Retained Executive Search vs Contingency: What’s the Difference?
Key Differences & Considerations of Retained Executive Search Firms & Contingent Recruiting Agencies
Finding and securing high-quality executive talent has grown more complex over the years due to consistent market shifts, new search procedures and methodologies, priority transitions toward DEI and ESG and competitive benefits packages. However, the intricacies of such a process are a necessity as high-impact executives are hard to come by.
If your company is in the market for a new executive—whether it be a CEO, CFO or relatively new title such as Chief Diversity Officer or Chief Data Officer—you won’t want to bypass any of these crucial processes to ensure you land a game-changing senior-level leader. So, how can you find the top performers in a confidential manner without thrusting your organization into a time-consuming and challenging search? Hire an outside executive search firm.
There are two major types of third-party agencies available a company might choose for placing candidates: retained executive search firms and contingency recruitment agencies. To ensure you choose the right type of firm for your organization’s pursuit, it’s critical you understand the differences between the two.
What Is Contingency Recruiting?
Contingency recruiting is completed by agencies that receive service payments after a candidate has been identified and hired. Due to the method of payment, most contingent recruiters take on as many searches as possible, ensuring they have multiple opportunities to get paid. This may mean the recruiter will be unable to give their full attention to your organization’s search or may walk away if they receive a more lucrative assignment.
In addition, such recruiters are known to attempt to fill positions as quickly as possible, which could mean bypassing certain assessment and interview procedures or disregarding several criteria and qualifications. In the end, your organization may end up with a stack of resumes to weed through, leaving you with just as much work as you were trying to offload. It’s important to note leaders in C-Suite positions can influence stock prices and also set the culture for organizations which impacts DEI, sustainability and more. When placing such influential positions—it's not about quantity of candidates, but the quality and caliber of the candidate.
When utilizing contingent recruiters, companies are not tied to a specific agency and may hire multiple. While this is typically an issue for the agencies who are pitted against one another, this can quickly become a security and confidentiality problem for your organization as well. Plus, all agencies may reach out to the same candidate, making your organization seem desperate and unorganized.
What Is Retained Executive Search?
Unlike contingent recruiting, which recruits talent for roles ranging from entry to senior, retained executive search focuses strictly on placing candidates in executive and senior-level positions. When hiring a retained executive search firm, your organization is leveraging the firm’s extensive knowledge of and experience in the industry, service or function. Retained executive search consultants specialize in high-impact, high-level placements – positions where the right leader provides a company with a competitive advantage.
Consultants only take on several searches each year, meaning they have the time and resources to dedicate to your organization’s needs. Plus, they work with an entire team of professionals including associates and researchers who help source and identify active and passive candidates. Executive search consultants have the means to engage with top-tier candidates who may not be looking for a position but possess every possible quality your organization is looking for.
Additionally, executive search firms work on an exclusive basis, so you won’t have to liaise with several agencies at once and all information remains confidential. It also means potential candidates won’t receive multiple requests from multiple agencies. Consultants and their teams will ensure every potential candidate is engaged in a strategic manner.
Because retained consultants work on a retainer fee, they serve as trusted advisors to leadership and offer complementary solutions to ensure the new hire is set up for success.
The Major Differences at a Glance
Scope of Work
Executive search firms provide advisory services by identifying, assessing, and selecting the best possible candidate for a role. Contingent recruiting agencies, on the other hand, leave the assessment and selection to the client.
Executive search firms take on a limited number of assignments, ensuring consultants can give each client the necessary time and attention from search to candidate integration. A consulting fee or retainer is charged at the beginning of the relationship. Contingent recruiting agencies, however, work on many assignments at once with the goal of recruiting a candidate in the shortest amount of time. Such agencies are paid based on hires.
While executive search firms complete comprehensive research on the client and potential candidates including referencing, competency-based interviewing, and assessments, contingent recruiting agencies utilize networks, advertising, and online databases to compile many resumes at once.
Contingent recruiters typically assist in filling entry- to mid-level positions, while executive search firms specialize in senior-level executives and board directors.
AESC Can Help You Find a Retained Executive Search Firm
If you and your organization are interested in finding the right fit for your open executive position or board seat, connect with an AESC member today! AESC members are vetted retained executive search firms that understand the industry and put in the effort and time to learn about your organization.
AESC CEO Karen Greenbaum said it best of retained executive search:
“It’s about trust, confidentially and expertise on hard to fill positions. When you think about looking for the top executives in your company whether that is the CEO or CFO, you want to make sure you are really hiring an expert that has the trust of the candidate community, not just the trust of the client. Executive search professionals have an exclusive assignment with the client, they are not just gathering a resume and hope something sticks, they have worked with the client to define the position, the culture, the requirements and the business strategy to do what they really do best and that is search for the right candidate.”