When you’re looking to fill a high-level position within your company, it’s essential to choose the right type of search firm. The most common types of firms are retained or contingency search firms. But what’s the difference between the two, and how do their fees work? Here’s a quick guide to help you understand the retained vs. contingency search debate.
What Is a Retained Search?
Retained searches are typically used for high-level positions that require a significant amount of time and resources to fill. In this type of search, the client pays the firm a retainer upfront, which covers the cost of recruiting, screening, and conducting interviews. The retained firm then works exclusively with the client to fill the position. Because of the level of commitment involved, retained searches tend to be more expensive than contingency searches.
The fees for a retained search are typically broken down into three phases:
- Phase 1: The initial retained fee, which covers the cost of recruiting, screening, and conducting interviews.
- Phase 2: A success fee, which is paid if and when the candidate is hired.
- Phase 3: A guarantee fee, which is paid if the candidate leaves the company within a certain time period.
In addition, the client may be responsible for paying the candidate’s relocation costs and signing bonus.
What is Contingency Recruitment?
A contingency search is a more traditional type of search, in which the firm is only paid if they are successful in placing a candidate. Because the firm isn’t paid unless they deliver results, they typically work with a larger pool of candidates.
The fees for a contingency search are typically a percentage of the candidate’s first-year salary and are paid only if the candidate is hired. For example, if the fee is 20%, and the candidate’s first-year salary is $100,000, the client would pay the firm $20,000. This percentage, of course, is just an example to illustrate pricing. Typically, contingency search fees range from 15% to 35%.
Retained vs. Contingency Search: When To Use Them
When would you use retained search?
If you have a senior-level position to fill that requires a significant investment of time and resources, retained search is the way to go. Because the firm is paid upfront, they can commit the necessary time and resources to find the best candidate for the job. For example, if you’re looking to fill a C-level position, retained search would be the best option.
When would you use contingency search?
Contingency search is typically used for positions that are less senior or that can be filled relatively quickly. Because the firm only gets paid if they deliver results, they tend to be more focused on filling the position as quickly as possible. For instance, if you’re looking to fill an entry-level or mid-level position, a contingency search would typically be the better option.
What does the decision between hiring a contingency or retained search provider mean for you as an employer?
The main difference between contingency and retained searches is the fee structure. In a contingency search, the firm is only paid if they are successful in placing a candidate. In a retained search, the client pays the firm a retainer upfront, which covers the cost of recruiting, screening, and conducting interviews. The retained firm then works exclusively with the client to fill the position.
The second key difference is the level of commitment from the firm. In a retained search, the firm is committed to filling the position and will work exclusively with the client. In a contingency search, the firm is not under any obligation to the client and may be working with other clients at the same time.
The decision between retained and contingency search comes down to what you, as the employer or manager, are looking for. If you need a quick turnaround, a contingency search is the way to go. But if you’re looking for a higher level of commitment from the firm, retained search is the better option.
How TruPath Structures Fees
TruPath offers both contingency and retained search services. We structure our contingency fees as a percentage of the candidate’s first-year salary, and we offer discounts for multiple hires. Our contingent search service is for lower-level placements within your company, while higher-level searches are secured with retained search. Fees for contingent searches are due upon placement. For retained searches, we will need a partial payment to initiate the candidate search process.
TruPath’s fees for direct placement recruiting are:
- Non-Leadership/Non-technical – 22% Contingent
- Technical – 25% Contingent
- Management/Leadership – 28% Retained
- VP to C-Suite – 30% Retained
When choosing between retained and contingency search, it’s important to consider what you, as the employer or manager, are looking for. TruPath offers contingent and retained search services, and our fees are structured accordingly. If you have any questions about which option is right for you, don’t hesitate to reach out. We’re here to help you find highly-skilled, culturally-aligned talent.