Choosing a recruiting vendor is akin to selecting the right fish from the sea. With a plethora of options available, companies often find themselves opting for familiarity rather than what might suit them best. In this article, we delve into the realm of recruitment vendor models, exploring seven different approaches and their respective advantages and disadvantages.

The Contingency Model

Probably the most widely used model, contingent recruitment is used by the majority of agencies to entice clients in with a no placement no fee service. meaning they only receive payment if they successfully placed a candidate in a job role.

Usually, the recruiting vendor charges between 15%-30% of the placed candidates’ basic salary.

Here are some pointers:

1. Success-Only Payment Structure: Recruiters operating under the Contingency Model typically do not charge any upfront fees to their clients. Instead, they receive a commission or fee only after successfully placing a candidate in a job position.
2. Competitive Nature: The Contingency Model fosters a competitive environment among recruiting agencies. Since recruiters only get paid for successful placements, they strive to identify and present the best candidates to their clients in order to secure placements and earn commissions.
3. Percentage-Based Fees: The fee charged by recruiters under the Contingency Model is often based on a percentage of the placed candidate’s basic salary. This percentage can vary widely depending on factors such as the industry, location, and difficulty of the position to fill.
4. Limited Commitment: Clients engaging with recruiters under the Contingency Model are not typically bound by exclusive agreements. They have the flexibility to work with multiple recruiting agencies simultaneously to fill their job openings.

Exclusive Search

As the name would suggest, exclusive search is a model which is based solely on an exclusive agreement between the client and the recruiter. Similarly, to contingent recruitment, Exclusive Search would typically be on a no-placement, no-fee basis but here there is usually an agreed time frame whereby the recruiter must deliver. If the recruiter cannot fill the role by that agreed time, the client has the right to engage other recruiters who may well place the role – and charge less commission.

Here are some pointers:

1. Quality of Candidates: Exclusive searches often result in higher-quality candidate submissions. Recruiters have the time and motivation to thoroughly screen and assess candidates, ensuring they meet the client’s specific criteria and qualifications.
2. Reduced Competition: By engaging in exclusive search, clients reduce the risk of competing with other companies for the same candidates. This can be particularly advantageous in competitive talent markets where top candidates are in high demand.
3. Mutual Commitment: Exclusive search agreements foster a sense of partnership and commitment between the client and the recruiter. Both parties are invested in the success of the hiring process, leading to better collaboration and communication throughout the recruitment journey.
4. Improved Candidate Experience: Candidates engaged through an exclusive search often receive a more personalized and attentive experience. Recruiters can provide detailed information about the company and job role, as well as timely updates on the status of their application.
5. Higher Success Rate: Research indicates that exclusive search arrangements tend to have a higher success rate in terms of candidate placements. According to industry data, working exclusively can significantly increase the likelihood of successfully filling a job role.

PSL Or Volume Recruitment

PSL recruitment stands for Preferred Supplier List recruitment. It is a hiring model commonly utilized by larger corporations or companies experiencing rapid growth. In this model, the organization maintains a list of preferred recruitment agencies or vendors with whom they have established agreements or partnerships. These agencies may have undergone a vetting process or have a history of successful placements within the organization.

Here are some pointers:

1. Streamlined Vendor Management: By maintaining a Preferred Supplier List, organizations can consolidate their relationships with a select group of recruiting agencies or vendors. This streamlines the vendor management process, reduces administrative overhead, and enhances efficiency in sourcing candidates.
2. Quality Control: Organizations can vet and select recruiting agencies based on their track record, expertise, and ability to deliver quality candidates. By working with trusted partners on the PSL, organizations can maintain a consistent level of service and candidate quality across their hiring initiatives.
3. Cost Efficiency: Preferred Supplier Lists often result in more favorable pricing terms and conditions for organizations. Recruiters on the PSL may offer discounted rates or volume-based pricing structures, leading to cost savings over time.
4. Access to Specialized Expertise: By partnering with recruiting agencies specializing in specific industries or job functions, organizations can access specialized expertise and insights into niche talent markets. This allows them to source candidates with the right skills and qualifications for their unique requirements.
5. Faster Time-to-Fill: Working with a select group of recruiting partners who understand the organization’s culture and hiring needs can expedite the recruitment process. Recruiters on the PSL are familiar with the organization’s preferences and requirements, allowing them to identify and present suitable candidates more efficiently.

