A New Breed of Recruiter: The “Container” Firm

For many years, the recruiting world was fairly simple to navigate.  Until recently, it was segregated cleanly into two distinct types of firms — high-end “retained” firms which are paid up front by companies to find talent, and “contingency” firms which are paid only if they happen to bring in the ultimate candidate who ends up getting hired.

Working with these types of firms, therefore, was a fairly straightforward exercise until recently.  If you were running a confidential search, at the executive level, you’d target your efforts toward retained firms since these boutique firms could be trusted to treat your search with the utmost discretion.  Their ability to charge companies sizeable fees ($20-30K) up front was and is a direct byproduct of their reputation, effectiveness, and professionalism.  As for contingency firms, while some conducted their searches with impeccable scruples, many were basically in the business to make as many transactions (cha-ching!) as possible, throwing candidates randomly against the wall at hiring managers and hoping a few would stick.  They faced the strong temptation, therefore, to misrepresent job opportunities and manipulate the hiring process to a certain degree, which cast something of a negative pall on the industry.  To this day, in fact, I meet many job candidates who were “burned” in the past and refuse to have anything do with recruiters during the course of their job search.

In the past few years, however, the line has blurred enormously.  As the recession took hold, and hiring slowed to a trickle, recruiting firms found themselves compelled to try and grab a bigger piece of a shrinking pie, leading many of them to “cross over” and work on the other side of the aisle.  In other words, many elite retained firms suddenly starting taking assignments on contingency, since their corporate customers no longer were as willing to pay enormous sums, up front, to locate talent.  And on the flip side, contingency firms started marketing their ability to fulfilled retained engagements, as well, in an attempt to shore up the “feast or famine” nature of the contingency business model.

The end result? And the point to this bizarre history lesson?  These days, the majority of recruiting firms are probably best described as “container” agencies — a hybrid of both the contingency and retainer models.  It’s therefore become more difficult to recommend a unified strategy to job hunters in terms of approaching the headhunter channel.  Since you can’t rely on the old generalizations any longer, your best bet is to track down as many appropriate firms as possible (and yes, Career Horizons has a comprehensive list of firms in Washington State!) and to investigate them, one by one, to determine which ones appear to operate professionally and to be specialized in your functional career area.  The due diligence bar has thus been raised a bit, but recruiters are still an important employment marketing channel and most active job hunters, in the end, should be able to locate at least a dozen firms that are worth contacting and communicating with on a regular basis.


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