Why Contingency Recruitment Is Poor Value and Rarely Finds You High Performance Talent in the Medical Device Sector

« Back to Remtec News

21/03/2018

In a parallel universe far away, Acme Medical Products is a distributor of medical devices. It has been in business for 30 years and recently the founder of the business has taken retirement and allowed his youngest son, Rick, a qualified accountant, to take over the running of the family empire. One of the company’s core product ranges is electrophysiology catheters.

They used to distribute a well-known brand, but they lost the distributorship when Rick’s father retired and now they have a choice of different unknown brands to sell. Rick has what he thinks is a cunning marketing plan.

As he has noticed that some poorly manufactured catheters sometimes fail, he will cut the price drastically to compensate for this and also he will offer the customer the chance of “Try Before you Buy” (TBB) – customers will only pay for the EP caths they use that work!  Based upon the fact that the caths are very poorly manufactured, from the cheapest quickest suppliers, many more than usual will fail, so this has to be factored into the business plan and written off. In Rick’s view this does not matter as he has found a manufacturer that will produce the caths extremely cheaply. Regulatory compliance in this particular universe is not a big issue, and many of the products are fraudulently manufactured so would never work anyway. Rick suspects this might be the case, but chooses to ignore it.  The important thing is they are CHEAP, because that is what the customer wants!

The strategy is initially very successful as hospital purchasers very much like the model, and before long many other suppliers are also offering “TBB”. It is a very easy concept to sell, in fact it needs very little sales skill at all!

Purchasers are happy. The hospital is only buying the catheters that work! What is not to like about that?!

Well, quite a lot really, certainly as far as the Physician/Electrophysiologist is concerned. Procedures are now taking four times as long as they used to, due to the many more catheters they have to use and discard, plus the higher quality specialised catheters that they used to rely on for complex cases now seem to be very scarce and no-one seems to be able to source them on the TBB model that Purchasing now insists on. It seems that all the good quality caths are all being acquired by the hospitals that have rejected the TBB model on the grounds of quality.

In this universe no one has heard of health economics, but it is becoming increasingly obvious that while staff are working harder, less patients are being treated, safety is being compromised, and the ability to do more complex procedures is noticeably curtailed. The hospital’s cardiology service is dying a slow death and the best staff are leaving. The unintended consequences are immense! 

And so back to our universe and the title of this article. What is the “Contingency Recruitment” that I refer to? It is essentially a service that is very common in the US and UK, and is becoming more common in continental Europe.  It is the recruiting equivalent of TBB. It is a service that looks superficially attractive; it essentially says you, the client, can review candidates for a role, but you will only pay a fee if a candidate is hired. For non-mission-critical roles, where candidates are plentiful, low skill or where the performance differential between candidates is minimal, many may argue this model probably still has a place.

However, for those companies that want to access high performance talent, or specific rare skills it is my opinion that it is highly inefficient and economically costly. It may appear comparatively cheap, and risk free, though it in most cases it is anything but!

The model for a majority of contingency recruiters is predicated on the following:

Recruitment “consultants” (many of whom are heavily commission based and very inexperienced) maintain focus on the following:

  • those roles that they have a high chance of filling
  • roles that are easy to understand, and easy to sell to candidates
  • roles where “low hanging fruit” candidates can be quickly accessed from a database, told about the job, and checked that they haven’t already applied via another recruiter
  • candidates that they can send to more than one vacancy to increase chances of a return

Contingency recruiters only expect to fill one in five vacancies that they take on. They cannot afford to spend too much time sourcing the best talent for your role, because you might fill it yourself, or it might be filled by one of their competitors, so the return on investment of their time is inefficient. If they say they are “doing a search”, this is as disingenuous as it is superficial.

If your role is complex, or you are particular about requiring only top talent, you will not be their priority. Additionally, the majority of top talent does not pro-actively “register” with contingency recruiters, and certainly won’t with poor quality ones, so the chances of finding such people is severely restricted through such organisations.

If a contingency “recruitment consultant” should find that highly talented individual, their ability to properly sell a complex role to a high value talented individual will be extremely limited by their general lack of experience. The cost of missing out on a highly talented candidate is difficult to measure, but the best way to think about this is to ask yourself whether you would send an untrained sales rep to visit your most important potential customer? No, probably not.

Hiring companies often seek to increase their chances with contingency recruiters by placing the role with numerous companies. There are a number of challenges with this. Firstly most candidates that do register with recruiters to look for a job will be registered with more than one recruiter, so in reality you haven’t really increased your chances by much as it is largely the same pool. Secondly, if the recruiter knows you are with a number of recruiters he/she will deprioritise your role as they will know they have a low chance of filling it. Thirdly they will probably poorly assess your candidates as they realise they are in a “CV/resume race” with their competitors. None of these improve your chances to get the best service or Top Performing Talent. 

Economically the contingency model mainly fails. The consequences of not finding talent, and having to compromise and take second best is not easy to accurately model, but it is apparent that the difference between a sales team that consistently exceeds their target  and one that consistently falls short may be the difference between prosperity, survival or company failure. The difference between a top talent regulatory professional that gets a product through its 510K and a compromise candidate who fails is of even greater impact perhaps.

So what is the solution to all this? Well, if you must use a contingency recruiter choose very carefully, but also do so in the knowledge that you are not necessarily sourcing the best talent through them, and that may be OK for you. Make sure they are very motivated and engaged. Definitely don’t choose a cheap one – they will almost certainly damage your employer brand (see our book on employer branding). If they need to be cheap it is because they are not good at what they do.

The reality is though, if you are genuinely serious about finding Top Performing Talent for your company you need to find a much better solution. That solution first requires a time investment by your company in understanding what Top performing Talent looks like to your business, and then working with genuine recruitment professionals who are able to describe ways that they will identify, attract and engage with the Top Performing Talent that you need. 

If you are still reading this article the likelihood is that you are someone who sees the value in attracting Top Performing Talent, and probably wants to understand why your current approaches to talent attraction may not be working. To find out whether you qualify for a free half hour consultation on High Performance Talent Acquisition please visit this link.

« Back to Remtec News