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Sunday, January 31, 2010

Different Types of Recruitment Models

Different companies have different hiring needs. So depending on level of engagement, exclusivity, long term prospects and other factors many different recruitment models are followed in the market.Here I will try to explain them.

Different recruitment models:
  • Contigency Hiring
  • Retained Search
  • Exclusice Requirements:
  • Recruitment Process Outsourcing(RPO)
  • Outplacement
  • Executive Search
Contingency Hiring: In contingency hiring whenever a company comes across any requirement it gives it to many consultants at the same time and asks all of them to send resumes.Only  the consultant whose candidate is offered gets money from the company. Here recruiters don't get any assured and fixed salary. Their revenue depends entirely on whether they can make offers or not.As risk factor is high here, consultants charge more percentage for such type of recruitment. generally company pays in terms of a specific percentage of CTC of the candidate. This is the most prevalent way of recruitment.

Retained Search: Here a recruitment consultant works exclusively for a specific requirement and payment is divided into two parts.He  is paid a fixed amount by the company for search activity. It is called retainer fee. Other than that if he makes offer he gets more money. For recruitment of senior executives like CEO,Sales head very focused approach is required , so this method is preferred.

Exclusive Requirements: Sometimes companies give some requirements exclusively to recruiters. Here recruiter assures the client to close the position within specific date. if he cant close the position by that time he needs to either  close the position with lesser commission or bear some other penalty.All the conditions are clearly decided before the contract. Here percentage of commission is less than contingency hiring because there is no competition.

Recruitment Process Outsourcing(RPO): RPO model is gaining lot of popularity recently. Here a company outsources whole recruitment process to another consultant. Some people from the consultant side seat in the company itself and manage the whole process by themselves. The sourcers can either sit in the client place or in their own office. Here RPO partner is responsible for closing all the requirements. They take care of the whole recruitment process right from sourcing,scheduling, interviews, offer to joinings.The benefit for the company is that- they don't have to manage their own recruitment team which reduces costs. But on the other hand risk is high, because if consultants don't understand the company culture and hiring plans properly it can get disastrous also. So companies should be careful while choosing recruitment partners.Because we are talking about high scale and longer duration engagement here.

Outplacement came into picture during  recession period. Here If a company wants to lay off some people employees to cut costs, they can hire a consultant to place those employees in other companies. The recruitment cost is borne by the current employer.Outplacement is not very popular till now.

Executive Search: Executive search teams only focus on senior level ie: CEO, CTO, Sales head and similar kind of requirements. Method of sourcing for such positions are quite different from junior level requirements. Here number of potential candidates are less and they don't prefer to show their resume on the portals. So head-hunting, searching in networking sites and personal networks help a lot. For such requirements commission is much higher. Executive search teams do retained search activity also.

 Other than the above models recruitment can be divided in other two types.
  • Permanent recruitment
  • Contract or Temporary staffing:

Permanent staffing: Here after recruitment the candidate stays in the company payroll as a permanemt employee.
Temp staffing: In case of temporary staffing/ contract staffing the candidate remains in the payroll of the consultant and works with the company for a  limited time period. Companies generaly prefer this model if the project is small or uncertain. Again it reduces their long term costs also. So this model is gaining good popularity now a days.

Both permanent and temporary staffing can be applied to all the above recruitment models.
I have tried to explain different recruitment models followed in the market. Please mention you suggestion and feedback in the comment sections.


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