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How is Retained Executive Search Consulting Different from Contingency Recruiting?

When evaluating a search firm, one important factor to consider is whether the search firm is retained or contingent, as this factor could impact the overall success of the search.  

In this article, we define contingency recruiting and retained executive search consulting and show how they affect the client and the search agency differently.

What is Contingency Recruiting?

Contingent search firms often seek to place as many candidates as possible in the shortest amount of time, working on several assignments at once. Contingent firms offer their service with no money up front, and only get paid for candidates who are hired from the resumes they present.  

Contingent recruiters access local and regional candidates mostly in mid-management roles who are actively looking for a new position. The recruiter’s process is largely sales based and focuses on maximizing the number of clients and candidates. This is a benefit to the candidates.

It is common practice for contingent search firms to deliver a large group of candidates by presenting a large number of resumes. However, these resumes tend to be all over the place (as it relates to level of experience) since there is less time for collaboration with the client.

When utilizing a contingent based search firm, it can be a hit or miss situation. Contingent staffing companies typically cannot afford to invest too much time into any given project since they are in competition with others and there is no guarantee they will secure a placement.  Often times, if a particular search assignment is not gaining momentum, contingency recruiters have little incentive to continue and will move on to another assignment.

In summary:

  • Recruiter doesn’t get paid until (or unless) the client hires one of the recruiter’s candidates
  • Recruiter does not operate on an exclusive basis and is usually in competition with the client’s internal HR department, direct applicants and other recruiting companies to get the hire
  • Used when several candidates are likely to be qualified for the position, rather than the specialized nature of high-level executives
  • Used when filling multiple positions with the same job description at once
  • Used when a company wants to handle screening, interviewing and negotiating with candidates

What is Retained Executive Search Consulting?

Executive search firms operate on an exclusive, client-centered basis, with a limited number of assignments at one time. Executive search firms often find candidates with diverse backgrounds and have access to candidates who are not actively seeking a new position. These firms are engaged in all aspects of the search process, from defining the search through candidate on-boarding.

Retained firms charge a consulting fee (retainer) for the assignment, consistent with their in-depth advisory work. Executive search consultants deliver high-quality service, a slate of highly qualified candidates, and strive to develop long-term relationships built on trust and industry knowledge.

The relationship with a retained firm tends to be much more collaborative in nature.  Retained firms work closely with the HR department, Senior Leadership Team, Board of Directors or Search Committee. Retained Executive search consultants begin by understanding their client’s industry, business strategy and unique needs, and employ highly sophisticated methodologies in order to meet them. These methodologies include competency and culture-based interviewing, referencing and various other due diligence processes, all centered on the client’s needs. Retained consultant success is defined by the long-term commitment and impact of the person hired. They are motivated to help secure a lasting, successful executive hire for their client.

Retained Executive search consultants also often access senior executives who may not be actively seeking a new position, and treat their potential interest with a high degree of confidentiality. They can help these hidden candidates see the potential advantages of making a move for the right opportunity.

In summary:

  • Recruiting firm is paid retainer fee, which is a percentage of the placement fee at the beginning of the search. The total fee is usually based on a percentage of the annual salary offered to the selected candidate.
  • Recruiter operates on an exclusive basis, not in competition with other firms
  • Provide weekly updates and communication on the search progress
  • Typically utilized for Senior Leadership / Executive roles / C-Suite
  • When filling an executive-level position or a position in which the best candidate – not just a qualified candidate – is needed
  • When a company wants help with screening, interviewing and negotiating with candidates

Aside from the definition, they differ in an important way

Generally, searches handling senior executive roles and c-suite roles are handled on a retained basis. The client cannot fill the role internally, so they are looking for a search agency who partners with them.

And the word partners is the key.

As mentioned previously, contingency firms compete for the same client. Since there isn’t any money on the table, a client will often “hire” multiple firms. And whoever fills the role first wins. As a result, the level of relationship is vastly different. It is far more transactional. Sometimes, the client ends up finding a candidate using their own internal HR department … leaving 2 or 3 agencies in the lurch, time wasted and unpaid. Or a contingent firm drops out of the race altogether, because they know there are multiple agencies involved. Another major problem with contingency searches is multiple agencies are all chasing the same pool of candidates.

That is not to say contingent firms don’t want to build relationships. However, given the nature of the two business models, the retained search firm model lends itself to building relationships that are longer-term and built over time.

At Reeder & Associates, we value the collaborative effort a retained consulting arrangement provides and believe this is truly the best way to handle high-level executive placement. To learn more about partnering with us for your next candidate search, contact us today.

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