Executive search: retained vs contingent. How to choose?
Everyone wants to know that they are getting the best possible product / service at a fair and competitive price and the same goes for companies when selecting their recruitment partner.
When looking at the various options available, it is important to consider that there are significant differences between Executive Search (what we offer) and Contingency Recruitment, and these differences have an impact both on the process, costing and success of a recruitment project.
At a basic level, the two seem to differ only by the type of payment structure (retained vs success), yet this aspect alone determines the very nature of the process behind the service. The methodologies of each are very different; each offering their respective advantages and disadvantages.
So when selecting your future recruitment partner, know what you are buying and what to expect.
Contingency is a success-based recruitment model, whereby the recruiter is paid only when the candidate they propose is hired. The fee is usually a percentage of the candidate’s annual salary, and is generally lower than fees associated with executive searches.
The main source of candidates is their database from where they pull out profiles with the hope of one of them being selected by the client. In this model, typically non-exclusive, the contingent recruiter will often compete with (many) other agencies and even with the company itself if they have advertised the role.
Contingency is a volume based business; recruiters are typically sales profiles, handling many roles simultaneously. The key is timing, trying to fill roles quickly (before another agency, or the company itself, find a candidate). Consequently this influences the process of identifying and evaluating profiles and the resulting shortlist presented.
- Client can use multiple agencies simultaneously – no exclusivity. In reality, this is only a perceived pro, it is of no advantage to anyone involved in the process: not the client, not the candidate and not the agency.
- Shorter timeframe
- Lower fees that are paid only on success.
- Offers good results for non-critical, junior to mid-level positions.
- When you partner multiple agents, your job search is not a priority – (How can it be? Agencies will focus on roles where conversion chances are high and not where they are up against multiple players with no guarantee of success)
- High chances of discrepancies between your expectations and recruiter’s proposed candidates due to the limited time spent on really understanding (and challenging) the job description and the company’s needs.
- A less structured search process focused on databases and job boards/ads to get candidates.
- Increased work volume for hiring managers as you will need to go through all CVs coming from many different channels in addition to your own.
- Missing out on an entire pool of talent as primarily only active candidates are pulled into the process
- No one really owns the process; Clients get too many non-relevant CVs; the contingent recruiter often doesn’t get paid for their work (don’t quote me but the figure is around a 25% conversion rate on all mandates that hit their desk); candidates don’t know who they should channel their CV through to get the best chance of it becoming visible to the company etc …
Executive search (Headhunting) is based on a service agreement between the client and the recruiter, which implies that an exclusive, in-depth “search” will be conducted in order to ensure you the most relevant shortlist. The fee for this research backed process is a percentage of the candidate’s annual salary and is typically paid in 3 tranches, at the beginning of the process, at short list, and upon successful hire of the candidate. Retained executive search is typically used for middle and top management positions and hard-to-fill roles requiring a specific blend of skills and experience, or when the recruitment is highly confidential.
Firms invest important resources in talent mapping and sourcing, as well as evaluating candidates and moving them through the process in a highly structured way. As a client you will be presented with a progress report (research report on what has been done and the general market insight related to the search), a relevant longlist and final shortlist of suitable (and interested) profiles.
Search recruiters are consulting profiles; they invest time in fully understanding your company’s needs and in identifying the key success factors of the position to hire. They translate those factors into skills, knowledge and behavioural competencies required and they recommend the most relevant sourcing strategy (go-to-market approach) to find those ideal candidates. At the approach phase candidates are evaluated against very specific requirements including their motivation for change. This is a rigorous process with typically 8 -12 weeks from start to offer stage (pending complexity, urgency and confidentiality of each mandate).
To deliver, each mandate will be run by a dedicated team including resourcers, research associates and the lead consultant. If you are not receiving all of the above, you are not getting a full search service.
In terms of sourcing, in the majority of cases executive search consultants have an in-depth knowledge of the sector they are recruiting in, possess valuable hiring insights on the market, and dispose of an established network of professionals which they can activate. Also, they can access qualified passive candidates who are not active on the market (or not on linkedin).
- Fully dedicated and exclusive recruitment partner who will manage the process and deliver milestones in a timely manner. The recruiter acts as a consultant from defining relevant job criteria (in line with market) and recommending and deploying a relevant sourcing strategy, to finally keeping you abreast of the progress for your search.
- A rigorous methodology that ensures a relevant and qualified shortlist.
- Access to a larger (often exclusive) pool of candidates, not necessarily those actively seeking jobs.
- Get valuable market insights related to your recruitment in a specific sector / market etc.
- Longer time frame to deliver due to the process
- Exclusive agreement with one agency – you need to trust your partner and their expertise!
- Higher fees than contingent recruitment
- If the search is stopped for whatever reason, a minimum fee remains due, allowing for the heavy investment search firms make in the initial mapping and subsequent evaluation stages of the talent pipeline.
How to choose between the 2 types of services?
Before taking a decision, ask yourself the following: How critical is the position? How confidential is the hire? How quickly do I need someone on board? How much time can I really dedicate to the search? Do I have the resources and time to handle the entire process?
Key is working with a consultant that you trust regardless the firm behind them!