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Retained Search vs Contingency Recruiting: Which One Should You Choose?

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Recruit CRM Published on Aug 10, 2021

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It goes without saying that hiring is the first and the most crucial step towards any organisation's success. When a recruiter helps an organisation hire the right person, it not just aids in building a brand for their recruitment agency but also helps the company build trust in the agency's drive and work. Additionally, the right hire will help boost the morale of everyone working without anyone lagging or slowing down. As a recruiter, you must understand what type of recruitment will give you and your client the best possible results. This is why it's essential to know a great deal about contingency and retained search models.

Though both retained and contingency recruiting are the two sides of the same coin, let's take a look into which of the following recruitment models (based on the assurance of payment) would work the best for your agency.

  • Retained search is a type of recruitment model where companies themselves approach the search agency to help them fill up a vacancy. This model works on a contractual basis, and the recruiter receives a portion of the fee decided upfront.
  • It ensures exclusivity and guarantees that the outcome will be fruitful and the most suitable candidate will be hired.
  • Here, a recruiter will be looking for candidates to fill up higher-level job positions like CEOs, Vice Presidents, CTOs, CXOs, CMOs etc. It's rarely done for junior level positions. As a result, retained search is highly confidential in nature. Companies mostly do executive search on a retainer basis. For instance, if Coca Cola wants to hire a new CMO, it'll not advertise for the same on job boards like— Glassdoor, LinkedIn, Monster etc. It'll get in touch with a reputable executive search agency to carry out the search confidentially.
  • Agencies based on this model usually have their recruiters charge around 20-30% of the candidate's salary. The amount is paid usually in three stages— 1/3rd of the payment is made on signing the contract, the next 1/3rd when an offer is made and the final 1/3rd when the candidate joins the company. Nevertheless, they can charge more in case the recruitment is niche and rare.
  • It's considered as a much more secure model because the amount they will receive for the job they do is not entirely dependent on the completion of the job. They are also not bound by a tight time frame and can look for a suitable candidate thoroughly and efficiently.
  • It's not the fastest and cheapest way (quite expensive), but it helps you find the best candidates and build a brand for yourself in the industry.

All About Contingency Recruitment

  • In Contingency search, the recruiter gets paid if and only if the candidate they find is successfully hired by the company and shows up for the job. The words "No win, no fee" describes this model the best. Louise Archer, Founder of Retrained Search talks about how recruiters spend about 80% of their time doing jobs that doesn't result in a fee.
  • Contingency recruitment agencies hire for clients on demand. The goal here is to get the best candidate but also faster than others. There is a lot of competition in this model of recruitment, and since there are no official contracts and everything is on a transactional basis, no one is bound exclusively. Whichever recruiter finds the suitable candidate faster than the rest gets paid. This uncertainty is what makes this model much more riskier and messy.
  • Agencies search and scan for multiple candidates at once. The positions that you are looking to hire people for are generally of low or mid-level. You will also have a contingency time period in which you have to look for a suitable candidate, and your fees will be around 12-30% of your candidate's first annual salary.
  • It helps you build a better relationship with your candidate as they know that you are as eager as the candidate themselves to get the job for them before the time period is over.

Retained vs Contingent: Which Is Better?

retained search

There are several factors that can determine which way to go. Contingency search is not as secure as retained for several reasons. Without a guaranteed source of income, a contingency recruitment model is riskier and not advisable to base your agency off on. However, if your recruitment agency is focused on hiring for more junior roles or attracting candidates from the bottom of the salary spectrum, then contingency recruiting might be a very good option. In fact, here retained search might be overkill.

From conducting one-on-one interviews with the candidates to working with the senior managers and executives of a company, you not only get to know your candidates better but also build future potential relationships with the company when you're doing retained search. In spite of being expensive, it's a much more convenient form of recruitment, and the upfront fee provides a sense of security. Recruiters can actually double or triple their revenue with the same resources.

Write to us if you're working towards shifting from contingency recruiting to a retainer model and we might feature your story!