Hiring sales talent is not easy. According to Gartner, 78% of Chief Sales Officers (CSOs) reported difficulty in attracting superior sales talent for open positions.
You want more than a general idea of the fees charged by contingent or retained recruiting firms. Otherwise, you could end up with a partner who taxes your internal resources (time, financial or both) without delivering the hire.
This article lays out exactly what you need to know about each model and a third option that combines the best features of the contingent and retained models to create a talent acquisition service that protects your revenue and resources.
(Or, if we’ve piqued your interest with the third option, skip ahead to discover what it is and how it works.)
What is Contingent Sales Recruiting?
Contingent sales recruitment is a staffing solution that provides companies with a high volume of candidates, typically, very quickly.
How does contingent recruiting work?
Here’s what would happen if you chose to work with contingent recruiters:
1. Contact a contingent recruiting company
In your initial outreach, you send over a job description.
2. Agree on the contingency recruiting fees
Contingent recruiters are only paid if you hire someone and you agree on the fee before they start working.
3. Recruiters find active candidates who match your job description
Active candidates are people currently looking for a new opportunity. Contingent recruiters typically have a database of job seekers. Your recruiter reaches out to these candidates to see if they are interested in your position.
4. Applicants are sent to you for review
Candidates who agree to move forward are sent to you. It is your responsibility to review resumes, set up interviews and evaluate all candidates.
5. You may or may not hire
If you do not like any of the candidates you review and interview, you do not have to extend an offer. Since they have not been paid, your recruiter may not send over any other applicants.
What are contingency recruiting fees?
Contingent recruiters are only paid if you hire one of their candidates. (This is why you hear “no win, no fee” used to describe this model.)
Pros and cons of working with contingent recruiters
Contingent recruiters work quickly …
Your recruiter wants to be paid for a successful placement and they often rapidly send applications for review. If you have a very urgent hiring need, this can work out in your favor if the recruiter takes time to match resumes to your job description.
… but not all contingent recruiters diligently review applicants
As a result, you can end up with an inbox flooded with resumes. Not all will be fully qualified for your position, and it will take a considerable time investment to determine who you should and should not interview.
It’s not financially risky for your company …
Organizations like the contingent model because it relieves financial pressure. They do not pay unless they hire.
… but your recruiter knows this, too.
If the process takes too long, or they sense you are not satisfied with the candidates, they start working on other placements. A higher-paying opportunity can also divert your recruiter’s attention.
What is Retained Sales Recruitment?
Retained recruiting requires an upfront fee. It’s frequently used to find executive talent.
How does retained recruitment work?
Here’s what would happen if you chose to work with retained recruiters:
Pay your first fee installment to secure services
Retained recruiters typically charge 30-35% of your hire’s first-year salary. You pay this in installments, typically, 3. Your exact fee and payment structure will depend on the agency you work with.
You and the recruiter set parameters for the search
During a meeting, the recruiter gathers information about the role, and together, you work out the strategy for finding candidates. For instance, you may decide where the job could be posted or tell the recruiter to prioritize culture fit over skillset.
Recruiter sources candidates for your position
Candidates may be passive or active. Depending on the position, your recruiter may tap into a database, post on a job search site or use their network.
You interview from a shortlist of candidates
After some initial vetting, the recruiter sends you a short list of candidates and facilitates scheduling interviews on your behalf.
You hire (hopefully)
While the final payment installment should motivate your recruiter to continue working until you hire, they may stop after delivering a set number of candidates. If you do not like your options, and the contract does not require them to keep searching, you may end up without a hire.
What are retained recruiting fees?
Retained recruiters work exclusively on your job search and require an upfront fee before they start. This is typically one-third of the total cost of working with a retained recruiter, based on the hire’s first-year salary. The second comes part way through the search, and the last after you have hired.
Fees typically range from 30 to 35% of your hire’s first-year salary. Other fees may be built in, depending on your contract.
Pros and cons of working with retained recruiters
You get a dedicated resource …
You don’t need to worry your recruiter will prioritize other clients; they are working solely on your job search.
… but the fees are too high for most businesses
Few businesses can afford this model. It’s too expensive for entry-level jobs, and since fees are based on the hire’s salary, it can be prohibitively costly to fill executive-level positions this way.
Candidate pool is higher quality
You will not be flooded with resumes like you are in the contingency model. Retained recruiters are more selective in their search and do at least some preliminary vetting before sending you candidates to review.
… however. they may be coached
Unfortunately, some retained recruiters will coach candidates ahead of the interview. This can happen because the recruiter wants to increase the likelihood of you hiring and paying the final fee installment.
Why ProActivate Created a New Sales Recruiting Model
As an executive and leader at traditional recruiting companies, ProActivate founder Jamie Crosbie experienced both models first-hand and was not satisfied.
Crosbie wanted a new model that protected revenue for sales leaders by finding the best talent available, but without charging high fees.
How does ProActivate’s recruiting model work?
1. We collaborate on your ideal candidate profile
In place of a job description, you collaborate with our Talent Managers to create an ideal candidate profile.
2. Talent managers source passive candidates
Using your ideal candidate profile, your Talent Manager searches for working and winning talent who meets your criteria.
We focus on passive candidates because their current success is a strong indicator that they will thrive in your position, too.
3. We conduct in-depth skillset and mindset evaluations
This is not a cursory glance at resumes or a brief interview. Your Talent Manager will spend 1.5 hours with each candidate. During the evaluation, here are a few of the criteria your Talent Manager assesses:
- Past successes
- Sales process, approach and strategies
- Willingness to help colleagues
- Receptiveness to feedback
4. You review top-notch applicants
After the evaluations are completed, you receive the top 2-3 candidates to review and determine your next steps.
5. You hire
You are guaranteed the hire when you work with us. Your Talent Manager will continue to find and vet candidates until you hire your next employee.
Why does ProActivate use a flat fee structure?
Every business should have access to top talent. A flat fee makes sourcing passive candidates affordable for every position.
Pros and cons of working with ProActivate
The flat fee is less than the retained model …
Every business should have access to the best talent for every position, at an affordable rate.
But it still is an upfront cost
We understand why businesses are cautious about spending money before seeing or hiring candidates. To assuage concerns, we guarantee the hire. Meaning we do not stop working until your open position is filled.
Access talent you would not usually find …
Like in the retained model, we source passive candidates and send you applicants who are not actively looking for a position. However, your Talent Manager is not waiting on the final fee installment. This removes any incentive to coach a candidate. We do not offer guidance to applicants or provide tips before they speak with you.
But you may not hire as quickly
People like how fast the contingent model can be. While we work quickly to fill your position, we will never sacrifice quality. As a result, it may take extra time to find the right candidates. The process saves time and money in the long run because you ultimately hire an A-player who is more likely to contribute positively to your organization.
Fill Sales Roles with ProActivate and Get the Best of Both Worlds
Our sales recruiting model combines the affordability of contingent recruiting with the high-quality candidates found in the retained model. Since we keep working until you hire, you do not have to worry about lost time or investment.
Plus, we work with clients based on their internal resources and current team. If you have in-house recruiters, we’ll support and supplement their efforts.
Make your next hire with ProActivate and add an A-Player to your sales team.