Contingent Recruitment VS Retained Search

Most recruitment firms use either a “contingent” or a “retained” business model. This article will provide an overview of the difference between contingent recruitment and retained search.

What is contingent recruitment?

Contingent recruitment is the typical commercial model for most junior and mid-level roles. This business model simply means that the recruiter is only paid on “success” – when the candidate accepts an offer.

Contingent recruiters typically charge a percentage of salary, with 15-25% of the salary of the placed candidate being pretty typical in the industry. Another important feature of working with contingent search firms is that they often don’t have “exclusivity” with their customers. This means that a client often hires multiple contingent recruiters at once, with only the firm that places the placed candidate getting paid for their work.

Because only the successful contigent search firm gets paid, and that firm only gets paid on placement, it creates a lot of financial risk for the recruitment agency. Consequently, contingent recruitment firms cannot afford to commit too much time or resources to each project, as they might well be paid nothing for their time.

Typically, contingent firms will therefore have two main methods of finding candidates; advertising a position or searching their database for candidates from previous assignments

When is contingent recruitment the better option?

There’s definitely a big advantage to specialism when it comes to contingent recruitment firms. A contingent recruitment firm who has a strong track record of hiring software engineers will have a good network of candidates to tap into, indeed candidates might approach them directly when they are looking for something new, and they may have built a strong reputation in the market, which allows them to “suck in” candidates.

However, the downside of contingent recruiters is that they sometimes lack specialism (and rely on adverts for success – which is very hit and miss) and they are also much less likely to thoroughly map a market, or reach out to candidates they don’t know already.

What is retained search?

By contrast, most “headhunting firms” operate under the retained search model. This means that they require money up front, and not purely on success. Furthermore, most executive search firms (a synonym for headhunting firms) will insist on exclusivity as part of their commercial terms. These firms are also often called retained executive search firms.

Exclusivity and retained fee models are essential for retained executive search firms as they have a much more heavyweight process compared to contingent firms, and if they didn’t have exclusivity, or if they were only paid on placement, it would create too much financial risk for them. For a more detailed information on how executive search firms charge their clients please read our article on “Commercial Models”.

Retained executive search firms rarely advertise positions, but rather systematically map the relevant market, using bottom up market research. They will often create a list of companies, segmented by industry and sub-sector, and identify all the relevant candidates within them. This document is often called a “Target Landscape”.

Like contingent search firms, retained headhunting firms will also look at candidates from previous assignments and will often have deeper sector or functional specialism. If executive search firms were only paid on placement, they would be risking too much money committing to thorough market research. Typically they will walk away from projects that don’t offer exclusivity or a portion of the fee up-front.

Retained executive search firms will firstly identify a target group of candidates using their Target Landscape and network from previous projects. This list, depending on the role, can often be pretty substantial. Over 100 candidates is very normal, and sometimes these lists will be over 200 people. Those candidates will be prioritised and usually have an initial approach call over the telephone to get them excited. This is usually followed by an interview with the headhunter as executive search firms also assess candidates, they don’t just “send CVs” like a lot of contingent search firms. Executive search firms will also guide the clients and candidates through the process.

When is retained search the better option?

Retained search is more expensive and requires financial commitment from the client at a much earlier stage of the project. That obviously creates some risk from the client’s point of view. A reasonable question is: what if I pay the first tranche of the fee and the firm does not deliver well? Despite that, many businesses still prefer working with retained search firms. The main reason is that retained search usually leads to a higher-quality and more committed process. Because the search firm has already been engaged formally and paid part of the fee upfront, it is typically under much greater pressure to deliver a strong outcome. Just as importantly, the upfront fee gives the firm the resources to invest properly at the beginning of the assignment, which is often the most difficult and time-consuming stage of the search.

Retained search also tends to provide much better visibility and project management for the client. Retained firms are usually more proactive in updating the client on search progress, candidate feedback and market mapping. That makes the process easier to manage internally and reduces the hassle of coordinating multiple recruiters at once. In that sense, retained search is often a more genuine partnership. The relationship is usually closer and more collaborative than in contingent recruitment, where the dynamic can sometimes feel more transactional.

There is also a practical advantage. Contingent searches can sometimes create confusion over candidate ownership. If multiple recruiters are working the same role, disputes can arise over who introduced a candidate first, who first explained the opportunity, or who should ultimately be credited with the placement. That can create unnecessary friction and make the process messier for the client. Retained search avoids much of that complexity by giving one firm clear ownership of the assignment.

When to use contingent recruitment and when to use retained search

All these elements of the executive search process and fee structure will be covered in more detail elsewhere, but it’s worth noting that whilst retained executive search firms typically offer a higher quality, more thorough recruitment process than contingent firms, this also comes at a higher cost that makes executive search typically best suited for relatively senior and important hires. For this reason, most retained executive search firms work on roles that pay a salary of $150k+. By contrast, contingent search firms are often happy working on relatively more junior positions, particularly those where they may have strong sector specialism.

In practice, retained search tends to make the most sense when the role is business-critical, confidential, difficult to fill, or requires a broad and carefully managed search process. It is particularly well suited to senior leadership appointments, roles where the best candidates are unlikely to be actively applying, and situations where the client wants one firm to take clear ownership of the process from start to finish.

Contingent recruitment, by contrast, is often the better option when the role is more straightforward, the candidate market is active, and speed is a priority. It can work especially well for junior and mid-level positions, or for roles where specialist contingent recruiters already have a strong network of relevant candidates and can move quickly.

In simple terms, retained search is usually the better model when quality, depth and process matter most, while contingent recruitment is often more suitable when speed, flexibility and lower upfront cost are the main priorities.

See also:

• A guide to executive search firms in London
• The different commerical models that headhunting firms use
• The importance of sector specialism in executive search
• How to brief headhunting firms well