Contingency and Retained Searches: Is there anything in between? YES!
You have a need. Maybe a GLARING need at one or more positions within your organization, and you’ve exhausted your network to no avail. You’ve posted on LinkedIN and tried job boards, but no luck. You’ve engaged in some contingent searches but recruiters seem to come and go – sometimes with a flurry of activity initially, but no sustained, steady flow of quality talent, and still the vacant seat remains. More and more often this question comes to us from our clients: “I need help with recruiting, but contingency searches haven’t worked and Retained Searches seem geared solely to Executive Roles – is there anything in between?” Funny you should ask…
The answer is Yes. As with most things, there are vehicles and approaches built for different tasks. While many of these have certain inherent benefits, most come with limitations as well. Contingency arrangements offer a low risk approach to engaging with recruiters as the hiring company is only obligated to pay for services once a hire is made and guarantee is met. This sounds promising until results are mixed, resume flow dwindles, and the recruiter fades. Why would this happen? Contingency incentivizes short, quick searches. Speed. Generally, a challenging position requires a campaign and a methodical, diligent execution of it. Without any commitment from the company, it is difficult to justify/risk this time-intensive approach for the contingent recruiters.
So the alternative is Retained? Possibly, yes, but it depends on your need. Retained is much more involved, mutually committed, and typically, much longer term. They include higher fees with ⅓ paid upfront, ⅓ paid upon completion of agreed upon milestones, and ⅓ upon completion of the search. For Executive Management roles, these are often the way to go since the compensation, the equity, the team fit and the impact of the role are all greater. With greater responsibility comes greater need for getting the hire right AND a greater time investment on both sides.
So where do we go when we have an important need, we want a partner in recruiting who has a vested interest in completing the search and yet don’t need something quite as involved or expensive as a fully Retained approach? We have an Engaged agreement. Similar to Retained, there is a mutually committed component to the search where ⅓ of the fee is due up front. However, the overall fee is reduced from 33% (Retained) to 25% of the candidate’s first year salary, and the remaining ⅔ of the fee isn’t due until after the search is successfully completed. This insures that both sides are invested, and gives the recruiter the opportunity to craft the recruiting strategy (who, what, where, when and why) correctly and approach the potential candidates with much more tact and professionalism. Success rates are much higher than contingent searches, and generally relationships between the hiring manager and recruiter are much more cohesive and partnered.
There is a bit of risk for taking on any mutually committed search, but between the time saved in not managing multiple vendors, and the quality of results from a search executed properly, the upside should justify the investment.
Rob Reeves / Redfish Technology
Building Growth-Mode Tech Companies with Hand-Picked Talent Since 1999