Contingency vs. Retained Recruitment: What is the Difference?
Lindsey Road LLP is the latest edition to The Solution Group that has been established to work alongside Solution Recruitment Ltd and focus on retained mandates for senior level roles within the built environment.
Due to this fact, I wanted to write this article to explain the difference between both and to educate our clients and candidates on what is on offer throughout both processes.
What most people do not realise is that there are two different methods of recruitment: Retained and Contingency. Both are completely different and both will have their individual benefits.
Working on a retained basis means the dedicated head-hunter will charge an upfront fee to the client in order to conduct an Executive Search. They will operate on an exclusive basis meaning the job will only be filled through this search company.
These head-hunters work very closely with their clients and use an agreed methodology to find the best candidate for the role. The process is usually rigorous; with a longlist consisting of five to ten names being presented before a meeting with the client is scheduled to determine the ‘short list’ where the client will start conducting interviews.
In a perfect world, the retained head-hunter will be able to present around five candidates with the perfect skills and personality at the short list stage, and then all the client has to do is pick the one that they like the most.
Retained recruitment assignment fees are always higher than the contingency method. For example, at Lindsey Road the fee is 25% of the projected first years’ annual salary of the successful candidate. Clients will normally request a retained search when they are looking to fill a very niche role or it could be an extremely senior, business critical and sensitive opening.
Contingency is sometimes described as No Win, No Fee – a service performed by a recruitment company for free until the day a candidate represented by them takes a position with the respective company.
Recruiters working on this basis will have to compete with the client’s internal HR department, advertising, direct applicants and typically one or more other recruitment companies.
The main aim for the recruiter here is to represent the best candidate(s) and to do this faster than the other channels. If for instance the vacancy is difficult to fill, chances are there will only be a select few candidates in the market qualified for the position. Getting to these before everyone else is vital for the successful no win, no fee recruiter and fee percentages are typically around the 17.5% mark of the first year’s annual salary.
Difference in methodology:
The retained recruiter can take their time to get things 100% right using processes and agreed methodology, knowing they will eventually fill the position thanks to their exclusive terms.
The contingency recruiter will be a lot quicker and most probably deliver more candidates in order to increase the odds of making a placement.
Another difference is that the retained recruiter has signed up to a service level, sometimes a retained search can be very difficult and these projects can be rather lengthy.
To conclude; both methodologies have their benefits. For instance, using an Executive Search agent for a role can provide a detail orientated approach which will guarantee results, but on the other hand you could potentially have a quicker turnaround using an agency on contingency basis.