Contingent vs. Retained Search - What is the Difference?
At first glance, it may seem that the only difference between contingent and retained searches is how the recruiter is compensated. However, changing the incentive structure changes the game (remember that when your departments are butting heads). Contingent and retained searches, done well, should elicit the same positive results, but they are two very different processes, to be used under different circumstances.
Let’s clarify.
Retained
In a retained search agreement, the recruiting firm is paid a retainer or commitment fee upfront to conduct the search on an exclusive basis.
Using a highly consultative approach, the search firm will then work with the client on every aspect of the search, working cohesively with the client to build every aspect of the recruiting strategy and set a go-to-market approach designed to extract the best outcome.
The process is usually extensive, includes in-depth vetting and market-mapping, and exhausts all efforts over weeks to create a shortlist of top candidates to be presented to the client for consideration.
Retained searches can be successfully used for hard-to-fill positions at all levels, but are most commonly applied on senior-level mandates, from Director and above, high profile searches that have garnered the attention of senior managers or shareholders, or confidential roles
Retained searches are often a more lengthy, more costly process (fees are customarily 30+% of total compensation), with a focus on quality, and initiated under specific conditions. The client should expect a high level of support throughout the processes, from the job description and how the interview process is designed, to salary benchmarking, negotiations over an offer and onboarding.
Contingency
Whether you call it “no win, no fee,” or contingency, the concept is the same. The recruiter that fills the position gets paid.
The recruiter, at their own risk, and costs, will work with the client from the time the search is initiated, to the time it is filled.
The recruitment fee (usually 25% of base salary when working with a specialist agency) is likely lower than with retained search.
A standard approach is typically used, and resources are determined by the recruiter.
As firms are working against the clock to beat out not only other recruitment agencies but the client’s internal HR department and direct applicants, the key to success is to present the best candidate faster than others. Maintaining an extensive database of candidates, cultivating relationships with the sector, and highly tuned assessment skills are crucial to success.
Contingency searches are typically used for more traditional or junior roles that do not require a specialized approach, where a search is limited to the local market, or when a client prioritizes time-to-fill and/or is looking to control costs.
For this approach to make commercial sense, Recruiters working on contingency will often work on a large number of job openings simultaneously and will use a candidate database to match resumes with opportunities and suggest candidates for interviews. This can produce a swift turnaround if a suitable candidate is already known to them, but it is not nearly as comprehensive a search as that done on a retained basis.
Contingency searches work best when the recruiter’s niche market is in line with the job opening, so a specialized boutique firm has a much higher chance of success.