Differences in Approach
There are several key differences between retained and contingency recruiting in the way the process is carried out. A retained consultant works exclusively on the search and is expected to evaluate all candidates being considered for the position. As a result, a retained consultant will never present the same candidate to more than one client at a time. A contingency recruiter usually does not have an exclusive assignment, but instead is in a race against other sources to present a winning candidate, and often presents attractive candidates to as many clients as possible.
Contingency recruiters tend to be more specialized by industry and function. Retained search consultants may also specialize but, because they are driven by original research for each engagement, are willing and able to apply that process across industries and functions – especially when circumstances indicate the possibility of recruiting from outside the client’s industry.
Just as the two kinds of service differ in their approach, their fees also differ. Retained recruiters typically receive 30-35% of guaranteed first-year cash compensation for the hired candidate. They make an estimate of the fee and bill for a portion of the fee to initiate the engagement, with several subsequent invoices leading to a final bill that makes an adjustment based on the actual compensation package awarded to the hired candidate. As an alternative, most retained consultants will also accept a fee fixed at the outset based on the expected compensation level and billed in three or four monthly installments during the search. Contingency recruiters, on the other hand, typically receive 20-25% of first-year cash compensation, paid in one lump sum on hiring.
In addition to the fee, retained consultants ask clients to reimburse them for travel expenses incurred for candidate interviews. Contingency recruiters typically do not incur these expenses.
Neither contingency nor retained executive search consultants accept fees from individuals for the purpose of helping them find a job. However, contingency firms are motivated to “market” highly attractive candidates to several potential employers at once. Retained consultants are not motivated to sell candidates in the same way; they are being paid for the process of selecting the best candidate, so they can be more objective about whether a particular individual is the right choice.
Search Process
The contingency recruiting process is quite simple. Recruiters learn the basic facts about the job vacancy, scan known candidates, conduct cursory phone screening calls, and submit their resumes as quickly as possible.
The retained search process has many more steps. If a firm decides to hire a retained executive search firm, here is what they can expect:
· The consultant will conduct detailed interviews with the client organization’s management team to develop a full understanding of the position to be filled and the qualifications of the executive to be recruited.
· A summary of this understanding, including a detailed profile of the qualifications and experience of the desired candidate, will be communicated to the hiring executive at the outset of the engagement.
· This engagement letter will also include a complete description of how the search will be conducted and will outline the firm’s policies on fees, expenses, guarantees, and assurances against recruiting executives away from the client organization in the future.
· The consultant will conduct original research, targeting organizations identified as likely employers of potential candidates, and accessing proprietary and commercially available databases for sources of potential candidates.
· Through this research, the consultant develops a “long list” of potentially qualified candidates, then conducts telephone interviews to develop candidates for possible in-person interviews.
· During one or more in-person interviews, the consultant conducts a thorough evaluation of each candidate’s suitability for, and interest in, the position.
· The consultant presents several qualified candidates to the client for interviews, and throughout this process acts as a mediator to assure that all issues relevant to filling the position are being addressed.
· Once the client has selected one or more candidates it would like to hire, the consultant conducts final reference checks to confirm the accuracy of judgments about the candidate’s suitability and to assure that all relevant information about the candidate has been gathered.
· The consultant will help the client develop the job offer and will help the candidate prepare to accept it.
· After the hiring, the consultant will stay in touch with both the client and the successful candidate to assure an orderly transition.
· Finally, the hiring organization can expect two assurances from the search firm: first, the firm will pledge that, during a given period of time, if the hired candidate does not work out for reasons the search consultant should have foreseen the firm will repeat the search at no extra charge (travel expenses only); second, the search firm will pledge not to recruit from the hiring organization for a stated period of time following the engagement.