Retained or Executive Search

Retained or Executive Search as it is sometimes called is a ‘rare’ way of doing business in recruitment, but is the norm to outside industries, i.e. Recruiters get paid for the work that they are doing from the start. This model is normally structured into thirds, the client makes an initial payment to commence the search, a further payment on candidate shortlist and a final payment based on an accepted offer and adjusted to suit the final basic salary of the candidate.

Here are some pointers:

1. Priority Attention: In a retained search arrangement, the recruiting firm commits to dedicating its full resources and attention to filling the client’s position. This means that the search receives top priority, and recruiters can devote extensive time and effort to sourcing, assessing, and presenting qualified candidates.
2. Strategic Partnership: Retained search arrangements typically involve a close, collaborative partnership between the client and the recruiting firm. Recruiters work closely with the client to understand the organization’s culture, values, strategic objectives, and specific hiring needs, enabling them to identify candidates who are not only qualified but also well-aligned with the organization’s long-term goals.
3. Access to High-Caliber Talent: Retained search firms often have access to a vast network of high-caliber candidates, including passive candidates who may not be actively seeking new opportunities. Recruiters leverage their industry expertise, market knowledge, and professional networks to identify and engage top talent who may not be accessible through traditional recruitment channels.
4. Thorough Candidate Assessment: Retained search firms conduct comprehensive assessments of candidates to ensure they possess the requisite skills, experience, qualifications, and cultural fit for the client’s organization. This involves rigorous screening, interviewing, reference checks, and competency assessments to evaluate candidates’ suitability for the role.

RPO – Recruitment Process Outsourcing

Recruitment Process Outsourcing OR RPO as it is known is when a client outsources the entire talent acquisition function to an external recruitment company. RPO provides a holistic hiring solution, typically having recruiters sitting on site within the client’s business and absorbing all the TA activities for the business. RPO is considering a more integrated way of running a recruitment business – clients would expect an RPO provider to design or reframe the clients’ hiring processes, implement technology and find people for the organization. Working as more of a consultant than a recruiter in the traditional sense, the partnership between the client and the RPO provider is more strategic, programmatic and certainly not transactional. For these reasons, RPO services are often instructed by large corporations to bolster their internal hiring efforts and support them in long-term scalability and sustainability.

On the face of it, RPO is a great solution to all parties involved. RPO is much more than getting jobs and filling positions – Recruiters will be working closely with their clients to improve their recruiting process, implementing and reporting on technologies that meet the companies employment needs and monitoring and analyzing outcomes based on all that has been implemented. RPO is not for the transactional recruiter, it is about create long-term partnerships with clients and help shape the way the business is built on a strategic level.

Recruitment Process Outsourcing is an ongoing service. Recruiters will be likely working with clients for several years and along the way be improving their internal processes and thus, success is not based on how many people they client hires but on the constant improvement of their turnover rates, time to fill, cost per hire etc. Managing a success RPO program and being able to demonstrate results is a complex task, and also one that requires many different functions within a recruitment business – Making it one of the more investment-heavy recruitment business models.

Here are some pointers:

1. Scalability: RPO providers offer scalable solutions that can flexibly adapt to fluctuations in hiring volume and organizational needs. Whether the organization is experiencing rapid growth or seasonal variations in hiring, RPO services can adjust resources and capacity accordingly to ensure optimal recruitment outcomes.
2. Cost Efficiency: RPO arrangements often result in cost savings for organizations compared to traditional recruitment methods. By outsourcing their recruitment functions to an external provider, organizations can reduce internal hiring costs, such as staffing, technology, advertising, and administrative expenses.
3. Access to Specialized Expertise: RPO providers bring specialized expertise, industry knowledge, and best practices to the recruitment process. They leverage their experience and insights to optimize sourcing strategies, candidate screening and assessment methodologies, employer branding initiatives, and recruitment technology platforms.
4. Strategic Partnership: RPO engagements foster a collaborative partnership between the organization and the RPO provider. RPO providers act as strategic advisors, working closely with clients to understand their business objectives, talent acquisition goals, and workforce planning needs. They provide data-driven insights, recruitment trends, and industry benchmarks to help organizations make informed decisions and achieve their hiring objectives.
5. Focus on Core Competencies: By outsourcing recruitment functions to an RPO provider, organizations can focus their internal resources and expertise on core business activities and strategic initiatives. RPO services allow organizations to delegate time-consuming and resource-intensive recruitment tasks to external specialists, freeing up internal stakeholders to focus on driving business growth and innovation.

