+++ Recruiter Health Warning +++
Posted by Mitch on 4th February 2019
Around 7-8 years ago, which was when I first started talking about how retained recruitment was the way forward for proper recruiters, most people thought I was an idiot.
Now, retained recruitment seems to be becoming more mainstream. So much so, that people who’ve never sold a retainer or worked a retained assignment are now advising recruiters how to do it.
For some, part of that advice includes the recruiter only charging the client £500 as the retained portion of the fee.
So let’s get straight to it…
Only charging £500 as a retainer is a really stupid idea.
The primary purpose of a client paying part of the fee upfront is to keep both parties honest and committed to the process. It stops things like the client responding to another agency that might randomly pitch them a candidate.
What doesn’t stop that happening is the client having to add £500 to the final fee – because let’s be honest, £500 in recruitment fee terms is nothing. In fact, the other agency would almost certainly reduce their easily-earned fee by £500 just so the client can save face.
It also doesn’t stop the client looking at people internally, employee referrals and anyone else they might know via their social media feeds.
So, as a preserver of trust and/or shared commitment, it’s an absolute non-starter.
Real client commitment looks something like 20-30% of the projected fee.
I think the problem the ‘£500 retainer’ idea is trying to solve is the recruiter being intimidated by asking for somewhere between £2-7K. Part of that intimidation is caused by them thinking that if they take that kind of money upfront, they have to fill the job.
That kind of pressure can be intimidating – especially for recruiters who don’t know how to do anything different to what they would normally do when working on contingency. Which means, deep down, that they know they’re really just selling retained, but only delivering a contingency service.
Here are a few recruitment activities that look very different when done on retained:
- The depth of the initial brief.
- The quality of the job marketing.
- The candidate insights offered in the shortlist.
If you don’t know what to do to effect these 3 key areas, chances are you’re going to be having more clients asking for their money back.
And if you’re only comfortable asking for £500 instead of £5,000, chances are you’re not the kind of recruiter who knows enough about recruitment to know what needs to be done to ensure a job is defintely going to be filled when retained – as opposed to maybe filled when worked on contingency.
The quickest way to lose your existing contingency clients is to have them pay money upfront and then not fill those jobs.
And given that, on average, perm contingency recruiters fill between 20-25% of all the jobs they ever work on, this means that each time you sell a £500 retainer, you’re probably increasing the odds of you losing that client by up to 75%.
+++ End Of Recruiter Health Warning +++