Retained Recruiting Agreement

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When you have to fill a job opening ASAP, it may be worth putting a recruiter on retainer. Recruiters often work on contingency, getting paid only if they find a new employee. If you and a recruiter sign a retention agreement, you guarantee to pay her in return for her making your needs a top priority. Businesses usually sign retainer agreements when their need for a new hire is urgent.

Pros and Cons

Paying the recruiter some of the fee up front has an obvious disadvantage: If the recruiter doesn't deliver, the money's wasted. Most retained recruiting agreements also commit you to using one recruiter exclusively. The benefit of the agreement is that a good recruiter can afford to devote more time and effort to the search than if she were working on a contingent basis. If she turns up some suitable candidates, you get first crack at them, even if other companies are looking to fill the same position.

Talking Agreement Terms

Retainer agreements typically set the recruiter's fee at a third of the salary for the open position, according to Slone Partners, and usually break down the payment into three installments: one when the agreement is signed, one a month later and the last when the job opening is filled. The fee for contingency recruiting runs 15 to 25 percent. A retainer agreement may require the recruiter to meet various deadlines for finding and delivering suitable candidates.

When to Retain

Working under a retainer agreement costs you money, even if the recruiter fails. It also commits you to using only the one recruiter. It's important to have absolute confidence in the recruiter's abilities before you sign. Ask for references, contact the references and talk to the specific headhunter assigned to your contract. Most companies go with a retained recruiter only for the most important vacancies, such as holes at the top executive level.

Alternatives

There are alternatives that fall between pure contingency and a retainer agreement. An exclusive contingency agreement guarantees you use the recruiter exclusively for, say, the next 30 to 90 days. After that, other recruiters come in. There's no upfront fee. An engagement fee agreement is exclusive and requires an upfront payment. Most of the money, though, is contingent on you hiring one of the recruiter's candidates. If it's not a top-priority search, one of these alternatives may work better than a retainer.

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