Understanding the Differences Between Contingent and Retained Search Options

When a company needs to fill key positions, especially those that require specialized expertise or leadership, partnering with a staffing agency is a strategic move. Staffing agencies offer two primary types of recruitment services: contingent search and retained search. While both aim to connect organizations with qualified candidates, the two approaches differ significantly in terms of process, payment structure, candidate pool access, and level of commitment. Understanding the differences between contingent and retained search options can help companies choose the right approach for their hiring needs.

What is Contingent Search?

Contingent search is a type of recruitment service in which the staffing agency is paid only when they successfully place a candidate in the role. This model is typically used for non-executive, mid-level, or high-volume positions, but it can also be applied to roles that require specialized skills. In a contingent search, the client company engages multiple recruitment firms or relies on its own internal team, with the understanding that only the agency that successfully fills the position will be compensated.

Key Characteristics of Contingent Search:

• Payment upon Placement: The most defining feature of contingent search is that the agency is only paid once a candidate has been hired. This payment structure incentivizes recruiters to work quickly and focus on roles where they feel confident they can place a candidate.

• Non-exclusive: In many cases, contingent search assignments are non-exclusive, meaning that multiple staffing firms might be working on the same role. This increases the competition among recruiters to fill the position first.

• Faster Process: Since contingent search firms are often competing to place the candidate, there’s an emphasis on speed. Recruiters focus on presenting candidates as quickly as possible, which can lead to a shorter time-to-hire for the client company.

• Breadth Over Depth: Given the need to work quickly, contingent search firms may cast a wider net, focusing on candidates who are readily available or actively seeking new opportunities. The search might not go as deep into passive candidate pools, as the focus is on volume and speed rather than targeted outreach.

What is Retained Search?

Retained search, often used for executive or highly specialized roles, involves a more exclusive and in-depth process. In this model, the staffing agency is engaged on an exclusive basis and is paid a portion of their fee upfront, regardless of the outcome. This fee is typically divided into stages, with payments made throughout the recruitment process, whether or not a candidate is ultimately hired.

Key Characteristics of Retained Search:

• Exclusive Engagement: Retained search firms work exclusively on behalf of the client, meaning the company does not engage multiple agencies to fill the role. The retained firm is the sole partner in the search, allowing for a more focused and dedicated effort.

• Upfront Fee Structure: In contrast to contingent search, retained search agencies are paid in installments, often with an initial fee due when the search begins. This fee structure reflects the depth and commitment involved in retained search engagements.

• Comprehensive, In-depth Search: Retained search firms typically take a more methodical and exhaustive approach. They conduct detailed research, leverage extensive networks, and often engage passive candidates who are not actively looking for new roles. The goal is to find the best long-term fit for the organization, even if the process takes longer.

• Focus on Quality: Since retained search firms are paid regardless of how quickly they present candidates, they prioritize finding the right match over simply filling the role quickly. This often results in a higher level of scrutiny, including deeper background checks, thorough candidate vetting, and alignment with the company’s culture and values.

Key Differences Between Contingent and Retained Search

Payment Structure and Risk

• Contingent Search: The key feature of contingent search is that the agency only gets paid if they successfully place a candidate. This means that the financial risk lies with the recruiter, not the client. As a result, contingent search firms are often incentivized to prioritize speed over depth, as they need to secure the placement to receive payment.

• Retained Search: Retained search firms, on the other hand, are paid in stages, with a portion of the fee upfront. This shifts some of the financial risk to the client, as they are paying for the service even if the recruitment process takes longer or no candidate is ultimately hired. However, this fee structure also allows the retained firm to dedicate more time and resources to the search, ensuring a more thorough and tailored approach.

Candidate Pool and Search Depth

• Contingent Search: Contingent search agencies often focus on candidates who are actively seeking new roles. This means they might rely heavily on job boards, internal databases, and candidates who are more immediately available. While this can result in a faster hiring process, it may limit access to passive candidates—those who are currently employed and not actively looking but might be open to the right opportunity.

• Retained Search: Retained search firms typically engage in a more exhaustive search process, reaching out to passive candidates who may not be visible through traditional recruitment channels. This allows them to identify and attract highly qualified individuals who are not actively applying for new positions but may be the best fit for the role.

Exclusivity and Commitment

• Contingent Search: In a contingent search, the client company may engage multiple agencies to work on the same role, often leading to competition among recruiters. This non-exclusive model can lead to a more transactional approach, where recruiters focus on finding candidates quickly rather than taking the time to find the perfect match.

• Retained Search: Retained search firms work exclusively on behalf of the client, which fosters a more strategic and collaborative relationship. The retained firm becomes an extension of the client’s internal team, offering a more personalized and consultative approach to finding the ideal candidate.

Speed vs. Quality

• Contingent Search: Contingent searches are typically faster since agencies are motivated to place a candidate quickly to secure payment. However, the emphasis on speed can sometimes result in a less rigorous vetting process or a focus on candidates who are more immediately available rather than those who are the best fit for the role.

• Retained Search: Retained searches often take longer because they involve a more comprehensive process. The retained firm takes the time to deeply understand the company’s needs, conduct extensive research, and vet candidates thoroughly. While this process may be slower, it usually results in a higher quality hire.

Which Approach is Right for Your Business?

Choosing between contingent and retained search depends largely on the nature of the role you need to fill and your company’s hiring priorities.

• Contingent Search: If you are hiring for mid-level, non-executive, or high-volume positions where speed is a priority and there is less risk associated with making a hire, a contingent search may be the best option. It allows you to engage multiple agencies and pay only when a successful placement is made.

• Retained Search: For senior-level or highly specialized roles, where the quality of the hire is critical, retained search is often the better option. It offers a more tailored, in-depth approach and is particularly valuable when filling leadership positions or roles that require a long-term fit. The upfront fee structure ensures that the agency dedicates the necessary time and resources to finding the right candidate.