Hiring the right talent is crucial to the success of any business. But with so many recruitment strategies available, it can be tough to determine which one will work best for your company’s unique needs. Contingent and retained search are two of the most common methods businesses use to find candidates, but they each serve different purposes and have their own benefits and drawbacks.
So, which one should you choose? This article will break down the differences between contingent and retained search, explain when each method is most effective, and provide actionable insights to help you make the right choice for your company. By the end, you’ll have a clear understanding of which approach will help you attract top talent and meet your hiring goals.
What is a Contingent Search?
A contingent search is a recruitment model where a company hires a recruiter to find candidates for open positions, but only pays the recruiter if a candidate is successfully placed. This model is typically used for filling lower to mid-level roles and positions that require a faster hiring process.
How Contingent Search Works
In contingent search, the recruiter acts as an external partner, sourcing candidates and presenting them to the hiring company. However, the hiring company can work with multiple recruiters simultaneously. The recruiter only receives compensation if their candidate is hired. This creates a competitive environment where the recruiter is incentivized to fill positions quickly.
Pros of Contingent Search
- Cost-Effective: There are no upfront costs, and the recruiter only gets paid once a candidate is hired. This makes contingent search a low-risk option for businesses with tight budgets.
- Speed and Efficiency: If you need to hire quickly, contingent search can often deliver faster results, as multiple recruiters work on the same role to compete for the placement.
- Flexibility: Companies can engage with multiple recruiters to cast a wide net and increase their chances of finding the right candidate.
Cons of Contingent Search
- Limited Commitment from Recruiters: Since recruiters are only paid on successful placement, their level of commitment may be lower than that of a retained recruiter. The focus might be on filling the role as quickly as possible rather than finding the best possible candidate.
- Higher Competition: Because several recruiters may be competing for the same role, the quality of the candidate pool may vary, and communication between recruiters can be chaotic.
- Less Vetting: While contingent recruiters may find good candidates, the vetting process is often less thorough compared to retained search, which could lead to a higher turnover rate.
What is a Retained Search?
In contrast to contingent search, retained search involves a recruiter who is hired on an exclusive basis and receives an upfront payment for their services. This approach is often used to fill high-level executive roles or specialized positions. The recruiter is responsible for identifying and vetting top-tier candidates and typically works in a more dedicated and structured way.
How Retained Search Works
When a company engages in retained search, they enter into a formal agreement with the recruiter to exclusively handle the hiring process. Typically, the hiring company pays a portion of the fee upfront, with the remaining balance paid upon completion of the search and successful placement of a candidate.
Pros of Retained Search
- Dedicated Focus: Since the recruiter is working exclusively on your role, they can devote more time to finding the right candidate and vetting them thoroughly.
- Access to a Larger Network: Retained recruiters often have access to a larger, more diverse pool of high-quality candidates, many of whom may not be actively seeking new positions (passive candidates).
- High-Level Expertise: Retained recruiters specialize in executive or niche hiring, bringing expertise and insight into the search process. They often have deep industry knowledge, which can help identify candidates who are an ideal cultural and professional fit.
- Long-Term Value: The time spent vetting candidates and developing a tailored strategy ensures that the hires made through retained search are more likely to succeed and stay with the company longer.
Cons of Retained Search
- Higher Initial Cost: Because retained search involves upfront payments and a more thorough process, it can be more expensive than contingent search. This may be a barrier for smaller companies or those with limited hiring budgets.
- Longer Process: The recruiting process may take longer since the recruiter is searching for highly specialized talent and conducting thorough interviews and background checks.
- Limited Flexibility: The exclusive nature of retained search can sometimes make it less flexible for companies that may need to adjust their hiring strategy quickly.
Key Differences Between Contingent and Retained Search
Now that we’ve explored the fundamentals of each recruitment method, let’s compare the two in greater detail. Understanding the key differences between contingent and retained search will help you choose the right strategy for your hiring needs.
Financial Commitment
- Contingent Search: No upfront fees. Payment is made only when a candidate is successfully hired.
- Retained Search: Upfront payment is required, with the remaining fee due upon successful placement.
Recruiter Commitment
- Contingent Search: Lower commitment from recruiters, as they are only paid if they place a candidate. They may split their attention between multiple clients.
- Retained Search: High commitment, as recruiters are exclusively hired by one company and paid upfront. They dedicate more resources to finding the perfect candidate.
Time and Speed
- Contingent Search: Faster turnaround time. Multiple recruiters can work on the same position to increase the speed of filling the role.
