Retained search, contingency search and a hybrid approach: What your business needs to know

Learn about the common types of candidate searches used by recruiting firms, what sets them apart, and the benefits and drawbacks of each.

Finding the right candidate to fill a specific role starts with selecting the most relevant and effective candidate search process. An executive or director position is far different than one focused on frontline duties or entry-level work and, as a result, the processes used to acquire talent in each situation should differ as well. Leading talent acquisition firms use three types of candidate searches to fulfill the many staffing requests made by their partners. They are:

  • Contingency search.
  • Retained search.
  • Hybrid search - combining elements of both contingent and retained recruitment strategies.

With each recruitment method's distinct advantages and disadvantages to consider, let's take a closer look at these three paths to identifying, vetting and placing prospective candidates.

Retained and contingency search recruitment — the benefits and drawbacks to keep in mind

Retained search

Retained search is the traditional option used for filling open positions at the highest levels of a business including directors, vice presidents and C-suite executives. This is because the retained search method is centered on an exclusive relationship between the talent acquisition search firm and its partner, involving frequent communication between the two parties. Recruiters engaged in this kind of process collect detailed information about potential candidates and regularly share it with the client in search of top-level talent.

This high-touch approach is often seen as crucial because of the open position's importance. Companies always want to make the right choice when it comes to hiring a new staff member but recognize the especially strong level of influence that a director of finance or CEO, for example, can have on day-to-day operations and continued organizational success.

Retained search requires plenty of careful analysis and review on the part of recruiters, which helps to explain the pricing structure commonly put in place for this service. When a business retains a talent acquisition firm in this manner, they make three payments:

  • Initial, non-refundable retainer.
  • Midpoint payment.
  • Final payment at the conclusion of the process.

The initial retainer fee charged is a percentage of the total first-year compensation for the role and is provided before any work begins.

The benefits of retained search

  • Save resources: Retained search is a primary sourcing function, so the company looking to fill a leadership role doesn't need to engage in internal sourcing or otherwise leverage its own resources — beyond payment — in the process.
  • Eliminate the need for advertising: A retained executive search also removes the need for public advertising, something that businesses may want to avoid for crucial positions — maintaining confidentiality is often imperative in these situations. Companies can choose to make the search public and advertise accordingly, but the talent acquisition firm will screen any direct applicants attracted by that promotion.
  • Gain access to valuable insights: This type of candidate search is high-touch and a retained recruiter will provide frequent (generally weekly) updates, including sharing the names and interest levels of individual prospects.

Potential drawbacks of retained search

  • Costly: The multiple payments (including the percentage of a high-level staff member's total first-year compensation that's incorporated into the initial retainer) make retained search an especially expensive option.
  • More data, fewer results: In some cases, companies that choose to use a retained search model with their talent acquisition partner might be paying for data and updates more than they are for actual results. Some less-effective staffing agencies may share this information readily, but not otherwise alter their standard approach to sourcing and vetting prospective candidates.
  • Overlooking referrals: This recruitment strategy can prevent the company itself from hiring for the position in question through a personal connection or referral - unless the organization has a sophisticated talent mapping strategy in place.

Contingent search

Contingent search is most commonly used to fill openings for less-senior positions within a business. A strong majority of candidate searches for entry- and mid-level roles use contingency recruitment. It's a proven strategy for acquiring talent outside of top leadership, leveraged by a wide variety of companies with broadly positive results.

The specifics of a contingent search are very different from those of a retained search. A contingent search is a non-exclusive process, where payment is generally provided as a single sum instead of distributed across the project timeline. Companies only fulfill their financial obligations once the search is complete.

The fee is based on a percentage of the first-year salary offered for the role. However, the lower level of pay for these roles, as compared to those traditionally recruited through retained search, leads to a lower cost than other options. While it's still more expensive than contract placement, it's the least costly option when it comes to finding employees a company would otherwise hire directly.

Benefits of contingent search

  • Multiple search firms can contribute: Contingent search is non-exclusive by nature, allowing several search firms to participate in the recruitment process. There are conflicting schools of thought as to whether involving several talent acquisition firms in a search is positive or negative, but having the freedom to choose is clearly an advantage.
  • Opportunity to leverage internal resources: Companies can use their own resources, like internal referral processes, in the search, and the open positions can be publicly advertised as well. Because businesses that use contingent search generally have their own internal recruiting teams in place — and must pay for them — it only makes sense to leverage those assets to find effective talent in tandem with partner firms.

