Which Agency Model Should You Choose for Your Next Search

Contingency Search vs. Retained Search

As you may know, finding qualified and talented employees to join your company is not easy. It can be daunting to look for someone who has the skills necessary for a particular role and fits into your company’s culture. As such, it is common practice for businesses to seek help from recruitment agencies to find the best possible candidates. Should you decide to do this, you may encounter two models from which to choose: contingency and retained searches.

The question now is: What is the difference between the two, and which one should you choose? Read on to learn more about how each model works and what situations they are most ideal for.

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What is Contingency Search?

Contingency search firms are typically most suitable for hiring mid-level or lower positions. As its name suggests, you only pay the firm if you hire the candidate that they recommend, so it is common for businesses to hire multiple firms at a time. Thus, the competition can be intense and difficult to manage as contingency search firms may compete with other firms, direct applicants, or hiring managers in many cases.

The payment will typically come in the form of a small percentage of the candidate’s starting annual salary, but the percentage will vary based on industry, difficulty in search, recruiter’s experience, and others. The general range can be from 15% to 30%, but it can also be more or less depending on the factors mentioned. Contingency searches are mostly beneficial for cases when you need to fill a position quickly or need multiple candidates to hire. Since you only pay the firm if you hire their candidate, you do not lose any money from hiring more than one firm at a time.

What is Retained Search?

Retained searches are the opposite of contingency searches. Its name implies that you are hiring a recruiter to retain them, which means they dedicate their time and expertise in helping you find candidates. These jobs are more commonly found in the high-end or top-end of the market, which involves the top positions with high salaries but fewer candidates available. Thus, retained searches are often utilized to fill in senior-level or executive roles, or generally positions that are hard to fill or require confidentiality.

When hiring a retained search firm, you give them exclusive rights to fill in whatever position you need. As such, the search process will be much more rigorous and comprehensive as the firm works to find the best possible candidate for the job. The payment scheme works similarly to a contingent search, where the firm gets a percentage of the candidate’s starting annual salary. However, retained search firms will get a significantly larger percentage, sometimes reaching 50% and often paid based on the total compensation package (salary + bonus) for the first year.

With retained searches, you will pay the firm even if you do not select anyone from their candidates. However, the payment is often broken down into different parts. The first payment will be to start the search, essentially an upfront payment to engage the firm’s services. The second payment will be made upon receiving a shortlist of candidates, and the final payment will be made once you have chosen a candidate. All these payments will total to the percentage you have agreed upon with the firm.

Generally, contingent searches are viewed to be the mass-market option when you need to fill many positions or lower-level roles. You can benefit from hiring multiple firms to do this to get as many candidates as possible without spending a fortune. Retained searches, on the other hand, are more suitable when looking for higher-level positions where the talent pool tends to be smaller. However you wish to proceed with an agency search, be sure to ask for references and do the proper vetting. If you would like to discuss our services, please contact us.