- Retained Search: Longer process due to more thorough vetting and searching for high-level or specialized candidates.
Candidate Quality
- Contingent Search: While it can yield candidates quickly, the quality may vary since recruiters are focused on speed rather than depth.
- Retained Search: Focuses on high-quality candidates who are thoroughly vetted, often accessing a pool of passive candidates who may not be actively seeking new roles.
Ideal Use Case
- Contingent Search: Best for filling lower to mid-level roles, high-volume positions, or when speed is a priority.
- Retained Search: Best for executive, senior leadership, or highly specialized roles that require a thorough search and long-term commitment.
When Should You Choose Contingent Search?
Contingent search is a great option when:
- You need to fill multiple positions quickly.
- You are hiring for entry-level or mid-level roles.
- You have a limited budget or want to avoid upfront costs.
- You are okay with working with multiple recruiters to increase your chances of a quick hire.
Pro Tip: To make the most of contingent search, ensure clear communication with the recruiter and set expectations upfront. You can also consider offering an incentive to recruiters who fill your role quickly and efficiently.
When Should You Choose Retained Search?
Retained search is the better option when:
- You need to fill senior executive or highly specialized roles.
- Your company values quality over speed and is willing to invest in a more thorough hiring process.
- You want a dedicated, exclusive recruiter who can devote significant time and effort to your hiring needs.
- You need access to a broader network of passive candidates.
Pro Tip: Retained search is an investment in long-term success. While it may take longer, the quality of candidates and fit for your organization will often lead to higher retention and long-term satisfaction.
Real-World Examples & Case Studies
Case Study 1: Using Contingent Search for Retail Expansion
Company: Walmart Walmart, a global retail giant, frequently uses contingent search for high-volume, low-to-mid-level positions such as store managers, department heads, and associates. In one of their recent expansions in the U.S., Walmart needed to fill more than 50 store manager roles across multiple states to accommodate a rapid expansion. To meet the aggressive timeline, they turned to contingent recruitment models.
Outcome: By utilizing multiple contingent search agencies, Walmart was able to quickly fill the roles and keep up with their expansion. However, there were some drawbacks: despite the quick hiring, turnover rates were higher than expected due to the less thorough vetting process, which is common in contingent search scenarios. This led to an ongoing recruitment effort to replace candidates who didn’t stay long term.
Source:
- “Walmart hiring hundreds of store managers amid expansion” – Forbes
- “How Walmart’s Hiring Process Stays Efficient with Contingent Search” – RetailDive
Case Study 2: Retained Search for Executive Leadership
Company: Microsoft In 2014, Microsoft was undergoing a significant transformation as it shifted its focus toward cloud computing and digital services. As part of this strategy, Microsoft needed to hire a new Chief Technology Officer (CTO) to lead this digital transition. Given the specialized nature of the role and the criticality of getting the right fit, Microsoft opted for a retained search model to find the best candidate.
Process and Outcome: Microsoft engaged a retained search firm to conduct an exhaustive, exclusive search for the role. After several months, the company hired Kevin Scott, who was previously the CTO at LinkedIn, as its new CTO. Kevin’s leadership was instrumental in Microsoft’s accelerated cloud adoption, contributing to the company’s success in cloud computing and AI technologies. The retained search ensured a thorough vetting process, ensuring a high-level executive who not only had the technical skills but also fit the company culture.
Source:
- “Microsoft names Kevin Scott as CTO” – Microsoft News
- “Microsoft’s Cloud Transformation: Leadership and Innovation” – TechCrunch
FAQs: Clearing Up Common Confusions
What’s the main difference between contingent and retained search?
Contingent search works on a success-based model, where recruiters are paid only if they successfully place a candidate. Retained search involves an upfront fee and an exclusive agreement with the recruiter, who dedicates more time and resources to finding the right candidate.
How much does retained search cost, and is it worth it?
Retained search is more expensive than contingent search due to the upfront fees and dedicated attention. However, it’s an investment in quality candidates, especially for high-level or specialized roles, and often leads to better long-term results.
Choosing between contingent and retained search ultimately depends on your company’s needs. If you require speed, flexibility, and are filling multiple entry-level roles, contingent search may be the way to go. However, if you’re seeking high-quality candidates for executive or highly specialized positions, a retained search will offer the focus and dedication needed to find the right fit.
At Constellation Search Group, we understand the complexities of recruitment and can help you decide which search method is best suited for your organization. Whether you need high-volume hiring or are seeking a dedicated executive search partner, we’re here to help you attract the best talent.
