Contingency vs. Engaged vs. Retained: What your Search Fee Actually Buys
Contingency vs. Engaged vs. Retained: What Your Search Fee Actually Buys
Not all recruiting engagements are built the same. The model you choose will actually have a much greater impact in the outcome than you may think.
Here are the 3 main options outside of RPO(Recruitment Process Outsourcing) which is typically reserved for searches of more than 1 position at a time.
Contingency Search:
This is the most common and probably the one most of you are familiar with. You pay nothing until a candidate is hired and is often-times non-exclusive, which sounds like the low-risk option.
There are some serious considerations though that most companies do not factor in when choosing this approach.
Because the firm only gets paid on a placement, contingency clients sit behind the engaged and retained ones. The priority clients get the first look and the right of first refusal on the strongest candidates. Contingency clients usually get the second or third look, after the priority clients have passed on those candidates initially.
They also do not get prioritized time and/or dedicated effort. The deep sourcing effort, the work of finding passive candidates who are not in the market, goes to the searches that fund it. Contingency roles tend to get whoever is already active and easy to reach, because that is what closes fastest.
And most clients miss the last part. On a pure contingency basis, the recruiter is effectively working for the candidate, not for the company. The candidate is the asset, so the incentive is to market one strong person across as many open roles as possible and generate multiple offers ultimately ensuring a placement fee for the recruiter.
Engaged Search:
This is the model where you pay a portion of the fee upfront to start the work, with the balance due on placement. That upfront commitment buys the client exclusivity, as well as, dedicated time and effort. The recruiter, and oftentimes an additional sourcer or 2 on his/her team, maps the market for your specific role rather than recycling whoever is already in the database. This search will take priority over any contingency positions. This fits roles where the talent is harder to find and you need real focus.
Retained Search:
This model requires a larger upfront investment, but the attention and priority given is elevated exponentially. This is the model that you choose when you need to have it right the 1st time!
This is reserved for senior, confidential, or business-critical hires. The recruiter runs a full market map, approaches passive candidates who are not actively looking, and manages a structured process from intake to close. You are paying for a partner who owns the result.
The point is not that one model is better. The point is matching the model to the difficulty of the hire. A widely available role does not need a retained search. A confidential VP search, or a niche D365 architect in a thin market, will rarely close on contingency alone.
Not all recruiting engagements are built the same. The model you choose will actually have a much greater impact in the outcome than you may think.
Here are the 3 main options outside of RPO(Recruitment Process Outsourcing) which is typically reserved for searches of more than 1 position at a time.
Contingency Search:
This is the most common and probably the one most of you are familiar with. You pay nothing until a candidate is hired and is often-times non-exclusive, which sounds like the low-risk option.
There are some serious considerations though that most companies do not factor in when choosing this approach.
Because the firm only gets paid on a placement, contingency clients sit behind the engaged and retained ones. The priority clients get the first look and the right of first refusal on the strongest candidates. Contingency clients usually get the second or third look, after the priority clients have passed on those candidates initially.
They also do not get prioritized time and/or dedicated effort. The deep sourcing effort, the work of finding passive candidates who are not in the market, goes to the searches that fund it. Contingency roles tend to get whoever is already active and easy to reach, because that is what closes fastest.
And most clients miss the last part. On a pure contingency basis, the recruiter is effectively working for the candidate, not for the company. The candidate is the asset, so the incentive is to market one strong person across as many open roles as possible and generate multiple offers ultimately ensuring a placement fee for the recruiter.
Engaged Search:
This is the model where you pay a portion of the fee upfront to start the work, with the balance due on placement. That upfront commitment buys the client exclusivity, as well as, dedicated time and effort. The recruiter, and oftentimes an additional sourcer or 2 on his/her team, maps the market for your specific role rather than recycling whoever is already in the database. This search will take priority over any contingency positions. This fits roles where the talent is harder to find and you need real focus.
Retained Search:
This model requires a larger upfront investment, but the attention and priority given is elevated exponentially. This is the model that you choose when you need to have it right the 1st time!
This is reserved for senior, confidential, or business-critical hires. The recruiter runs a full market map, approaches passive candidates who are not actively looking, and manages a structured process from intake to close. You are paying for a partner who owns the result.
The point is not that one model is better. The point is matching the model to the difficulty of the hire. A widely available role does not need a retained search. A confidential VP search, or a niche D365 architect in a thin market, will rarely close on contingency alone.