On Demand Recruiting

On-demand recruitment is the recruitment business model based on charging on an hourly or project basis. The on-demand recruitment model is different from an RPO business model as it is designed to expand the in-house teams capacity whereas an RPO service is designed to replace it. On-demand recruiting’s flexibility and scalability are of a huge benefit to startup businesses and businesses experiencing unpredictable hiring or those who operate in a highly competitive market.

Here are some pointers:

1. Flexibility: On-demand recruiting offers organizations the flexibility to scale their recruitment efforts up or down based on changing business needs, hiring demands, or project requirements. Organizations can engage recruiting professionals on a short-term basis to address immediate hiring needs or seasonal fluctuations in recruitment activity.
2. Cost-Effectiveness: On-demand recruiting can be a cost-effective solution for organizations, especially those with sporadic or unpredictable hiring requirements. Instead of maintaining a full-time internal recruiting team or outsourcing recruitment functions on a continuous basis, organizations can engage on-demand recruiters as needed, reducing overhead costs and maximizing efficiency.
3. Access to Specialized Expertise: On-demand recruiting allows organizations to access specialized expertise and industry knowledge from experienced recruiting professionals or firms. On-demand recruiters often have deep domain expertise in specific industries, functional areas, or talent markets, enabling them to provide targeted recruitment solutions and deliver high-quality candidates.
4. Quick Turnaround Time: On-demand recruiting offers organizations the flexibility to quickly ramp up their recruitment efforts and expedite the hiring process. On-demand recruiters can rapidly mobilize resources, leverage their networks, and deploy strategic recruitment strategies to identify and attract qualified candidates in a timely manner, reducing time-to-fill and time-to-hire metrics.
5. Scalability: On-demand recruiting services are scalable, allowing organizations to adjust the level of recruitment support based on evolving hiring demands or project requirements. Whether organizations need assistance with a single job opening or multiple positions across different departments or locations, on-demand recruiters can adapt their resources and capacity to meet the organization’s needs effectively.

RaaS – Recruitment-As-A-Service

A newer, alternative recruitment business model is Recruitment-As-A-Service. RaaS is essentially a contractual-based managed service business model, but for recruitment. It allows recruiters to forge and build long term relationships with clients and by removing the commission-based incentive, clients often feel like they are getting better value – Both financially but in the quality of candidates and their ‘fit’ within the business. Working on a RaaS business model, the client gets the benefits of using a traditional agency like access to a large talent pool and quick turnarounds and int turn, the recruiter has a guaranteed monthly revenue stream where they know they are getting paid.

Here are some pointers:

1. Cost-Effectiveness: RaaS typically operates on a contractual-based managed service model, allowing organizations to access recruitment services at a predictable and transparent cost. Unlike traditional recruitment models that rely on commission-based fees, RaaS removes the commission-based incentive structure, providing organizations with better value financially.
2. Predictable Costs: With RaaS, organizations have a clear understanding of their monthly recruitment costs, as the service is often provided under a fixed fee or subscription-based pricing model. This predictability allows organizations to budget and plan their recruitment expenditures more effectively, eliminating unexpected costs associated with traditional recruitment models.

Conclusion

In conclusion, selecting the right recruitment vendor is a critical decision that can significantly impact the success of your organization. By understanding the various vendor models—from contingency to RaaS—companies can make informed choices that align with their unique business needs and goals. I hope this guide serves as a valuable resource in navigating the complex landscape of recruitment services. Should you have any further questions or require assistance, please don’t hesitate to reach out.