4H02 Sources of Applicants and Candidates

Contractors may use various sources for hiring middle and senior-level managers. These sources may include executive search firms and referrals from employees.

a. Executive Search Firms. As part of the CMCE, COs must determine the sources of the applicants and candidates for the managerial position(s) they are evaluating, and examine the relationship the contractor has with these sources.

• Types of Search Firms. A contractor may maintain several different types of arrangements with executive search firms. Below are just three examples.
  • Firm on retainer. In this arrangement, the employer usually has a contract with the search firm under which the contractor pays the firm a basic fee for its services, with that fee supplemented for each referral hired. This type of arrangement is more common for professional or entry-management positions where the employer anticipates a continuing need for hires in certain fields, or at certain levels where there is a skills shortage internally, externally or both.
  • Firm on contingency. In this arrangement, the firm is usually paid a fee only if a candidate it refers is hired. This type of arrangement is more common for middle to upper-level management jobs and contractors may prefer this when they only occasionally hire from outside.
  • Unsolicited Referrals. Contractors may sometimes hire from among unsolicited referrals from an executive search firm. In this arrangement, the firm is paid a fee only if the candidate is hired.
• EEO and Affirmative Action Obligations in Referrals. Contractors, under the equal opportunity clauses in their contracts, retain responsibility for ensuring that solicitations for employees placed on its behalf by a search firm or other referral source comport with all of the contractor’s EEO and affirmative action obligations.

Consistent with those clauses, as well as with its obligation to incorporate the equal opportunity clauses in its subcontracts, the contractor is urged to notify the search firm of its EO obligations including that the firm, in seeking candidates on its behalf, must actively seek to include qualified members of diverse groups among those recruited and referred for listed jobs.

• Monitoring Referrals: Contractors using search firms must monitor referrals received by sex, minority group and, when possible, protected veteran and disability status as part of its internal auditing and reporting systems under 41 CFR 60-2.17(d), 60-300.44(h) and 60-741.44(h). A contractor should ask its search firm how it locates and selects candidates if the search firm fails to refer women, minorities, individuals with disabilities or protected veterans.

A contractor is not relieved of its obligations related to recruitment by using a search firm; it must ensure that any firm acting as its agent carries out the contractor’s affirmative action and nondiscrimination obligations.

b. Employee Referrals: Contractors may use employee referrals as a source for new hires. However, as with search firms, the use of employee referrals does not relieve a contractor of its obligations related to recruitment. For example, if a contractor has established a goal for a job group and the contractor relies on employee referrals to recruit that group, the contractor could make clear to employees that it desires referrals of a diverse group of qualified candidates. The contractor might also supplement employee referrals with other sources of qualified applicants for the jobs involved, such as by seeking referrals from organizations that focus on providing services to minorities, women, individuals with disabilities or protected veterans.

A contractor’s exclusive use of employee referrals may be discriminatory where there is evidence that the intent behind that reliance is to exclude underrepresented group members from consideration for certain jobs. Reliance on employee referrals may also be discriminatory when such reliance has an adverse impact on a particular sex, race or ethnic group, and is not job-related and consistent with business necessity.