Which Recruiting Model is Best for You: Retained Search vs. Contingent Search

There are two components to hiring top talent. The first is Sourcing Candidates, and the second is Screening and Interviewing Candidates. The focus of this post is to help you understand the sourcing of candidates and the two primary recruiting models available for you to choose from: Retained Search and Contingent Search. Do you know the difference, or which one is optimal for your needs? To help you out, we are going to lay out the fundamentals and help you understand the ins and outs of each approach so that you can choose the option that best fits your company’s needs. Ready?

Let’s begin with the Retained Search

  • If you hire a recruiter that works on a retained basis, he will charge an upfront fee before the search even begins, and then another payment midway and a final payment upon hire. This is due to the additional amount of work and investments on behalf of the recruiter on your behalf to find you the right candidates.
  • This type of search includes much more service and focus from the recruiter. The recruiter will make investments on your behalf to access multiple job boards and other search tools, utilize proven methodologies and assessment tools as well as other formal screening, testing and more in-depth interviewing techniques in order to identify the right candidates for you.
  • Often, companies will use a recruiter on a retained basis when they are looking to fill a middle to senior positions and/or any other critical hard to place roles.
  • The priority for recruiters working under this model is focused entirely on getting the right person for the role and your company, whereas contingent recruiting is typically motivated by placing the first candidate that meets the basic criteria and at the highest salary, which is how they get paid. It is important to understand that the retained model takes a lot more time to identify the right person. You will likely not see any candidates for the first 30 days or more. But when you do, you can be assured that they have been fully vetted for your role and company.   
  • Another important note about retained searches is that these search assignments function on an exclusive contract basis only.
  • Another benefit of retained search recruiters is that they tend to offer a longer replacement guarantee on the new employee due to the enhanced confidence in the new hire.

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So, what’s a Contingent Search

  • A contingent search is often called a No Win, No Fee search. This means that the recruiter only collects money when the position is filled.
  • This fee is based on about 20-30% of salary and is paid in full upon hire, so you need to be prepared to write a big check.
  • The recruiter typically puts in very little effort up front, and if the search firm does not find someone within the first week or so, they typically move on to the next gig because they simply cannot afford to invest any more time than that since they only get paid on results.
  • The priority here is efficiency, getting the position filled ASAP. A recruiter working on a contingency basis will present many more candidates (but not necessarily better candidates) in hopes of making a placement. The recruiter will present most candidates within a week or two of receiving the order.
  • The search assignments are typically for lower level, and/or easy to fill positions.
  • Contingent search assignments are also typically not exclusive, meaning that the recruiter is in competition with other recruiting firms for the placement, which also creates a bigger urgency focus rather than a quality focus.
  • Contingency firms typically offer lesser guarantees. However, due to the large fees (typically 25-35% of first year total compensation) associated with higher level roles, they may offer a longer guarantee.