Time to Read: 7 Minutes
Changing labor market dynamics, a lack of continuity and stability in hiring contract workers, increased legal and regulatory risks, and rising technological advancements are leading to the adoption of alternative employment models.
As organizations strive to adapt to evolving workforce needs and remain competitive, they are increasingly recognizing the limitations of contingent recruitment.
The key to successful future recruitment strategies lies in partnering with invested staffing firms that have a deep understanding of various industries and job markets and who have the necessary training and familiarity with internal company processes to work as a dedicated extension of the company’s talent acquisition team.
The Evolution of Employee Recruitment
The history of employee recruitment in the United States has evolved significantly over time. In the early years, recruiting was primarily done through personal networks, word-of-mouth, and local advertisements. As industrialization and urbanization took hold, the need for a more structured approach to recruitment emerged.
The growth of newspapers and job boards in the 19th and early 20th centuries facilitated wider reach and access to job opportunities. Then in the mid-20th century, with World War II creating major gaps in the workforce, we saw the rise of employment agencies and recruiting firms providing specialized services to match job seekers with employers.
Recruitment took off from there and thus created an entirely new job field for recruiters. Fast-forward to the end of the 20th century when we saw the dot com boom, recruiting flourished and revolutionized how candidates are discovered and selected, enabling recruiters to tap into a vast talent pool and utilize advanced tools for targeted searches.
Today, the employment and recruiting agency industry in the United States is massive—raking in a whopping $32.2bn in 2022, and is projected to grow exponentially over the next decade.
The “Big Three”: Contingent Recruitment, RPO, and Retained Search
There are three types of employee recruitment firms: RPO, contingent recruitment, and retained recruitment. All three have their advantages and disadvantages depending on an organization’s wants, needs, and goals.
1. Recruitment Process Outsourcing (RPO)
While the definition can vary depending on the source, recruitment process outsourcing is most commonly viewed as a business model in which an organization collaborates with a third-party provider to manage the majority or all aspects of the recruitment process on the organization’s behalf. In this arrangement, the recruiter serves as an extension of the company, operating for a predetermined fee. RPO firms often serve as replacements for internal Talent Acquisition teams or are engaged as fractional partners to oversee various departments’ entire recruiting and hiring process. Integrating a flat fee and guaranteed revenue within this model ensures alignment, consistency, and a predictable and cost-effective structure for both the client and the RPO provider. This model goes beyond simply sourcing candidates, involving a more comprehensive and long-term collaborative solution.
2. Contingent Recruitment
Contingent recruitment involves organizations partnering with external recruiters or recruitment agencies to assist in finding appropriate candidates for job openings. In this arrangement, recruiters are compensated exclusively upon successfully placing one of their sourced candidates with an organization. If no placement is made, the recruiter does not receive any compensation. This pay structure has earned the contingency process the nickname of “no win, no fee.”
3. Retained Search
Retained search—or retained recruiting—was previously used solely for high-level or executive searches. Nowadays, it’s become a mix of contingent recruitment and RPO recruitment, recruiting for all employment levels and types of positions. A small retainer is paid to the recruitment agency upfront with no additional financial obligations until a successful hire has been made. The retainer fee ensures that the search firm commits dedicated time and resources to conduct a thorough search process, often targeting passive candidates who may not be actively seeking new opportunities. The financial investment risk without achieving desired results remains minimal as the burden of commitment and focus is alleviated.
Contingency Recruiting: The Good
The draw for companies to hire contingent recruitment agencies all comes down to one thing: reducing risk. The ability to ensure you don’t pay for any service provided unless you get the desired results is a significant risk mitigator. By leveraging contingent recruitment agencies, organizations can avoid upfront costs associated with candidate sourcing, screening, and advertising. The pay-for-performance model reduces expenses related to candidate assessments and minimizes the time invested in the recruitment process.
