What is the difference between retained and contingency search, and which is best for my organization?
In the world of recruitment services, there are two common approaches: retained and contingency search. These two methods play a crucial role in helping companies find the right talent for their needs. Let’s dig into the intricacies of retained and contingency search and explore their definitions, differences, and the pros and cons associated with each.
Retained Search:
A retained search is a recruiting model where a client engages a search firm exclusively for a specific leadership position. In this model, the client pays a retainer fee upfront for the guarantee of a hire. The retained search model is typically used for critical, strategic, hard to fill, or high-level positions within an organization.
Contingency Search:
Contrary to a retained search, a contingency search operates on a “no-win, no-fee” basis. In this model, recruiters are only compensated if their candidate is successfully hired by the client. A contingency search is commonly used for mid-level or specialized roles where the talent pool is larger.
So, what are the pros and cons of each type of search?
Retained Search
- Pros: For a retained search, the value is in the exclusive commitment, dedicated resources, high-touch client management, and market expertise. The retained search firm partners with hiring managers to align on search strategy based on market feedback, while also providing analysis and a detailed candidate summary report on each candidate submitted. Most retained search firms specialize in specific industries or fields, which allows them to provide their in-depth knowledge of the market and a targeted approach. Retained search firms pursue both active and passive candidates. Additionally, because of their market expertise, they not only provide up-to-date market data, but analysis of candidate’s interview answers compared to their peers. All retained search firms should also offer an employment guarantee. If the hire leaves, the search firm will replace the candidate for a designated time.
- Cons: Retained search firms require a retainer fee before the search begins, which requires trust in the quality of service up front. Retained search also tends to be more expensive as the service is more hands on and customized.
Contingency Search
- Pros: As for contingency search, the service tends to be cheaper as they are only providing resumes. Payment to the firm is contingent upon hiring one of their candidates. These searches can be ideal for organizations with limited resources or non-critical hires. Contingency firms deal primarily with active candidates looking for work and may result in a shorter recruitment cycle.
- Cons: Contingency search firms do not provide market data, interview analysis, or dedicated resources. These firms provide candidates in their database, and do not pursue passive candidates. Passive candidates are those professionals not actively seeking new employment opportunities. Lastly, contingency firms rarely guarantee employment and when they do, it is for a shorter time compared to retained.
What does this mean for you? It means that choosing between retained and contingency search depends on the unique needs and priorities of your organization. Retained search offers exclusivity, specialized expertise, and access to top-tier candidates but comes with upfront costs and a longer timeline. On the other hand, contingency search provides a cost-effective and faster solution, but you will see only the market that exists in their database. Ultimately, a thoughtful evaluation of the hiring requirements and resources will guide you in selecting the most suitable approach for your recruitment needs.