Difference Between Retained and Contingency Hiring Firms

Companies have several options when it comes to selecting the right type of hiring company. If you opt for a retained or contingency-based company. We will give our opinion on both services. So how do you as an employer decide which type of company is right for your needs(?)

Retained Recruitment

Retainer-based companies enter into contractual relationships with their clients for strategic search assignments. Since a contract-based relationship exists, a retention-based company will work exclusively on one opportunity until a successful candidate has been identified.

As the name implies, retainer-based companies will require an up-front fee to perform the search. This fee is usually 50% of your total fee for the assignment. Retained companies operate exclusively, meaning the job will be filled through this hiring company. They operate with processes and methodologies agreed between the client and the search company. As a client, you have the peace of mind of a contractual agreement to protect your interests as well.

Retained search companies can establish a higher level of credibility with passive candidates. Because a held search is given higher priority, most candidates are more likely to accept the recruiter’s call. Retained firms will share the company name upfront to establish credibility. When speaking with candidates, there is no need to be evasive in explaining your purpose for calling or sharing information about your client. For high-level assignments, retained searches are more attractive to executive-level candidates. No need to randomly search for the dreaded purple squirrel.

We have found that many senior executives will only work with retained firms. You’re also less likely to get your application posted on national job boards, especially when they want your search to be confidential. A retained company represents a level of seriousness on the part of the company to fill the position.

contingency recruitment

Contingency-based hiring companies will work on similar assignments while working on other projects at their hiring desk. Recruiters working on a contingency basis will often compete with the client’s internal recruiting department, job boards, and often other recruiting firms that received the same search assignment. The trick is to present the best candidate before the competition beats you. The result can sometimes mean quantity over quality.

As noted above, companies that use contingency recruiters also often open up the assignment to other recruiters. This intention is to allow recruitment companies to compete to see who can present the best candidates for interviews faster. This sometimes results in a no win no pay approach on the part of the recruiter. Situations have arisen where multiple contingency companies have claimed to have put forward the selected candidate. These disputes will escalate to the point where the employer simply decides that it is easier to walk away from the whole situation. Contingency companies will be much quicker to send candidates, as they know that the more candidates that apply, the better their chances of making a placement. For some easy to fill positions, this can be ideal.

The results

When your company has a need to hire a mid-level candidate or below, you should use a contingency-based company. If the job description is generic in terms of the skill set you’re looking for, then you should use a contingency-based recruiter. Companies looking for a unique candidate in terms of skills and leadership qualities will hire a consultant. The consultant will provide true objectivity when recommending the best option for her need. This is the ideal situation to use an experienced retained based company.