Contingency-Based Searches: Success-Based Work?

Let’s ask a crucial question: "who relies on success-based recruitment?" Is it the successful recruiter, known for their excellent work, or the newbie—perhaps a former HR manager—who thinks they can easily transition into entrepreneurship, forgetting that HR and entrepreneurship are entirely different fields? Or is it an agency that wants to keep its staff but lacks enough work, trying to make a quick buck to maintain their low-cost employees?

The truth is clear: only those who are unsuccessful—or let’s be nice and say, not-so-successful recruiters—take on contingency or success-based work. A truly good Search & Selection Consultant has no time to work for free or gamble on uncertain outcomes. They don’t leave their paycheck to chance; they don’t need to. They are always busy in a world where companies are desperately searching for talent and struggling to find the right candidates.

So, why would you work on a success-based model? Should I tell you? It’s because you don’t do a good job as a recruiter. If you did, everyone would know your name, and companies would pay you whatever you wanted. Statistically, hiring the wrong person can cost an organization 15 months of salary. It takes 60 to 120 hours—that’s about a month’s worth of work, spread over 2 to 6 months—to find and evaluate the right person. This includes waiting time when you might have no one filling the role.

This evaluation process often requires involvement from management, department heads, and team leaders, who may spend 1 to 3 sessions reviewing a shortlist of candidates before selecting one. Once a candidate is chosen, Onboarding begins, which involves “non-productive time” for the new hire and requires additional time from people of other departments, spanning 1 to 3 months.

In the first 3 to 6 months, new employees are often not as productive. They might not reach their break-even point for 3 to 9 months after starting. If you discover within the first 3 months that you have the wrong person, or if the new hire leaves because they expected something different due to a rushed hiring process, you’re looking at 15 months of losses—not just in time and money, but also in the revenue or job fulfillment you failed to generate.

So, do you really want to take on such high risks? I ask you, employers: do you want to face such a high risk? Losing 15 salaries, missing out on revenue opportunities, and incurring high costs in both money and time? Really?

And you, recruiters—do you want to work for free not once, but twice? The first time and during the guarantee period? Quick searches often lead to:

- Reworking the position,

- Losing a client due to disappointment,

- A bad reputation with clients and candidates,

- Not gaining repeat clients....

The solution is straightforward, but on both sides:

People often lack the courage to express what they truly want and need.

A good recruiter wouldn’t have the time to engage in risky, contingency-based work. A bad recruiter who rushes through the process, because a client refuses to pay adequately, will ruin their business. The chances are high that they will compete against 2 to 3 other recruiters, as well as against the company itself, which may prefer to hire internally.

Let’s be honest: you’re a crook if you complain about cheap and unfair labor conditions in Bangladesh, talk about ESG, and at the same time, put an educated HR manager in Europe at a 75% risk of not getting paid because there are 4 other recruiters searching for the same position. The likelihood of the consultant getting paid in that scenario is 25% or lower, especially since the company may favor their own candidates.

The solution is:

For companies: If you truly want the right talent, find a competent consultant and pay them well. You will save money and hassle fro all. Some consultants lack business acumen and struggle as a result. A diligent recruitment process requires expensive tools and thorough work to evaluate candidates not only on expertise but on cultural and personality fit. A good consultant can provide this service effectively; those who don’t are merely flipping candidates like real estate agents flipping houses, charging 10% to 12% fees.

Don’t support illegal consultants who lack an (Iskur number) legal permission or tax registration. A personal company without these credentials is a joke; they don’t take their business seriously, nor do they respect tax authorities.

For consultants: If you are good, don’t sell yourself short. Your service is not cheap, and you cannot not work for low fees. You are now in business and have to pay taxes—some forget this and don’t survive beyond three years because the tax burden hits them hard. Remember, revenue is not profit, and profit is not yours until taxes are paid. You are no longer employed, where the company handles your gross-to-net difference and social insurance. You need a valid (Iskur number) legal permit to do this business; otherwise, you risk operating illegally. You also need to have your own CRM and LinkedIn recruiter—not one tied to a friend's company—otherwise, you are operating illegally as well...

If you genuinely want to find the right and best talent, let’s see if we are a good fit for each other. I invite you to have a preliminary evaluation meeting with us.

Andreas Vetr

https://isghr.com/recruiting-survey/

www.isghr.com or www.isg.com youtube: https://www.youtube.com/@ISGhr

www.andreasvetr.com

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