Not to mention, if a company has a negative experience with the hiring process of a particular agency, they have the freedom to discontinue their collaboration without any obligation. They can swiftly terminate the relationship as quickly as it was initiated, enabling them to explore alternative options and find a more suitable recruiting partner.
Contingency recruiters also boast their ability to tap into a wide candidate pool. This sounds great on paper. What hiring manager would pass up an opportunity to dip into extensive networks and resources to quickly source candidates from various channels? However, the notion of having access to a quick and vast pool of candidates is one of the biggest misconceptions in recruiting.
The Downfall of Contingency Recruiting
A compromise in quality over quantity, thoroughness, and long-term strategic alignment between the recruiter and the client—ultimately impacting the overall success and satisfaction of the hiring process—has led to the downfall of contingent recruitment. In just the last 18 months, the demand for partnership and specialization to hire the right people is at an all-time high. Achieving results from successful hires outweighs the risk of paying a recruiter who fails to deliver a qualified candidate that results in a hire. And it’s become more apparent that the growing demand for this solution is here to stay.
A Broken Business Model
Clients are continuously frustrated and overwhelmed by the influx of contingent recruitment agencies vying for their attention, all claiming to be the best, and offering to send resumes for free. In the end, these recruiters offer nothing more than a great sales pitch that leads to unmet promises.
More and more organizations are becoming disheartened by recruiters who lack a comprehensive understanding of both the company and the open role. They are often frustrated by the lack of quality candidates, resumes that don’t align with the job description, an overwhelming number of leads, or insufficient leads, etc. The list of concerns goes on.
On top of that, contingent recruiters struggle to be invested in an organization’s business. They’re invested in the payout. Without a comprehensive understanding of a company’s organizational culture and values, recruiters struggle to identify candidates who best align for the job.
The Future of Successful Recruiting
Securing the right talent is paramount for businesses, as it is the only path to executing a successful go-to-market strategy. And as the role of recruiting evolves, the significance of selecting the right hiring agency becomes increasingly paramount. To truly tackle the frustrations clients encounter in the recruiting process and meet demands for a genuine partnership, bringing on board a retained recruiter is a serious solution to consider.
With a deep understanding of various industries and job markets and the premise that they work as an extension of a company’s team, retained recruiters prove time and time again that they understand the changing trends and best practices needed to attract the right candidates.
Retained recruiters are experts on the latest sourcing techniques, assessment methodologies, and recruitment technologies. This enables them to employ innovative approaches that improve the efficiency and effectiveness of the hiring process. Their ability to leverage data analytics, artificial intelligence, and other cutting-edge tools helps identify top talent, reduce bias, and enhance the overall quality of the candidate pool.
Blueprint’s Recruitment Strategy
We offer a comprehensive retained search offering—engraining ourselves in our partners’ organizations and becoming an integral part of the recruitment and hiring team. With a 97% candidate retention rate, our hiring methodology has a track record of delivering high-performance results for public and privately held companies across any industry. As the industry’s leading GTM recruiter, in addition to sourcing candidates, we’ve got you covered in setting up technology, updating and managing interview processes, and refining your goals for execution.
Our goal extends beyond simply finding the right individual for your organization; it encompasses comprehensive assessment and effective management to ensure a candidate’s long-term success. Our commitment remains steadfast, going well beyond the start date while making the entire process seamless and effective, so you can focus on building your business.
We firmly believe that a true partnership thrives when both parties are fully invested, demonstrating unwavering commitment and aligning their goals and desired outcomes. Retaining our services ensures everyone is not just aligned to outcomes but committed as well.
Our recruitment process is tailored to attract and find talent with the skills and behaviors needed to succeed in your organization. We assess candidate profiles accurately from the start by helping you build them. We go beyond understanding, mastering your business so we can pitch its unique value proposition as effectively as you, if not better, often increasing the flow of candidates you’d otherwise never engage.
Implementing a strategic, targeted approach that ensures success within any industry. Exceptional hires and candidate retention starts with us.
Check out our Go-To-Market Interview Guide for the top five tips to implement a diversity hiring plan.