Contingent or Retained? Pros and Cons for Executive Searches

Posted by Reed Flesher

A contingent executive search is when the search firm doesn’t get paid unless their candidate gets hired successfully. Their fee is contingent on producing a hire. A retained executive search, however, is when the company hires one particular firm to do an executive search and pays them whether they produce a hire or not (although there may be some penalties if they don’t).

Contingent vs. Retained

These two types of searches each have pros and cons for executive search firms trying to decide what kind of searches to focus on. Contingent search firms seem like they would be disadvantageous for executive recruiters because they could end up putting in a lot of work for nothing if they don’t get the hire, but competition is often a positive thing and generates the drive recruiters need to find top candidates that lead to hires.

A search firm that can’t get the job done isn’t going to last very long, whether contingent or retained. Performance really is key either way, and firms that need to get their foot in the door with a number of companies may find that offering to work on contingency may generate the volume of business they need to become profitable and successful.

On the other hand, retained search firms may have an easier time keeping their cash flow steady since they are paid at least part of their fee up front and they get their fee whether or not they deliver a hire. But how long do you think a retained search firm will have clients if they don’t produce hires and do so in a timely manner?

While retained search firms seem to be more of a sure thing, the reality is that an executive search firm is only as good as its hiring track record. Search firms that don’t deliver hires will soon find it hard to retain clients.

How Retained and Contingent Search Firms Work with Talent

Of course, both types of search firms want to source the best possible talent, but contingent search firms will often present a single candidate at a time to the company for consideration and may compete against one or more search firms who will also present a candidate. The company’s own HR may also have a candidate to present.

Retained search firms, on the other hand, often need to present a slate of several potential candidates for the company’s consideration so that they can choose their favored candidate. That way, the company is more sure to get at least one candidate they can hire, since the retained search is pretty much their only option at that point.

Working one-on-one with a single candidate is bound to take less effort than producing an entire slate of candidates, but a contingency recruiter may do this for several searches before they have success and even a single hire. In reality, there is no one type of recruiting that is easier than any other type. Both retained and contingent recruiting have their pros and cons.

Thrive TRM is a software tool that can help executive recruiters compare profiles, communicate with clients and hiring teams, and even import talent profiles in order to streamline repetitive recruiting tasks and concentrate on what is most important for any executive search–relationships. Discover solutions for search firms to see how we can help with many aspects of the recruiting process, whether contingent or retained.

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