Recruiting Engagements 101: Understanding the Vendor Landscape
Not sure if you should hire a contingency recruiter, RPO, or executive search firm? Here’s everything you need to know about the landscape of recruiting firms.
You identified the gaps on your team. You budgeted to hire a recruiter to support you on the search. You started asking for referrals…only to discover the landscape of recruiters is vast and full of jargon. Should you hire a recruiter on contingency or do you need an RPO to embed with your team? Are you not even sure what this lingo means?
Before joining Primary as Director of Talent, I spent eight years as a tech recruiter. I’m now building out Primary’s embedded recruiting offering, through which we provide companies in our portfolio support that ranges from building a talent acquisition pipeline to sourcing candidates and managing the interview process.
Before you hire a recruiter, it’s important to understand the landscape. There are three main types of recruiter engagements: contingency recruiters, RPOs, and executive search firms. The type of engagement you hire depends on a few variables, including the role you’re hiring for, your company size, and your budget.
Engaging a contingency recruiter
Contingency recruiters work on your search for free and get paid 20-30% of the base salary if and when they fill the search. Typically, terms are a 30-day payable with a 90-day guarantee, which means you are invoiced one month after the hire’s first day and can receive a prorated or full refund if they leave within their first three months depending on what you agree to in the contract.
You’ll find some really wonderful, high-performing recruiters working on contingency, especially for individual contributor (IC) searches. Contingency recruiters often find a niche and deeply specialize in a way that allows them to move quickly. Because of the pay structure, they’re motivated to choose the best, most efficient searches—which also means that, if a client isn’t being a good partner, they can walk away.
You can make your search more compelling by being coachable and responding to their feedback about your process. Make sure you provide them with all necessary information, avoid being too picky, move candidates efficiently through your process, and recognize the gaps in your own company that might make your opportunity harder to sell, like being an early stage startup with no HR benefits. You can also consider offering a portion of the fee upfront to garner more commitment.
The timeline varies by position but is often two to six weeks for an IC. A specialized recruiter with a broad network can hit the ground running and start showing you candidates more quickly. Some of the timing also depends on how well you’re running your process and how compelling your company and position are.
Engaging an RPO
RPOs aka “Recruitment Process Outsourcing” are contract recruiters in residence who can own your entire process, from sourcing to managing the candidate experience to extending offers. An RPO or embedded recruiter is essentially a member of your team, set up to use your applicant tracking system (ATS) and post job descriptions. They usually work full-time at one company for increments of three to six months and are paid monthly at an hourly rate.
RPOs are a great option if you’re hiring in bulk and need someone to help facilitate interviews as they can drop in to provide dedicated support wherever you need it the most. If you’re building a recruiting function for the first time, they can also help you understand what tools to use and metrics to track.
To keep embedded recruiters from becoming too expensive, make sure to set a clear scope of work—and then respect those boundaries. I often see resource-strapped startups assigning their RPO admin work, like organizing the database, but then becoming frustrated when they don’t deliver hiring results quickly enough. Providing a thorough job packet and clear candidate profile can also help this person ramp more quickly.
Service-level agreements (SLAs) are required for RPO engagements to lay out the scope and expectations of the work. While specific to RPOs, SLAs provide helpful guidelines for any recruiter relationship. At Primary, we have several rules in place for all our recruiting engagements:
- Clear ownership of work: The recruiter owns the search, including sourcing, recruiting, candidate and interview management, and offering guidance for the role.
- Timely communications: The hiring manager must respond to the recruiter with feedback and next steps within 24 to 48 hours of receipt of any profile. They have 15 to 20 days from the first interview to either extend an offer or cut the candidate loose.
- Regular meetings: The recruiter and hiring manager meet at least once weekly for updates and debriefs on the pipeline and candidates.
- Clear metrics and expectations: The hiring manager establishes all KPIs and expectations upfront so the recruiter understands what they’ll be evaluated on. The recruiter sends weekly progress reports.
Engaging an executive search firm
Executive search firms are available to recruit for positions of VP and above. These firms typically charge a base salary, paid half upfront and half upon completion. Some agencies will also take a percentage of the bonus, especially for sales roles, or equity in the company.
Founders are often apprehensive about working with an executive search firm because of the cost, but I encourage you to think of this as an investment into your most valuable asset, your leadership team.
Some general advice for hiring an executive search firm:
- Lean on good referrals.
- Look for both specialization in your industry and recent experience recruiting for a similar search.
- Plan ahead. Get in touch with the firm early, provide them ample time to ramp, and set clear expectations. The executive search cycle can take a quarter or two, so make sure you plan accordingly.
- Vet your firm and get transparency around whether you’ll work with the senior recruiter you interview or a junior recruiter on the team, and how many other searches they’re currently working on.
- Set clear expectations around metrics, check-ins, and results.
One piece of advice I’ve heard from top founders: Don’t be afraid to walk away if the search isn’t working. Give a well-vetted, experienced recruiter the benefit of the doubt if progress seems slow initially, but you can reevaluate the search if you’re not seeing any results after 30 to 60 days. Though you’ll unfortunately lose a significant sum of money, founders who’ve been in this position say you’re better off cutting your losses and quickly shifting to a new search than wasting valuable time.
No matter which route you decide to take I encourage you to learn from your recruiting partner on how they approach networking, building relationships, and getting potential candidates excited about your business. Time and time again we see the founders that put their heart into getting hiring right end up excelling in team growth, building dynamic culture, and hitting their goals as a business.