Mistakes to avoid when trying to hire top sales talent: #2
Great recruiters are hard to find, and we’ve all worked with too many bad ones. To better equip you in selecting recruiters, here’s some critical info for filtering:
The two most popular compensation models for recruiters are the Contingency Model and the Retained Model. There are important nuances and distinctions here. A Contingency recruiter earns a fee only when the organization hires someone. A Retained search consultant, on the other hand, is paid in advance to conduct a search that usually, but not always, results in a hire. Most businesses initially want the Contingency model because it sounds lower risk, but it’s often a bust.
This is because from the Contingency recruiter’s perspective, they’re competing- possibly even with your internal HR dept- for the quickest paying win. No hire, no fee. So most use a shotgun approach and splatter the posting in as many places- typically online job boards- as possible. And there’s a conflict of interest: they’re likely sourcing many similar roles (i.e. Farmers and Hunters) for many similar companies. Since the fee is usually a percentage of the first year’s total comp for the role they are trying to fill…you can see what happens. Simply put, if you’re not at the top end of comp for this type of role in your industry / geography, then you will not get the top end of candidates sent to you.
In contrast to the Contingency recruiter, the Retained search consultant is typically granted exclusivity to fill this role. So she’ll work directly with you using a proven methodology. She’ll use a sniper vs shotgun approach: exactly what’s needed to fill positions with top decile performers. Also, the Retained consultant typically possesses stronger sales skills for pulling the best candidate into the role. This type of talent isn’t cheap; retained consultants are often 30-50% of yr1 role comp.
So, which model is your best fit? That depends on factors including number of roles you’re trying to fill, uniqueness of the role(s), average tenure with role and company, etc. One approach I like to take is a bit of a hybrid model. I’ll lock a Retained consultant with a performance guarantee that ensures they got it right. Request a clause like, “If a candidate placed by our firm is terminated or resigns on account of performance-related issues within two years from the hire date, we will conduct one replacement search for no additional retainer”. In addition, negotiate a payment split at search start, hire date, and 60 day anniversary.