Professional Search of Atlanta - Engineering Manufacturing Success by providing Dynamic Technical Managers
Professional Search of Atlanta, Inc.
770-952-0009, 1-800-648-0009
recruiter@psa-recruit.com

Contingency Vs. Retained Search

Article by: Jon Harvill CPC
APICS Atlanta Employment and Recruitment Coordinator
Article appeared in the December 2002 APICS-Atlanta newsletter


As a hiring official, you have a position to be filled and have always heard that for any position over $100,000 you should use a Retained Search firm, and for salaries under $100,000 you should use a Contingency Search firm. Since retained and contingency searches usually cost about the same, let's look at how the services of search firms have changed and the opportunities these changes may offer you.

RETAINED SEARCH

Retained Search originated when the general business consulting industry broadened its consulting practices to include helping their client companies find top executives. They typically collect 1/3rd of their fee up front, and the other 2/3rds over the course of the assignment, whether a hire is made or not. In line with their consulting origin, retained search firms typically have a number of ancillary services they can provide to their clients, either included in the assignment fee or for additional charges. The most common of these services are:

The negatives associated with Retained Search are:

  1. Because of the deliberate approach used, retained search firms tend to be somewhat slower than you expect from a contingency search firm.
  2. Client must pay part of the fee up front.
  3. Retained Search firms tend to be generalist, without an industry or functional specialty.

The positives associated with Retained Search are:

  1. Client usually expects a higher quality candidate as a result of the greater executive involvement of the retained consultant.
  2. Client can be sure someone is working on their assignment and there is reasonable assurance the open position will be filled.
  3. Additional business expertise is usually available to ensure the placement goes together reliably.
  4. If needed, confidentiality can be maintained more reliably.
  5. Only a single contact must be maintained.
CONTINGENCY SEARCH

Contingency Search has its origin in the employment agencies that started out by finding jobs for administrative personnel, for which they charged the applicant a percentage of their first several months' salaries. It quickly moved to employer paid fees, rather than applicant paid fees, and expanded upward to cover most salary levels. The term 'contingency' means the search firm only collects a fee when the client company actually hires someone provided to them.

The negatives associated with Contingency Search are:

  1. The lack of money up front allows for a lack of commitment to fill every job assignment taken. Contingency search firms tend to 'cherry pick', to work the easy positions and not work on the hard-to-fill positions.
  2. If more than one firm is given the same job to fill they may race each other and present candidates who are inadequately screened. In their haste the search firms may fail to identify and recruit the very best candidate for the job.
  3. Contingency firms may lack the ancillary consulting expertise and involvement to guide the placement together reliably and efficiently.
  4. Using multiple search firms requires dealing with multiple contacts.

The positives associated with Contingency Search are:

  1. You can more often find a Contingency Search firm that has an industry or functional specialty that matches your firm's needs.
  2. Job openings may be filled faster, (or it may not be filled at all) depending upon the anticipated difficulty.
  3. No money is required up front.

In recent years the differences between retained and contingency search firms have tended to become blurred. Retained search firms have modified their offerings to accept the last portion of the fee contingent upon a hire being made. Contingency search firms have moved to higher salaries for which they may also require money up front or even a full retainer for a commitment to fill a position.

In effect, you now have Retained Search firms, Contingency Search firms and a special breed of search firm that truly wants to fit the search relationship to the actual needs of the client, not what they themselves are more comfortable performing. These special breed firms have the ability to perform like a retained search firm, when that is what is needed by the client, and like a contingency firm if that will reliably satisfy the client's needs and desires.

EXPECTATION

It is up to the hiring official to search out the appropriate resources, demand the specific relationship appropriate and negotiate any ancillary services that are appropriate to satisfy their company's needs. No matter what the job opening to be filled, you should expect the following from your search firm:

NEGOTIATION

Get exactly the service you would benefit from the most. You can negotiate the relationship, and the additional services that are of value to you (without costing your company anything additionally), by using a suitable mix of the following incentives:

Will you get better results from your next search dollar expenditure using this roadmap?

Back to Employer Articles