Retained Executive Search Vs. Contingency Recruitment

What is Contingency Recruitment?

Contingent search is derived from the term ‘contingent’, defined by Oxford Dictionary as occurring or existing only if (certain circumstances) are the case; dependent on. This is exactly what the search means as well. In a contingent search, the payment is due from the organization to the recruitment firm only if they fulfil the conditions of the contract.

What is Retained Executive Search?

In retained executive search, a recruitment firm is paid based on a retainer to hire for executives in a company. In retained executive search, the recruiter must be paid even if they are unable to complete the search. Some executive search firms that are on a retainer are paid for each phase of the search. Generally, retained search firms are paid a lot more than contingent firms, and are bigger companies with several clients and thousands of employees at least.

Retained Executive Search vs. Contingency Recruitment

In retained search, the recruiting firm is paid no matter whether they succeed in their search or not. In contingent search, they are paid only when they succeed and the last designated step in the executive search process is complete, that of onboarding the executive.

In contingent search, it is up to the organisation to decide on the roles and responsibilities of the candidate, to offer compensation, and then successfully onboard the candidate once the interview is over. In a retainer search, all these responsibilities fall on the shoulders of the recruitment firm, and they will keep searching for the right candidate until one is found.

Pros and Cons of Contingency Recruitment

Pros

1. In a contingency recruitment, there is no upfront fee. You do not run the risk of having to pay upfront without any results.
2. The possible fee in a particular phase of the recruitment might also be lower than what you would pay for a retainer.
3. They may not have any direct experience in the industry that you are hiring for as they generally work across industries.
4. You have to pay the recruiting firm only if they are successful in securing the right candidate.
5. Contingent search firms will engage with you from the beginning to the end and take most of the responsibilities.

Cons

1. The number and kind of resources dedicated to each search is decided by the contingent search firm.
2. The recruitment consultants in contingent search firms are usually not as experienced as those in retainer search firm.
3. They generally do not approach passive candidates, which can be a great miss for you, as many of them are very good at what they do.
4. You may not agree to the contingent search business model of any size talent fits all roles followed by most contingent search firms. You may want more objectivity than that.

Pros and Cons of Retained Executive Search

Pros

1. You work with the best consultants in the business who work for your industry.
2. The recruitment firm works with your organization for all steps beginning with understanding the job description to onboarding a new hire, with more direct involvement at each step.
3. The candidates are more thoroughly vetted using a time-trusted process.

Cons

1. Higher cost of recruitment means that it becomes infeasible for project-based hiring.
2. You will need to give time to work with the recruiter as it is a collaborative process.
3. An up-front fee is most often required to retain the recruiter.

Why Use Contingent Search?

People are often vexed which one to pick when the set them against each other: Retained executive search vs contingency recruitment. People tend to use a contingent search firm at times when it is for non-critical roles. It takes a lot less time than a retained search. A contingent search is also costs a lot less than a retainer search. This mean that companies have to take less of a risk when using it. The fact that you need not pay a contingent search firm if they are not successful further brings down the risks involved.

What is the Process of Contingency Recruitment?

As we saw earlier, a contingent search process is designed to answer a certain problem, that of lower budgets, lesser time, and a not so critical role. Now let us look at the exact process of contingent recruitment right from the organization coming up with the job descriptions to the candidate being onboarded.

1. A detailed job description is shared with the contingency firm by the organization.
2. A fee and a period for recruitment is fixed by the contingency firm and the organization for each successful recruit.
3. The contingent search firm then moves to start using its strong network of candidates, establishing contact with them and describing the role and company details.
4. The recruiting firm then conducts an initial screening of candidates they think are a best fit. The list of candidates that clear the screening can be then submitted to the client for further consideration.
5. The client the conducts interviews to shortlist the candidates for the role.
6. The candidate is then made an official job offer by the client.
7. If the selected candidate takes up the job and completes a specific period in the company, then the contingent search firm would be paid their dues, as per the contract agreed upon by both company and contingent firm.

Retainer Executive Search vs. Contingency Recruitment, Which One is Better?

As a company, you must decide your priorities. Are you hiring for a critical role and are you willing to spend more money? Then you must go for a retainer search. But then you should be willing to spend more time collaborating with a recruiting firm going over deciding what to do at each step and how it will pan out. On the other hand, if you are not willing to spend so much, are looking for a quicker hire, and it is for a not so critical role, then contingent search can be a better option.

Fewer HR consulting companies actually offer both contingent search and retainer search, and such companies would also advise you which road to go down on so that you get the best talent for any position you are looking for while balancing costs and time taken.

An example of such an HR consulting company is Alp Consulting. But in addition to just recruitment, Alp also offers staffing solutions, payroll outsourcing and HR compliance. This means that all your HR needs are met with a single partner on your journey to hiring greater talent.

FAQs

1. What is engaged search?

Enagaged search is really a hybrid of contingent search and retainer search. In engaged search, the client pays a fee upfront (this makes it different from contingent search), but then pays the remaining amount only when the terms of the contract are fulfilled (this makes it different from retainer search). This gets the organisation the attention of the recruiting firm without requiring them to have to pay the whole amount at one go.

2. What is retainer placement?

Retainer placement involves the use of retained search to place a candidate in a company. Retainer placement is an alternative term for retainer search.

3. What is executive search?

Executive search is an HR function to recruit top-level talent for a company. This generally involves those in the C-Suite such as CMO, CFO, CHRO, CEO and CTO.

4. What is the fee for a recruitment retainer?

Typically, the fees for a recruitment retainer are between 15-25% of the new hire’s annual salary. This can be paid at one go or in parts. In case the candidate leaves within a time frame, some retainers offer a free replacement to the client immediately.

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Amit Saproo

Head Operations: RPO

Amit Saproo is the Head of Operations at ALP Consulting with nearly 17 years of experience in Executive Search, RPO, Leadership, and IT & Engineering recruitment. He leads nationwide recruitment programs across Technology, BFSI, and R&D domains, driving strategic hiring solutions for diverse client needs. Amit excels in building and managing high-performance teams that deliver scalable, end-to-end recruitment and consulting services.