I am often asked what the difference is between engaging a Recruiter from a contingency recruitment agency or a Head-Hunter from an executive search firm. Having experience in both environments, I can assert that these two types of search models are quite different. Contingent talent search agencies and retained executive search firms are two distinct approaches with unique service differences and unique suitability. Understanding these differences is essential for businesses seeking to find the best fit for their hiring needs.
RETAINED EXECUTIVE SEARCH FIRM:
Payment Structure: Retained executive search firms are engaged on an exclusive and upfront fee basis. Clients pay a portion of the fee at the beginning, another installment during the search process, and the final installment upon successful placement. This fee structure reflects a commitment to a thorough and dedicated search process.
Focused and Customized Search:Contingent agencies often work on multiple assignments simultaneously and focus on quickly presenting candidates to clients. Due to the payment structure, they may prioritize filling positions rapidly, which can be advantageous for businesses with urgent staffing needs. However, because of the speed to delivery, this transactional approach is not typically recommended for niche or senior leadership level roles. Most top-tiered executives are passive candidates and posting a job advertisement won’t uncover them. Retained firms dedicate more time and resources to understand the client’s organizational culture, specific needs, and leadership requirements. The search is typically more focused and customized, emphasizing quality over quantity.
Process: To ensure the process and search strategy is continually refined throughout the search, retained partners collaborate with the hiring team through weekly or bi-weekly project reports and status updates. These meetings are designed to provide recent information on compensation and what is or what is not appealing to the candidates about the opportunity.
Candidate Assessment: Retained firms conduct in-depth assessments of candidates, often involving multiple interviews and comprehensive evaluations. This ensures that the presented candidates not only meet the skill requirements but also align with the client’s strategic goals and cultural nuances.
Exclusivity and Partnership:Retained executive search firms operate on an exclusive basis, meaning they commit to working solely on the client’s assignment. This exclusivity fosters a more collaborative and consultative relationship between the client and the search firm, leading to a more thorough and personalized search process and greater placement success.
Fee: While the search fee under a retained model can be a bit more costly, there are a number of retained head-hunters serving small to mid sized business who offer affordable customized fee structure and service delivery, Elite Search being one.
CONTINGENT TALENT SEARCH AGENCY:
Payment Structure: Contingent agencies operate on a “no win, no fee” basis. They receive payment only when a candidate they present is hired by the client. The fee is typically a percentage of the candidate’s first-year salary. As there is no financial commitment upfront, they typically limit their efforts to presenting candidates they have readily available (in-bound) or those responding to job advertisements. Without the financial or reputational incentive, they do not take the time and effort needed to perform an exhaustive search (out-bound) for their client.
Volume and Speed: Contingent agencies often work on multiple assignments simultaneously and focus on quickly presenting candidates to clients. Due to the payment structure, they may prioritize filling positions rapidly, which can be advantageous for businesses with urgent staffing needs. However, because of the speed to delivery, this transactional approach is not typically recommended for niche or senior leadership level roles.
Candidate Pool:Contingent agencies typically maintain a large and diverse pool of candidates, allowing them to quickly source individuals for various roles. The depth of candidate assessments and the level of customization in the search process does vary.
How Used:Clients (hiring employers) engage contingent agencies for specific roles, typically more junior, traditional roles, and there is no exclusivity in the arrangement. As a result, multiple agencies may be working on the same assignment simultaneously, leading to potential competition for candidates.
In conclusion, the choice between a contingent talent search agency and a retained executive search firm depends on the organization’s specific needs, priorities, and the criticality of the role to be filled. Contingent agencies offer speed and flexibility, while retained firms provide a more strategic and comprehensive approach, ensuring the identification of the best-suited candidates for leadership positions.
You may like the idea of working on a contingency fee basis and not making a financial commitment upfront. This approach does make sense for junior level roles. However, for important strategic hires, contingency firms are often not well equipped to handle these vital talent searches. Having spent half of my recruitment career in contingency search and half in retained search, I have come to clearly understand the nuances of the two distinct models. I have also come to enjoy a 97% placement success rate in retained search versus a 25% (industry average) in contingency search.
Contingent recruiters are great if you are looking to fill a non-critical, non-niche type role. But if you are looking to hire the best candidate for a mission critical position, you need to hire a retained head-hunter.
To connect with us for assistance to fill your most critical senior leadership roles, please check us out at Elite Leadership Search or connect with Managing Partner Sandy Dennis
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