Pay on Success vs. Pay as You Go

By paying on success, the objective of the recruiter is not to find the best possible candidates, but the objective becomes completion of the work as soon as possible in order to get paid, frequently without regard for quality of output. Many clients believe they can control the recruiter. But if the recruitment becomes too difficult, the recruiter will abandon the efforts and move on to an easier assignment, one with a higher probability of completion. What the client will find is that they will be told that the marginal or unsatisfactory candidates being presented are the best available. Or worse, the candidates may be coached and backgrounds misrepresented in order to achieve a higher probability of gaining acceptance of the candidate.

Another way to look at the no-cure-no-pay recruiter is to see how he makes his money. A recruiter usually sets up his business so that he can survive on the revenue of one assignment per month. Each assignment, in our 20 years of experience in Southeast Asia, takes an average of 3 months to complete. Therefore, in order to complete one each month, the recruiter must be working on 3 assignments at any point in time. But that assumes that he completes and gets paid for every assignment. The track record of “no-cure-no-pay” contingency recruiters, in many Asian markets, is to complete only 1 in 10 assignments. (Many charge a set-up or advertising fee up-front, which is where they make some of their money.)

Thus, at any given time, the contingency recruiter is probably “working on” at least 30 assignments. (One once admitted to us that he was juggling 68 assignments, and could not even remember who his clients were!) This is why this type of recruiter cannot give the same level of attention to their clients and to the evaluation of their candidates which a retained consultant is able to provide.