Contingent vs. Retained Search: Don’t Accept That E-mail!
3 Different Clients - 3 Similar Stories - All Within The Last Few Months
Abeln, Magy, Underberg & Associates is a retained-only search firm. For over 25 years, this has been our business. We have never wavered . . . . never taking on contingent search work. (There is information on the definition of contingent search on our website - see https://www.abelnmagy.com/how-we-work.) Contingent search is not bad business; it is just a different business model.
The 3 clients vaguely referenced above have all been aggressively approached by contingent firms who have the ‘perfect’ candidate for them. The contingent firms making these specific approaches have no clue if the client has an opening or what might be needed in terms of specific skill-sets or cultural match, but they have the ‘perfect’ candidate nonetheless.
Candidate Ownership
I am not an attorney. As I understand the law in this area, if a contingent firm sends a candidate to a prospective client (that means sending a resume - by e-mail) AND you accept the e-mail, the contingent firm has the right to a fee if the candidate is hired. That is certainly the case if you interview the candidate. And that makes sense after an actual interview. But there are nuances here that need to be considered:
- What if you simply open the e-mail but then delete it without responding?
- What if someone in the company other than HR or the hiring manager gets the e-mail and opens it?
And it gets more complex especially after you open and then delete the e-mail! The common situation . . . . . you don’t do anything with the e-mail other than delete it, and that same candidate is referred to you by a colleague. Who ‘owns’ the candidate if they get hired? And what if the candidate was referred for a completely different opening in a different part of the organization? Does the contingent firm still own the candidate regardless of the opening? And for how long?
An Unveiled Threat!
I can answer the ‘how long’ question with some certainty. IF (and I mean IF) the contingent firm legitimately ‘owns’ the candidate, it is for a period of 12 months from their presentation (e-mail) of the candidate.
Here is the actual threat that was received:
- We had researched, identified, screened, interviewed and presented a candidate for a senior leadership position (ELT-level) for a client. He ended up being a finalist. While the search was coming to a close, a contingent firm that had previously presented the candidate for something completely different (a role that was not part of the ELT) reached out to this client stating that if the candidate was hired for this ELT-level role, they would be legally owed a fee.
The end of this story - our client legitimately chose a different candidate. If the client had hired the candidate referenced, they would have had to pay two fees (or at least fight the contingent firm’s claim).
Knowing The Rules
Most clients that we work with are not aware of the nuances in the world of retained versus contingent search. We don’t know all of the laws and nuances either. And again, we are not saying that contingent search is bad in any manner at all. We are saying that firms that send candidates routinely may have a right to that candidate depending on how the organization receiving the resume reacts and responds.
The Real Moral Of The Story
Develop a relationship - spend time with the firms you want to do business with (contingent and retained). Ask about candidate ownership, off-limits policies and guarantees (among other topics). A firm that wants to partner with you will welcome the conversation and want to explain their processes and practices.
A Quick Note
Accenture and Cargill (to name two employers) have a notice posted on their career websites directed to staffing agencies and external recruiters about how to present candidates. These notices are worth reading and adopting.