contingent or retained

Contingent or retained: Which recruitment model works best?

Sarah Linney
22 Jul
Reading time: 6 minutes
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Wondering whether your agency should offer a contingent or retained recruitment model but not sure how they differ and what would work best for your agency? We’ve got you covered.

The short answer is that contingency recruitment is based on a “no win, no fee” basis, where you only get paid if you secure the right candidate for your client and you compete with other recruiters to “win” the placement. 

Retained recruitment is based on an exclusive commitment with your client, where you’re paid an upfront or scheduled fee and you’re responsible for finding the right candidate, you won’t be competing with other recruiters. 

Contingency recruitment has traditionally been the go-to option for recruitment agencies but there’s a growing trend to move towards retained recruitment. In this blog, we’ll explore each model in more detail and give you all the info you need to determine which model is right for you and your agency. 

What is contingency search?

Contingency searches are a form of recruitment where a company uses recruitment agencies and other external recruiters to fill positions. 

However, as the name suggests, there’s a contingency for companies; they’ll only pay if they hire a candidate you suggest.

As such, they only pay when the candidate accepts the job and they sign a contract. With this approach to recruitment, a company can have one or more recruitment agencies helping to fill a position. 

At the same time, an internal HR department may also be actively assessing applicants. Should the internal team find a suitable candidate, the company won’t have to pay the recruitment agencies anything.

This gives the recruitment agencies greater incentive to front the best candidates as soon as they can to secure earnings. But, on the other hand, it also means that you must compete against other agencies or recruiters in order to quickly find the best candidates for the position.

Usually, contingency recruitment is suitable for filling positions quickly that may have numerous suitable candidates. 

Benefits of contingency recruitment

By using a contingency recruitment model, you’ll have the potential to earn money based on suggested hires. Moreover, you’ll benefit from contingency recruitment in the following ways:

  • Sending the best candidates as soon as possible, garnering a good reputation with companies
  • Making the most of your talent pool and quickly identifying potential candidates
  • Working on placing multiple jobs at once, increasing your earning potential

Disadvantages of contingency recruitment

Along with the benefits it offers, there are also downsides to contingency recruitment. They include:

  • If the company doesn’t choose your candidate, you don’t get paid 
  • It may be hard to be first to the punch, forcing you to work quickly, which may result in accidental errors or oversights
  • It may impact relationship building, as you don’t have any exclusive, ongoing commitments with companies
  • You don’t have any guaranteed revenue so forward planning may be difficult

What is retained search?

Retained search is a recruitment method where a company pays to retain the services of a recruiter in their efforts to fill positions. 

With this approach, they only use one recruitment agency, giving them exclusivity and guaranteeing them an income, should they find a suitable candidate. 

In contrast to contingency recruitment, companies will have to relinquish some control over the recruitment process. However, they will have the confidence that the placement agency will have sufficient commitment and motivation to deliver the best service. 

Retained recruitment is usually suitable when looking for highly skilled and scarce professionals whose salaries are high, so executive search firms usually adopt the retained recruitment model. 

However, other agencies are starting to see the benefits of retained recruitment and it’s becoming more popular across the recruitment sector. 

Benefits of retained recruitment

With this recruitment strategy, you’ll have more control over the recruitment process as a retained recruiter. The benefits include:

  • Consistency in pay and guaranteed income for the work you put in 
  • Security and exclusivity thanks to a contract with your client
  • Less rush and time pressure, as you’re not fighting to be first 
  • Clear timelines and expectations as you’ll work closely with your client, rather than being one of a pack of recruiters
  • You can customize the search to suit a company’s needs, as you’ll understand their processes and priorities 

Disadvantages of retained recruitment

Though retained recruitment has some appealing benefits, it also has some disadvantages, such as:

  • An upfront cost may deter some companies from working with your agency
  • Some companies prefer the idea of recruiters competing for candidates 

Price comparison: Contingent or retained recruitment?

As mentioned above, the pricing strategy of contingency recruitment is simple. A company only pays if there’s a successful placement. Upon successful placement, the company will pay the recruitment agency fee, which is a percentage of the candidate’s annual salary.

When it comes to retained recruitment, pricing varies significantly. First, recruitment agencies must receive some payment prior to beginning the recruitment process. This is because this strategy requires a lot of effort and intensive research to ensure the best candidates.

To begin with, a company will have to pay an upfront fee for you to initiate the search. From there, the company may have to make two more payments when they receive a shortlist of candidates and when they make a hire. 

Often, the total fee is just divided in three across these three stages, so it may not be any more expensive than using contingency recruitment. 

Which recruitment strategy suits you: Contingent or retained?

Each of these approaches has its advantages and disadvantages. 

Each model has been traditionally used for different candidate levels with retained most commonly used for executive search. However, this may be shifting as recruiters seek out the security of exclusivity and the guaranteed income of the retained model. 

Explore these two models and choose the strategy that best suits your skillset and potential to advance as a recruiter. 

If you’re confident in your abilities to quickly scout the best candidates for a position and beat out the competition, having a contingency recruitment strategy may be the better option.

However, if you prefer to build relationships with companies and take your time to conduct a thorough search to pinpoint the best candidates then retained recruitment may be the model that works best for you.

Starting your own recruitment agency, setting up fees and processes and investing in the right technology can be stressful, so making the best decisions upfront (whether it’s what recruitment model you use or what applicant tracking software you adopt) can prove crucial.

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