Retained vs. Contingency Search: How to Choose the Right Recruiting Model for Your Needs

Filling vacant job positions is complicated enough; you don’t need your search model to make it harder.

Retained and contingency searches are both excellent ways to fill positions, but there’s a time and place for each. Knowing which is right in specific hiring situations is key to reaching the best outcome.

Retained Search

You’re likely already familiar with retained and contingency searches, so we’ll keep the definition brief.

Retained searches are when you hire someone to outsource the recruiting process on your behalf. This is an exclusive, committed arrangement in which the firm is contractually obligated to fill the position, either through external sourcing and recruiting or by vetting internal candidates.

When a Retained Search Works Best

Many people believe a retained search is only worth the investment when filling executive-level roles. However, a retained search is also appropriate when you know you’ll fill a position with an outside candidate who has a very specific skill set. A retained search conducts a broad and exhaustive search for candidates who fit those unique criteria.

In addition, retained searches can actually result in quicker completions than contingency searches. If you need to fill a critical role quickly, whether it’s an executive position or a vital mid-level job, retained searches are your best option.

The Benefits of a Retained Search

When you hire a search firm on retainer, you get their full focus. They must fill the position you’ve contracted them for, so they dedicate more resources to the process and get you as close to guaranteed success as possible.

By conducting an exhaustive search, firms vet hundreds of candidates in new markets, along with internal candidates or referrals from your company. They keep you updated, providing visibility into the process so you know what progress has been made and how the market is responding to your search.

If the firm can’t find enough candidates who fit your requirements, have confidence that it’s because the candidates aren’t out there. The firm’s feedback allows you to calibrate your search parameters to better match the market.

Perhaps one surprising benefit of a retained search is your motivation. When you invest in the process from the start, you’re more motivated to allot the internal resources necessary to see a return. This often leads to faster placement.

Retained Search Fee Structure

A retained search is a high-level service involving more dedicated resources than a contingency search. Consequently, it comes with a higher fee, some of which is paid upfront.

Typically, the fee is a percentage of the candidate’s annual compensation paid in two or more installments throughout the process, including an upfront payment to begin the search and two other payments upon reaching timing or success milestones. The payments apply whether the firm is directly responsible for sourcing the chosen candidate or not.
Infographic: Retained vs. Contingency Search: How to Choose the Right Recruiting Model for Your Needs

Contingency Search

For a contingency search, you engage a firm to find and vet a job candidate, but you only pay the firm if they successfully fill the position with the candidate they sourced. This type of search comes with much less commitment and more flexibility.

When a Contingency Search Works Best

A contingency search works well if you’re not sure you’re going to make an external hire. For example, you may have a strong internal candidate or a great referral. Still, you may want to see a few more candidates to compare them and ensure you’re making the right choice.

Contingency searches are also appropriate if you have a larger pool of candidates, a limited budget, or a noncritical or less pressing role to fill.

The Benefits of a Contingency Search

Flexibility is the main benefit of contingency searches. They’re relatively commitment-free, so you can engage multiple firms and even continue to search independently.

You also undertake less financial commitment with contingency searches since you don’t pay for the service upfront. This works well for companies with limited budgets. Plus, if the firm never fills your role, you pay nothing. It gives you the opportunity to “kick the tires” of the candidate market without losing an investment.

Contingency Search Fee Structure

For this type of search, payment is contingent upon the firm filling the position. If they find the candidate you hire, firms typically charge a percentage of the candidate’s base salary on their start date.

Retained vs. Contingency Search: Choose What’s Right for Your Situation

Retained search and contingency search are both valuable hiring processes, but they serve different purposes and meet different needs. To decide which is right for you, consider the role you’re filling, the timeline of your hiring process, and your budget.

Whether you choose to use a retained search or a contingency search, we’re committed to providing you with a high-quality process and thoroughly vetted candidates. If you’re ready to start your search, contact us today.

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