Unless you’re in the talent acquisition world, you may be hard-pressed to answer the question, “What’s the difference between contingency search and retained executive search?”
For those of us who work in the talent solutions and recruiting space, it’s a question we hear a lot. So often, in fact, that we decided to write a post to answer it.
Why choosing the right leadership is important
Choosing the right executive leadership is a crucial part of achieving business success, especially during times of transformation or growth. In our survey, “Trends in Transformation: Key Insights for 2022,” 46% of respondents said engaged leadership was the most important part of successful transformation.
The wrong executive leaders also have a significant impact on a company; according to research from Topgrading, the financial cost of a bad hire is between 5 and 27 times the employee’s salary. Add to that the fact that bad leadership can create a ripple effect of low morale, low engagement and toxic culture through every level of an organization, and the costs of choosing the wrong people for the C-Suite seem almost insurmountable.
The antidote to poor leadership? A better formula for finding and hiring the best possible candidate to fill the role.
With this in mind, it becomes even more important for companies to choose the right executive search model before they start the hunt for their next leader.
Before we dive into the differences between contingency and retained search styles, we’d like to say this: regardless of the search method you choose, you should expect your executive search firm to be your partner—to take the time to truly learn your business, company culture, expectations, and business goals. Cultural alignment is just as important as technical expertise when selecting the right senior leader; you want to partner with a search firm who understands and prioritizes this.
With that being said, let’s dig a little deeper into the fundamental differences between contingency and retained executive search.
How are contingency and retained executive search recruiters paid?
Let’s tackle the money question first.
The payment model is one of the easiest ways to distinguish a contingency search firm from a retained search firm.
Contingency recruiters are paid at the conclusion of the search process, when the client decides to hire one of the recruiter’s proposed candidates.
Retained executive search firms charge a consulting fee—paid as a monthly retainer—based on the scope, size, and estimated duration of the search process.
The differences go far beyond compensation, however…and that’s where things get interesting.
Let’s kick things off with a closer look at how contingency executive search works.
How does contingency executive search work?
In a word: efficiently. Clients opt for contingency executive search when speed is key. It’s a quick and affordable way to gain access to a vast network of talented executives.
Small to medium-size businesses look to their contingency recruiting partners to help them find a range of well-qualified directors, VPs, and C-suite executive candidates. And find them quickly.
To streamline the process, contingency search recruiters often rely on a carefully cultivated and curated pool of candidates. From there, they select the most qualified candidates for a given position.
Clients can expect their contingency search partners to submit pre-screened resumes of candidates who meet their must-have criteria. Once they’ve selected their top candidates from the pool, the process quickly transitions to interviewing and hiring.
Unlike retained executive search—which we’ll cover in a moment—contingency search isn’t exclusive. Hiring companies may opt to work with contingency search firms to augment the recruiting efforts of their internal HR teams. Companies may even work with more than one firm throughout the course of the search process.
It’s important to note that contingency candidates may be presented to multiple companies simultaneously. This ensures the best possible placement in the shortest amount of time.
Contingency executive search is a strong option for hiring managers who need experienced leaders and who prefer interviewing several qualified candidates for a given position. We encourage both our clients and our candidates to communicate openly with their contingency recruiters to help ensure an efficient and seamless executive search process.
How does the retained executive search model work?
In a word: exclusively. If efficiency is the defining characteristic of the contingency search methodology, then exclusivity defines retained executive search.
In a retained executive search process, the search firm operates on an exclusive basis — they’re the only team conducting the search, and their goal is to procure and present the very best candidate for the company they’re working with.
Retained executive search firms, like Vaco’s Focus Search Partners, often specialize in key markets like healthcare, technology, consumer/retail, and business services.
Retained executive search is a high-touch and comprehensive process that includes detailed client and cultural interviews, original candidate research, and extensive outreach, as well as screenings, assessments, background checks, and negotiations. Retained executive search professionals work in consultation with clients to develop a mutually agreeable search methodology and strategy.
When a company needs to find the best candidate for a leadership role—nationally or globally—in a highly competitive market, retained executive search is the superior option. The discretion, exclusivity and comprehensiveness of the retained search model is ideal for larger companies who want to find the optimal candidate for a C-suite or board-level position.
Here at Vaco, we offer both contingency and retained executive search services, for both long-term and interim executive roles. We take a consultative approach to talent solutions, and we work extensively to become a true talent strategy partner for our clients; this allows us to identify the best search model to meet their needs.
Learn more about Focus Search Partners, Vaco’s retained executive search firm.
Want to learn more about Vaco’s suite of talent solutions? Explore our For Businesses page or reach out to us directly.