For a recruitment business owner, one of the most significant elements of a retained contract is that the client pays a portion of the fee upfront.
On the outside, that may sound mercenary, but less so when you consider that the alternative is a contingency contract in which the recruiter is only paid if they make a placement.
It’s incredibly hard for any business in any industry to operate under that kind of uncertainty.
No wonder there is a growing trend for recruitment business owners to attempt the transition from contingency contracts to retained contracts.
James O'Brien and Jo Gregory of i-intro® sat down with James Russell and Paige Warburton of Primaire Consulting, an executive search and selection firm, to discuss their progress in making this transition from contingent to retained, and how they managed to win 5 retained contracts almost straight away.
i-intro: What motivated you to start your journey into retained recruitment and did you have any reservations starting out?
Primaire Consulting: The early part of the pandemic, like most recruitment businesses, was a quiet period for us. We used that time to review what we wanted to do with our business and how we could improve our offering and differentiate ourselves. That gave us space to make the decision to explore retained recruitment and put a proper strategy together.
We definitely had some reservations. There was the general fear of the unknown, but also question marks over how we were going to pitch retainers, what our USPs were going to be, and how long the transition was going to take.
Actually, one of the biggest worries was over our existing clients. We have a lot of long-term clients – some have been with us for 10 years or more – and we were unsure how they would react. It was about helping them understand the value in this new arrangement and, fortunately, they were very quick to see the benefits.
Overall, the response has been very good. We have one new client who, over the years, has worked with over 100 different recruiters. They commented that our new retained method looked really professional compared to what they were used to, which gave us a lot of confidence.
i-intro: What was it like going into that first pitch, knowing you were going to ask for a retainer?
Primaire Consulting: Nerve-wracking. Of course. Businesses are used to a certain way of working with recruiters, so introducing something new is always a challenge.
But on the whole we got less pushback than we expected. Mainly because we were able to show the prospect the value of the additional level of service we offer. Most employers don’t realise that their hiring process is actually quite badly broken and is costing them money. So, when you show them how you can improve their outcomes, and save them time and money, the barriers come down.
What’s interesting is that when you start digging into the challenges that your client has, and you help to solve them, you start to build a strong bond with the client. It becomes more like a partnership.
Providing clients with a retained service with all of these added-value elements is allowing us to fill vacancies quicker. And because we’re doing so much assessment of the candidates early in the process, our clients only have to interview, on average, 3 candidates face-to-face, which is a huge time saver for them.
i-intro: Winning retained business is, of course, just the start. How did you find the experience of working on retained assignments?
Primaire Consulting: It’s a little overwhelming initially because you’re looking at the process as a whole. But i-intro® helped us break it all down into bite-size chunks and were there when we needed some extra guidance.
That support was crucial because if i-intro® had just supplied the tech it would have been easy to let it just sit in the business and never get around to properly using it. The training, and breaking everything down into steps, was all really well thought out. It gave us the confidence to take our new retained service to market.
i-intro: Don’t share anything you’re not comfortable with, but have you seen a positive impact on your income?
Primaire Consulting: I think we’ve seen a positive impact in lots of areas. Contingency recruitment work is such a race, so having campaigns that we’re working on a retained basis has given us the freedom to spend more time on these projects.
So, we’re busy, but more productive at the same time. Actually this has given us the confidence to turn down work because retainers give you that level of financial security that you can’t get through contingency work.
The impact on fees is there as well. We’ve increased our rates from 19% to 25%, which is like adding a third to our income.
We get a little pushback from prospects sometimes because of the increase, but it’s about holding your ground and making sure your pitch emphasises the extra depth in the level of service, as well as the superior outcomes.
The free replacement policy we’ve introduced has gone a long way to helping prospects feel comfortable with higher rates. We had one client recently who had a 40% retention rate of new hires after 12 months. This was a hugely expensive problem for them. Fixing this, while also giving them a free replacement policy that lasts for anything from 12-24 months, made the decision to retain us very easy.
A 25% fee doesn’t sound expensive when you’re getting a recruitment service that saves you many times more than this in terms of reduced commercial downtime and reduction in bad hires.
i-intro: If any recruitment business owner is reading this and is thinking of moving into retained recruitment, what would you say to them? What should their first steps be?
Primaire Consulting: You should definitely try it; the rewards are significant. But plan your strategy carefully.
Think about how much you want to grow, who your key target clients are going to be, and how you’re going to pitch retained to them so it becomes an easy “yes”.
If you get your enhanced recruitment service in place and your pitching strategy nailed down, then you’ll have the confidence you need to make it work. This was how we managed to win 5 retainer very quickly, because we made sure we had all our ducks in a row before we started.
Remember, as well, that you can transition at your own speed. Our goal is to turn 25% of our business into retained business over the next 12 months, and then have a 50/50 split by the end of year two. It might end up happening faster, but we’ve got a target to aim for that feels achievable.
Thank you to James Russell and Paige Warburton of Primaire Consulting for taking the time to share your story with us.
James and Paige made good use of i-intro’s software and training resources to support their move into retained recruitment. If you’re a recruitment business owner you can arrange a free demonstration of i-intro® by booking a slot that’s convenient for you HERE.