Contingency vs Retained Recruiting

Is Retained Recruiting a Better Fit for Your Company?

There are two alternatives to strictly in-house recruiting- contingency recruiters and retained recruiting services.  Both of these models of recruiting can be highly effective, however certain company structures, growth stages, and open position types lend themselves to be a better fit for one vs. the other.

What is Retained Recruiting?

Retained recruiting is typically an ongoing service provided to a client for a set fee (retainer) paid at set points during the search process.   The recruiting company is paid their ongoing fee regardless of when a candidate is placed.  The fee is typically not strictly a percentage of the offered salary and instead covers a host of services around the recruiting process that are provided to the hiring company.  The biggest advantage of these types of agreements are that they are exclusive (the recruiting company is not shopping your candidates to other companies they are working with).  In a highly competitive market, where qualified talent is either hard to find or snapped up quickly, this is often the difference between placing a candidate and endless rounds of interviews that never fill a position.

The second advantage of retained recruiting is that typically with this type of agreement, the recruiting company is a true extension of the client company’s HR department and hiring staff. Most firms, like Silver Tiger Consulting, offering Retained Recruiting Solutions also offer various outsourced HR Solutions to complement an internal HR team, so their knowledge of labor law, talent development, the labor market, and HR systems in general is much more in-depth than a contingency recruiting company.

The retained recruiting company takes on a much bigger role than just sourcing candidates.  As a result, they have in-depth knowledge of the hiring company and its culture.  This not only saves a tremendous amount of time on candidate screening, but it helps “sell” the position to a wider audience of potential candidates much better so that the overall pool of candidates the hiring company is considering is of much higher quality.  

Services such as creating a company's marketing for the position, setting up and administering a company’s applicant tracking system, enhancing or setting up an internal employee referral program, negotiating salaries on behalf of the hiring company with the candidates, coordinating with international search efforts and other legacy contingency recruiting efforts, handling candidate rejection discussions, and assisting with new hire onboarding and acclimation are just some of the services that can be included in retained recruiting agreements.

How is Contingency Recruiting Different than Retained Recruiting?

In a contingency recruiting relationship, the recruiting company typically only gets compensated if and when a candidate is placed.  The fee is typically a percentage of the total annual compensation and varies greatly based on position level and industry.  Contingent searches are not exclusive.  A contingency recruiter is typically shopping their own candidate pool (that they own) to a number of their clients.  Good contingency recruiters will typically always have two to three alternate companies in the works for their candidates to choose from.  This ensures not only an actual placement that allows them to get paid, but allows them to spend time on open positions at hiring companies based on responsiveness of the hiring company.  Since the contingency recruiter is only compensated if a candidate is hired, they typically do not invest as much time in developing the relationship with the hiring company or on ancillary services (such as helping the hiring company market the position to the widest network).

When to Choose Contingency Recruiting:

If you are a newer company, or your company is not actively growing headcount (you may only have one or two low to mid-levele positions to fill in a given year), contingency recruiting is likely a better fit if you have an internal HR department.  This lower volume of recruiting, if you have an established HR department that can actively follow up on all incoming resumes and source resumes themselves, they can likely handle 1 -2 open job requisitions in a given year.  Managing multiple contingency recruiting relationships is typically not challenging for an existing HR department when hiring only 1 or 2 candidates.

When to Choose Retained Recruiting:

If you have an established company and are continuing to grow headcount by 3 or more positions a year or are looking for a higher level candidate in a tough market, a contingency firm is likely a better fit.  Contingency recruiting relationships are typically ongoing and are hiring for the same company multiple positions over the course of a year or several years.  Both the retained recruiting company and the hiring firm benefit from the ancillary services provided as the overall strength of the recruiting process is greatly enhanced due to the ongoing and exclusive nature of the relationship.  Ownership of the developed and continuously fed candidate pool also typically lies with the hiring company exclusively, so shires for similar positions at the company can be made faster and faster over time.  For more examples of specifics included in our retained recruiting agreements, please visit our page, "What is Included in a Retained Recruiting Agreement?"

 

About Silver Tiger Consulting

Silver Tiger Consulting provides outsourced business management solutions- including outsourced HR services, retained recruiting services, operations management, and outsourced marketing solutions.  Silver Tiger Consulting is a WBE Certified business serving national and international clients.

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