June 13, 2024


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Difference Between Retained and Contingency Recruiting Firms

Companies have several choices when it comes to selecting the right type of recruiting company. Should you go with a retained or contingency based company. We will provide our thoughts on both services. So how do you as an employer decide which type of firm is right for your needs (?)

Retained Recruiting
Retainer based firms enter into contractual relationships with their clients for strategic search assignments. Since there is a contractual based relationship a retainer based firm will work exclusively on an opportunity until a successful candidate has been identified.

As the name implies retainer based firms will require an upfront fee to conduct the search. This fee is typically 50% of their total fee for the assignment. Retained firms operate on an exclusive basis which means the job will be filled through this recruitment company. They operate with processes and agreed on methodologies in place between the client and search firm. As a client you have peace of mind of a contractual agreement to protect your interest as well.

Retained search firms can establish a higher level of credibility with passive candidates. Because a retained search receive higher priority most candidates are more likely to take the call from the recruiter. Retained firms will share the name of the company up front to establish credibility. When speaking with candidates no need to be evasive with explaining your purpose for calling or sharing information about your client. For high level assignments retained searches are more appealing to executive level candidates. No need to randomly search for the dreaded purple squirrel.

We have found that many high level executives will only work with retained firms. They are also less likely to have their candidacy posted on national job boards especially when they want their search to be confidential. A retained firm depicts a level of seriousness on the part of the company to fill the position.

Contingency Recruiting
Contingency based recruiting firms will work on similar assignments while also working on other projects on their recruiting desk. Recruiters working contingency often will compete with the client’s internal recruiting department, job boards and usually other staffing firms who received the same search assignment. The catch is to present the best candidate before your competition beats you to the punch. The result at times can mean quantity over quality.

As stated above companies who utilize contingency recruiters typically open the assignment to other recruiters as well. This intent is to let the recruiting firms compete to see who can come up with the best candidates to submit for interviews the fastest. This sometimes result in a no win no pay approach by the recruiter. Situations have arisen where multiple contingency firms have claimed to have presented the successful candidate. These disputes will escalate to the point where the employer just decides that it’s easier to walk away from the entire situation. Contingency firms will be a lot quicker in sending candidates your way as they know the more candidates submitted the greater their odds are to make a placement. For some easily filled positions this may be ideal.

The Results
When your company has a hiring need for a mid management or lower candidate you should utilize a contingency based firm. If the job description is generic in terms of the skill set you are looking for then you should utilize a contingency based recruiter. Companies looking for a unique candidate in terms of skills and leadership qualities will hire a consultant. The consultant will provide true objectivity when it comes to recommending the best fit for your need. This is the ideal situation to use an experienced retained based firm.