As the world changes and becomes more unpredictable, strengthening the upper levels of management and developing resilient C-suite executives has never been more critical than it is today. Leadership teams have been challenged to confront tough challenges head-on despite the ongoing pandemic and rising inflation rates. However, attracting and recruiting highly qualified leadership talent has become quite a challenge due to the competitive nature of the labor market.
To ensure the right seats are filled, companies are turning to executive recruiters to help them navigate the selection process. If your organization is considering an executive search firm to assist with your leadership hiring needs, you might be wondering what the difference between retained executive search and contingency search is and which solution would be better for your search needs.
If so, let’s take a look at the difference between these two search models to help you determine the type that best aligns with your goals:
Retained Search: A strategic solution for a strategic need, employed to identify, engage and fill highly specialized, confidential or critical leadership talent, typically at the C- or executive-level. Working on a retained basis means the firm will charge an upfront fee to the client to conduct a search and operate through an exclusive agreement to secure the hard-to-find candidates. Clients partner closely with an executive search firm to recruit highly qualified talent that meets their specific organizational needs and requirements.
Contingency Search: A tactical solution for a tactical need and differs from retained executive search in that the firm is only paid once a client hires the talent located by the firm. In other words, the recruitment agency is not compensated until their work is fully completed. Clients that need to fill mid-management to director-level positions often contract one or multiple contingency search firms to fill a role due to their non-exclusive nature and access to larger applicant pools.
Retained Search: Involves an agreement whereby a hiring enterprise contracts exclusively with one executive search firm to find a highly qualified candidate to fill a senior leadership position.
Contingency Search: Does not involve an exclusive agreement. A contingent recruiter will work diligently to fill an open role on behalf of an employer to earn their fee. During the recruitment process, they can compete against other recruiters, agencies, the client’s internal HR team, etc.
Retained Search: The investment is higher than that of a contingent search because of the scope of work included in the agreement. The fees for retained search are paid on a retainer basis throughout the life of the project, covering locating, evaluating, and hiring a candidate.
Additionally, a placement is guaranteed when hiring most retained firms. If the placement falls through for whatever reason, a new search will likely be executed at no additional charge.
Contingency Search: The recruiter only gets paid once a candidate is hired. If they don’t produce an appropriate match for the role, the employer doesn’t have to pay for the service. The low initial investment typically means the hiring process goes faster than a retained search engagement.
Both the retained and contingent recruiting models rely on extensive experience to find highly qualified candidates for their clients. While there’s less use of retained search models among mid-level management positions than among executive or senior roles, the difference between them is not the caliber of recruiters, but rather the scope of the work performed and nature of the relationship once the search is completed.
Retained Search: Develop genuine relationships to match the right leadership candidates with the right roles. Deep relationship building is the foundation to a successful retained executive search.
Contingency Search: Tends to be more transactional in nature. This is not to say a contingency search will not deliver superior client service or result in meaningful relationships, but the goal with this approach is to find a quality candidate as efficiently as possible.
Retained Search: A high-touch and comprehensive recruiting process that includes detailed client and cultural interviews, original research on candidates, extensive outreach, as well as thorough screenings, assessments, background checks and compensation negotiations. As a result, the process is more laborious on the part of the recruiter, requiring more time to complete than other search models.
When an organization needs to find the best candidate for a leadership role —locally or nationally—especially in today’s ultra-competitive labor market, retained executive search is the superior option. The attention to detail and exclusivity and comprehensiveness of the retained search model is ideal for larger companies who want to find the optimal leader for a C-suite or board-level position.
Contingency Search: A quick and expedient way to gain access to a vast network of talented executives. Typically, small to medium-size businesses opt for contingency search to help them find a range of qualified directors, managers and mid-level executive talent quickly. For hiring managers who need experienced leaders and prefer interviewing several candidates that meet the requirements for a given position, contingency search is a strong option.
There are advantages to choosing one recruitment model over the other, but it all depends on the organizational need. If you need to hire a mid-level manager, there are benefits, such as cost savings in the short term, to choosing a contingency firm. If you need to fill a seat in the C-suite or a board chair, investing in a retained executive search firm that takes the time to understand your unique company culture and hiring needs will ensure long-term success for higher-level placements.
For more on navigating the executive selection process and choosing the right recruitment partner for your business, download our Buyer’s Guide to Executive Search.