Retained vs. Contingency Search/Recruitment Services

There are several key differences between these two recruitment/search models. Let's compare and contrast ....  

A contingency search firm is only paid a fee if a candidate that they present to a client is ultimately hired (thus contingent on the hire). It can be an exclusive assignment, but more often than not, there are multiple contingency firms sending candidates to the client. The benefit of this approach is that it produces many candidates in a relatively short period of time. It also allows the client to withhold payment until the hire is actually made.

Contingency search is most commonly used at the director and manager levels in healthcare. Candidates are phone screened and then presented to the client based on that conversation. The recruiter rarely meets the candidate or conducts an in-person interview. The downside for the client is that it creates more work as its recruiters and hiring managers must conduct additional screening to determine if the chemistry and cultural fit exist. Typical contingency contracts will guarantee a candidate for 30 to 90 days, which means that the contingency firm will redo the search for free if the candidate leaves within this time frame.

A retained search firm has an exclusive arrangement with a client for a specific position. The firm is generally paid one-third of the fee upon contract signing, one-third in 45 days, and the final one-third of the fee after 90 days.

The process begins with an in-person survey visit. During the site visit, the search consultant visits the client and interviews all of the key stakeholders to determine the position specifications and requirements. This meeting also allows the consultant to assess the hiring manager’s management style and the organization’s culture. A national search is conducted, and then a long list of candidates (who have been phone screened) is presented to the hiring manager or search committee. The search consultant then conducts in-person interviews with each selected candidate and completes a package that includes interview notes; a reference, background and literature check; license verification; compensation history; and an optional behavioral assessment. The client then decides on three to five candidates to bring in for a first interview and then narrows the field to two to three for a second and final interview. Many times the second interview trip includes the candidates' spouses. Retained search is usually done at the vice president and C-suite level in the healthcare industry, and placement guarantees average one year.

When you’re working with a recruiter, it makes sense for you as the candidate to know which model is being used. Contingency search firms “market” good candidates to prospective clients whereas retained search firms look for specific candidates for specific searches.

If you’re a client pondering whether to hire a contingent or retained search/recruitment partner, it’s not a bad idea to consider the level of your open position; cash flow; internal resources; political environment; and difficulty of attracting and retaining a candidate before making a decision.

Both models are effective, but in different ways.