The difference between contingency and retained recruitment

There are instances where companies leverage the services of recruitment agencies. This could be because the brand has no hiring process in place, needs highly specialised talent or the recruitment aspiration is greater than the in-house recruiter’s bandwidth. Whatever the reason, it’s imperative to discuss the two different models of agency recruitment: retained and contingency recruitment.

This post explains in detail the nature of these two types of search and highlights areas in which they both vary.

What is retained recruitment?

Also termed retained search, this is a type of recruitment in which a client engages a recruiting firm on an exclusive basis to find candidates to fill certain roles. Under this arrangement, the client pays the search firm an upfront fee to commence the search and gradually completes the payment as defined targets are reached.

It’s a stress-free type of recruitment for clients as the search firm does the bulk of the work once the methodology and processes have been agreed upon. However, both parties still work in close alliance till the ideal candidate is hired.

What is contingency recruitment?

Contingency recruiting is a type of recruitment in which a client engages multiple search firms to find candidates. However, under this model, no upfront fee is paid to search firms to commence operations. They only receive their pay when the candidate they present is hired for the role.

The “many hands” approach of this model of recruitment increases the client’s access to a wider talent pool. Its competitive nature helps secure candidates much faster. Additionally, smaller brands are encouraged by the fact that they only have to pay when a qualified candidate is hired.

With a good understanding of what these two types of recruitment are, let’s unpack what makes them different from each other.

Contingency recruitment vs retained recruitment: How they differ from each other

Below are various points on how contingency and retained recruitment are different

Exclusivity:

The element of exclusivity is where the difference between retained and contingency recruitment really stands out. A retained search firm works with its client on an exclusive basis. Only that search firm is contracted to find highly qualified candidates to fill the relevant role.

However, this is not the case for a contingency search. Under contingency recruiting, the search firm isn’t the only one tasked with finding a qualified candidate for the role. The client engages different search firms; there’s a subtle competition among the various contingent recruiters to provide a successful candidate.

Brand representation and quality of service:

Search firms are ambassadors for their clients. Candidate experience, which includes the candidate’s encounter with the recruiter, matters a lot because it affects the image of the client and the impression the candidate has of them.

Retained recruiters offer a better chance of brand representation. This is because the retained search firm is committed to finding quality candidates for its client. Therefore, they exercise much discretion, communicate properly and make every reasonable effort to ensure that in the course of interacting with the candidate, they portray their client in good light.

These are indicators that the client means business as far as hiring candidates is concerned. Retained recruitment is also characterised by a high quality of service because the search firm’s entire attention focuses on the client’s recruitment needs.

Contingency recruitment is fraught with the risk of poor brand representation. The recruiting agencies know that they’re not working exclusively with the client, so they might not be passionate about selling the brand to candidates. The setup could lead to a ridiculous outcome in which one candidate would be contacted by multiple recruiters for the same role.

Such a situation would suggest that the client is desperate and disorganised.

There’s also the danger of a client’s brief dropping lower on the list of priorities. The recruitment firms might not feel driven to find an ideal candidate and could neglect or entirely abandon the client’s brief for an easier or more promising one.

It’s worth stressing that this doesn’t mean that all retained recruiters will give excellent service or good brand representation, and neither does it imply that every contingent recruiter slacks in delivery. These points are only to emphasise what’s typical in each model.

Timeframe:

Retained recruiting is geared towards finding the best candidate for the role. Consequently, the firm involved is tasked with going to extra lengths to find a candidate who lives up to the billing. Conducting in-depth searches and multiple interviews to access applicants will definitely require a significant amount of time.

Contingency search is typically faster because the search agencies don’t need to do any extra work. Their responsibility is to find a candidate who is good enough and assess them. A cursory look at their CV and an interview are enough to determine whether the candidate is reasonably competent before forwarding them to the client for final interviews.

According to the Recruiting Benchmark Report of 2019, the average time to fill a job opening through contingent recruitment is 39 days. It takes contingent recruiters way less time because their responsibility isn’t to find the ideal candidate, nor do they have to handle the entire evaluation and hiring process. If urgency is key, then contingency search is the way forward.

Ideal situation:

There are instances when it’s necessary to fill a vacancy in a company as quickly as possible and relying on the efforts of a sole recruiting agency won’t seem practical. Where this is the case, contingency recruiting is the best bet.

A contingency search is also the way to go if the client wants swift and pocket-friendly access to a vast network of talent. It boosts an employer’s chances of tapping from a wide talent pool and enables them to reap the benefits of different perspectives and recruitment ideas.

Due to its nature, contingency recruiting is ideal for filling lower to mid-level vacancies. It gives the clients an array of options to choose from.

If a client wants candidates for executive and senior-level roles, retained recruiting is just what the doctor ordered. This recruitment model is the better alternative when a client wants the very best candidate possible for a C-suite, board-level or otherwise leadership position.

While it restricts clients to a limited talent pool, it’s perfect for highly competitive markets and larger companies.

Payment:

The distinction between contingency and retained recruitment stands out prominently in the area of payment arrangement. With contingency recruitment, no fees are paid upfront for the search firms to commence the candidate hunt. Even when they find candidates and forward them to the client for final assessment, their pay isn’t guaranteed.

Contingency recruiters only get paid when their candidate is hired for the job. Since there’s no financial commitment at the initial stage, this recruitment model is largely considered to be cheaper.

Retained recruiting is the pricier counterpart. Firstly, the client has to pay an upfront fee before the search firm begins scouting for candidates. Then, the rest of the fees will be paid by way of instalments as the recruiter reaches certain milestones.

The pay is also usually higher because the scope of the recruiting agent’s work is taken into account.

Operating patterns:

Retained recruitment involves a dedicated search firm implementing a methodology agreed upon by the firm and the client. This alternative is easier for the client because the firm operates on auto-pilot once the terms and processes have been agreed upon. Their commitment promises a greater chance of finding the ideal candidate – all it will take is time.

Contingency search, as speedy and efficient as it might seem, can prove a tad stressful to the client. Engaging and managing multiple contingency search firms can take a toll on a client. Most times, though, these contingency search firms use their methodology without requiring the client’s input.

In closing, it’s necessary to re-emphasise that retained recruitment is not necessarily better than contingency recruitment. The elements discussed are their default characteristics and general tendencies.

The better of the two is strongly dependent on a client’s needs and the surrounding circumstances.