Retained or Contingency?

Candidate Sourcing and Development

The most significant difference between the retained and contingency search models is the method by which they generate candidates.

Retained firms follow a process designed to identify, recruit and convert highly respected and accomplished individuals whose talent their client would like to acquire.  A quality retained firm will identify a search strategy that targets companies known to harbor the talent the client is seeking.  Working closely with the hiring executive, retained firms seek to find the best person for the open position: from leadership, management, technical and cultural perspectives.

Recruiting candidates regardless of whether they are currently employed or seeking a new role, retained search firms will conduct in-person (and lately, video) interviews prior to presenting any candidate to their client thus ensuring that the slate they present is a short list of prospects that closely match the position description. Conducted well, a retained executive search involves significant market and competitive intelligence research, refined assessment skills, as well as client and candidate management.

Contingency firms are less likely to develop a targeted talent pool based on in-depth research and more likely to rely on databases or job boards to develop their slates; their candidates are typically active job seekers.  Also, contingency search firms are more likely to rely on telephone screening rather than face-to-face interviews; and their candidates may not have been assessed on the full complement of leadership, cultural, technical and managerial fit.

Retained firms provide a standard candidate guarantee for one year (that is, they will re-conduct the search without additional fees if their placement leaves the company within one year of their start date).  Contingency firms’ guarantee is usually six months or less.

Retained firms operate under exclusive contracts. That means the client will not engage (implicitly or explicitly) another entity to recruit talent for any search under contract with that firm. By maintaining this exclusivity, the hiring entity ensures that the firm is an effective and consistent ambassador representing the hiring executive, the open position, and the hiring company to the available talent pool, and to both passive and active prospects.

In contrast, contingency firms do not hold exclusive relationships with clients. This means that the hiring company may have multiple individuals contacting the same candidate prospects on its behalf.  Additionally, the recruiting “ambassadors” are competing with each other, often providing conflicting or inaccurate information regarding the opportunity. This approach naturally compromises the quality of the candidate slates as the best talent is less likely to respond in such a recruiting environment.

Contingency firms will charge a fee only if a company has hired a candidate who the firm has presented to them. The hiring company is paying, so to speak, for the hire.  This fee structure limits the risk of compensating a firm for inadequate work.  The process is typically quicker and generates a larger, broader candidate pool that has been less rigorously assessed.

With retained search, the client is paying for processes known to identify prospects who are respected leaders and who closely match the position description, corporate culture, and preferred management styles, and who would fit well within the existing team. Retained recruiters’ value is in their competitive intelligence research, their candidate and stakeholder management, and their assessment expertise.  Operating more like management consultants and executive coaches, retained firms bill throughout the search.

Retained consultants will present a smaller candidate slate, but one where each candidate has been thoroughly assessed ensuring a strong fit with the position and the company.  Within this model the client is paying for tried-and-true processes, market and competitive intelligence, assessment services and management consulting.

When to Use Which
Use retained executive search if you are recruiting for senior level management where leadership competencies outweigh other requirements. Retained executive recruiters focus on assessing the nuances of candidates’ competencies and how they will impact team and operational performance and the hiring entity overall.  Unless you’re recruiting for a board-visible search at a large company, especially one public, you don’t need one of the big five (they’re less likely to be flexible on the contract terms than the tiers below them).  Consider using a firm the next tier down, or even a boutique firm--there are many good ones.

Use a well-respected and professional contingency firm if technical skill requirements trump others, or if the time:quality compromise must be weighted towards the former. Regardless of the type of recruitment company you use, research, reference, and select carefully;  there are many that are substandard.

I would say to use a retained

I would say to use a retained search firm when the role is mission critical enough to have a firm dedicated to the project. If any one my clients asked, then I would consider working on it!

Agreed! I would add that the

Agreed! I would add that the the level or title of the role is irrelevant when deciding between using retained or contingency. Instead, the complexity of the search (coupled with the urgency/criticality of the need) is what should drive this decision.

Dan, thanks for the comment;

Dan, thanks for the comment; I can't imagine very many circumstances where I'd turn away work either.

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