Potential drawbacks of contingent search

  • Less control and oversight: As a more open and lower-touch process, contingent search can lead to less control on the part of the client business. There are no weekly updates or frequent, in-depth discussions of relevant data.
  • A decreased level of priority: Talent acquisition firms may also pay less attention to this process on their end due to the lower level of payment, although that's by no means an industry-wide standard or roundly accepted practice. The non-exclusive nature of contingent search can lead to some talent firms deprioritizing the process in general if they have significant commitments to exclusive partners.
  • Less effective communication: The structure of contingent search also limits a staffing agency's ability to share a company's name with a passive candidate, which can negatively influence recruiting outcomes.
  • Potential "race to the bottom" mentality. If a client allows multiple talent acquisition partners to work on a role, as well as engage its own internal recruiting staff, this creates a significant incentive for those staffing firms to deliver the very first candidates they identify, rather than the very best ones. Because payment is received only upon the successful candidate's hiring, a firm may decide not to dedicate significant time and resources to the search, especially if they believe they will not be able to deliver a candidate quickly.

Considering a hybrid search

Hybrid search isn't an entirely different strategy compared to retained and contingency search. Instead, it brings together the best and most relevant elements of each of those established options to form a unique, effective and more flexible path forward for recruiting employees in higher-level positions.

Hybrid search can replace other models in many, although not necessarily all, instances. For candidate searches at the very top of a company's hierarchy, some businesses may still prefer to choose the retained model. However, hybrid search can effectively fill roles from vice president to director and chief financial officer.

In terms of cost, hybrid search includes two stages of payment: an initial retainer at the beginning of the search and a second at its conclusion. The fee is a percentage of total first-year compensation, but depending on the level of the position (e.g. for a director role), the total first-year salary may be used instead. Pricing is generally flexible based on the role in question.

Advantages of hybrid search

  • Work with a dedicated recruitment agency partner: A hybrid search is an exclusive relationship and the business benefits from a committed agency partner. This arrangement empowers a single talent acquisition firm to control the message to the suitable candidate market. It also allows for public disclosure of specifics, such as the company name, to passive candidates.
  • Leverage greater flexibility: Hybrid differs from retained search in terms of flexibility because it allows companies to work with direct applicants or hire via referral and use their own recruiting teams. In this scenario, the business doesn't have to pay the full fee. It's only responsible for the initial retainer, which represents the time and effort invested by the recruiting firm. The final fee is only due if the staffing firm delivers the final hire.
  • Improved insight into the process: Overall, the organization can choose to have the staffing agency handle every aspect of the process, or use those outside services to complement its own hiring resources. The level of contact between the recruiting firm and partner business is high, with weekly updates and information about prospects and their interest levels shared regularly.

Potential drawbacks of hybrid search

  • Ineffective for lower-level positions: Despite its many benefits, hybrid search is not an effective option for staffing at lower levels within a business. The substantial amount of attention and focus offered by the recruiting firm is only effective in terms of cost and outcome for higher-level positions.
  • Required payment regardless of the result: The initial retainer is always paid regardless of the outcome of a search. A company that brings on a talent acquisition firm for a hybrid search, but ends up completing the recruitment process largely or completely through internal channels, will still have to provide that initial fee.

One agency can address all hiring needs

A talent acquisition firm that can capably address all of your staffing needs is a uniquely powerful asset. While all types of talent searches have the same ultimate goal and ideal outcome, the structure and specific workflows of each are very different.

Beacon Hill can effectively lead and complete all types of candidate searches, whether the open position is in the C-suite or entry-level. With our wealth of industry experience and understanding of results, we strongly suggest hybrid search when addressing open positions near the top of the company. The flexibility of resources and processes, high level of recruiter commitment and simplified pricing structure make it an effective choice for most hiring needs. However, we are ready, willing and able to support those searches where the circumstances indicate that a retained model offers the best chance at success.

When it comes to recruiting outside of executive positions, there isn't much debate: A contingent search is the clear option for efficiently bringing new staff into a company. We can address a variety of contingent hiring needs across a wide range of industries and provide reliable support irrespective of whether your organization needs to fill three roles or three hundred.

No matter the specific need, our continued emphasis on quality in all candidate searches means you can count on experienced and effective recruiters to take on this complex task or serve in a key complementary role.

Prioritizing your next talent acquisition

Recruiting might involve a multi-month search for a new C-suite member, drawing on mostly passive candidates and incorporating a high amount of touchpoints to keep your company abreast of recent developments and the interest levels of individuals contacted. Or, it could be a time-sensitive and expansive project aiming to recruit dozens or even hundreds of additional frontline workers to staff a new facility or venture.

Choosing the right search type for your path forward is crucial. When your organization partners with Beacon Hill, it benefits from complete support in all types of candidate searches. We can focus on the necessary volume and fill roles by your deadline without sacrificing quality in contingent searches. Our experience with hybrid and retained searches leads to putting the best possible candidate in place to support your company at its highest levels.

To learn more about partnering with Beacon Hill to complete your next candidate search, contact us today or find a location near you.

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