typically only working with them. In the case of a retained search, the staffing agency usually has what is called “exclusivity.”

As a job applicant, what are the benefits or drawbacks of working with a staffing agency that is doing contingency fees?

As a job seeker, it is more advantageous to work with a company that has a retained contract, however not many organizations give staffing firms retainer contracts because many recruiters are willing to do contingency. Many hiring managers go into the recruiting process assuming the great number of contingency firms mitigates the need for retained search services. Whether such hiring managers make sound assumptions is debatable.

The problem with contingency contracts is that sometimes the employer is not too serious about hiring, and see no problem with scuppering the tried and true axiom of "less is more." The hiring manager might be getting resumes from all different types of staffing agencies, thus giving more competition to the job seeker. Contingency contracts also result in longer interviewing cycles, because new candidates are introduced into the mix all the time.

This does not mean that you cannot get a great job through contingency recruiting firm, though you should be aware of what may be going on behind the scenes of your interviewing process. If you, as a job applicant feel that the employer is interviewing more than seven or eight people, cut your losses and move on.

If your natural question is, “Well I really like this particular job why would it cut my losses?” The answer, to be technical, is “cognitive dissonance.” When an employer has too many options, it has an opposite effect than you might assume. Having too many choices leads even the most decisive among us to second-guess ourselves.

This is not a hard and fast rule, but it's pretty dependable. Another thing the job seeker wants to be aware of is that when it comes to contract negotiation, they should request that a contingency recruiter stay out of the negotiations (unless that recruiter is unusually qualified in the job seeker's field) . That recruiter may try to increase the base salary that you get paid simply for an increased fee: contingency is paid by your prospective employer, based on a percentage of your base salary (or sometimes your entire compensation package).
In the end, the job seeker should just be aware of how to properly work with contingency recruiters, as knowing how the recruiter and your potential employer think is crucial.