Which is Right for Your Hiring Needs...
Retained or Contingency Search?

When companies seek to hire management and professional talent from outside their organization, they have three options. They can decide to manage the process themselves, using advertising, the Internet, and/or a contracted researcher to identify potential candidates; they can engage contingency recruiters; or they can use a executive retained search consultant. 

First Choice:  Internal Sourcing and Hiring

Doing your own hiring means you or a human-resources executive makes an effort to find qualified applicants, typically by advertising the position in the print media or on the Internet. Then you have to screen responses, interview candidates and select the person to be hired.

The advantage here is that the company retains full control of the process. There are several disadvantages:

1. many qualified candidates (including some of those most qualified) may not see or respond to an ad or post their resumes on the Internet;
2. you will only find those actively looking and not possible candidates currently working who might be interested;
3. in order to discover those who are qualified you are going to have to review a great many who are not;
4. once qualified candidates have been identified, you face complex, time-consuming and sensitive issues of negotiation;
5. you face reference-checking-without the benefit of a third-party professional;

As a result, many organizations prefer to use independent recruiters.  But how do they decide whether to use a contingency recruiter or a retained executive search consultant?

Second Choice: External Sourcing with Contingency or Retained Search

On the surface, it appears to be simply an issue of how the recruiter gets paid. A contingency recruiter earns a fee only when the organization hires someone. A retained search consultant, on the other hand, is paid in advance to conduct a search that usually results in a hire—but not always.

Search Options 

• Retained Search. Client company pays a predetermined fee for the search firm to identify and interview for executive-level positions. This model requires significant consulting time and resources to identify the right candidates. This exclusive search fee is typically paid in thirds: at signing of the contract, upon submission of a short list of candidates and when candidate is hired.
• Engaged Search. A search is conducted  to find qualified candidates to fill open jobs and charges a portion of the placement fee as a retainer. The balance is due once the hire is made. Engaged searches are best for higher-level positions or particularly hard-to-fill jobs that require more in-depth research and considerable resources.
• Contingent Search. Search firm is only paid upon the successful hiring of a candidate. This “pay for performance” model provides access to top talent, but no fee until the hire is made.

Fees are typically a percentage of the candidate’s salary, although fee schedules can be structured in a variety of ways to accommodate the client. Ask for a fee schedule for your next critical hire.