Contingent vs. Retained Executive Search: Pros and Cons Uncovered

Choosing the right method to recruit top talent for an organization is imperative for business growth and success.

The two most common approaches are contingency and retained executive search.

Both these strategies have unique benefits and drawbacks, depending on the specific needs and requirements of the company.

 

Contingent search firms operate on a “no-win, no-fee” basis, which means they only receive payment if they successfully place a candidate with the client company.

This approach offers a faster recruitment process and is typically suitable for firms with tight deadlines or limited resources.

On the other hand, retained search firms provide an exclusive partnership, focusing on a narrower pool of highly-qualified candidates, including passive job seekers who aren’t actively looking for a new position.

Retained searches usually take longer and involve a three-payment schedule.

When evaluating the pros and cons of contingent vs. retained executive search, it’s important for companies to carefully consider their specific needs, budget, and the kind of talent they wish to attract.

This ensures the selection of the most suitable recruitment strategy that effectively addresses the organization’s requirements.

Understanding Executive Search Types

When it comes to hiring top talent, organizations have several options.

In this section, we’ll explore two popular methods of executive search: retained and contingent. We’ll define each type and discuss their respective pros and cons. Let’s dive in!

Retained Executive Search Defined

Retained executive search involves an organization engaging a search firm on an exclusive basis. The firm is paid a retainer fee, usually in installments, throughout the recruitment process.

These firms are typically hired for high-level, strategic roles in which quality and fit are of utmost importance.

Pros of retained search include:

• Thoroughness: Since the search firm has a financial commitment from the organization, they can dedicate more time and resources to finding the perfect candidate.
• Exclusivity: The search firm works solely for the client, ensuring that their efforts are solely focused on fulfilling the organization’s needs.
• Deep network: Retained search firms often have access to a vast network of passive and active candidates, which can help uncover hidden talent.

However, there are some downsides to retained search:

• Cost: The retainer fee can be expensive, making this method unsuitable for organizations with limited budgets.
• Time-consuming: The process of finding, vetting, and placing candidates can be lengthy, which may not suit businesses with tight deadlines.

Contingent Executive Search Explained

Contingent executive search, or contingency search, is an arrangement in which search firms only receive payment if they successfully place a candidate with the client company. Here’s a quick rundown of the pros and cons of this approach.

The positives of contingent search include:

• Cost-effective: Clients only pay for successful placements, reducing the risk of incurring costs for unsuccessful searches.
• Broad applicant pool: Contingent search firms often post job openings publicly, which can result in a larger and more diverse range of candidates as noted in this source.

On the downside, contingent search can have some drawbacks:

• Less dedicated effort: Since there is no guarantee of payment, search firms might not put as much effort into a client’s search as they would for a retained search.
• Less control: With a broader applicant pool, organizations may find it harder to identify the best candidate or ensure the right fit for their company culture.

Comparing Pros and Cons

Pros of Retained Search

Retained executive search firms are known for their expertise in finding top candidates for leadership roles. They work on an exclusive basis, which means they are the only agency working on a particular search for an organization.

Their deep understanding of the industry helps them identify highly qualified candidates, including passive candidates who may not be actively seeking new opportunities ¹.

This exclusivity allows them to maintain a high level of confidentiality throughout the search process, ensuring that sensitive information from both the organization and the candidate remains private².

Moreover, retained search firms are paid an upfront fee, which reflects their commitment to the organization and encourages a stronger partnership.

This investment in the search process ultimately results in a more customized and thorough approach, often leading to better long-term success³.

Cons of Retained Search

Retained search can be more expensive when compared to contingency recruitment. The pricing model typically involves an upfront fee, along with additional payments throughout the search process⁴.

Companies with a tight budget might find retained search services beyond their financial reach.

The process can also take longer, as retained search firms invest time in thoroughly understanding the organization’s needs and perform diligent research on each candidate⁵.

Smaller organizations or those in need of immediate solutions might find this longer process less suitable.

Pros of Contingent Search

Contingent search is a popular option for companies looking for cost savings and speed in their hiring process.

One key advantage is that contingent search firms operate on a no-win, no-fee basis, allowing companies to control cash flow. This reduces their risk, as they only pay when a candidate is successfully hired⁶.

The non-exclusive nature of contingency recruitment also means that multiple agencies can work on the same position⁷.

In turn, this casts a wider net in the candidate market and potentially generates more diverse applicant pools.

Cons of Contingent Search

Contingency searches tend to be more transactional in nature, which means that they might not build long-lasting relationships with the organization or provide tailored solutions.

Moreover, contingent search firms might have less incentive to focus on hard-to-find candidates, as they risk not receiving payment in the event of a fruitless search⁸.

As such, organizations seeking exclusive or highly specialized talent may benefit more from the dedication provided by retained search firms.

Footnotes

1. https://recruiterie.com/retained-search-contingency-search/ ↩
2. https://theceosrighthand.co/retained-search-vs-contingency-search/ ↩
3. https://scmtalent.com/retained-search ↩
4. https://cornerstonesg.com/retained-vs-contigency-search-firms/ ↩
5. https://www.fredericksonpartners.com/news/blog/retained-executive-search/ ↩
6. https://theceosrighthand.co/retained-search-vs-contingency-search/ ↩
7. https://recruiterie.com/retained-search-contingency-search/ ↩
8. https://www.fredericksonpartners.com/news/blog/retained-executive-search/ ↩