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Retained v/s Contingent Recruitment - Which one should you choose?

Retained v/s Contingent Recruitment - Which one should you choose?

October 21, 2021 | Kumar Mangala

While both types of recruitment may target the same goal, their method and methodology are quite different. 

The primary difference between the two is - In retained recruitment, the recruiter is paid partially upfront or scheduled fee and works on an exclusive basis, meaning they, and only they, will be looking for a candidate. 

In contrast, contingency recruitment works on what we could best describe as a ‘no win, no fee basis.’ There are multiple recruiters invited to look for the right talent. If one finds and places a candidate, they get paid. If they don’t, they don’t. “There is no written commitment on either side in Contingent and that is the real evil”.

The differentiating factors which would help you make your decision are listed below-

1. Quality - “Improve quality; you automatically improve productivity.” -W Edwards Deming. In the recruitment and staffing industry, quality refers to the fit for the role. Candidates differ by their very nature based on their experience, performance, skills, demeanor, values, and education.

On the contingent side, the recruitment agency focuses more on quantity and less on quality. They are not paid for their efforts until only a candidate is placed. As the agencies compete directly with the other agencies, they engage with different roles across different industries and clients. 

On the other hand, in retained search, quality is given the highest priority.  An entire team focuses solely on this opportunity, and you are bound to get only the best. They deploy substantial resources to get you your perfect fit (This is why they charge an initial fee). They are a team of specialists who better understand the role’s function and headhunt the individuals accordingly. 

 

2. Exclusivity - The retained search is exclusive. Here, the recruiters can extrapolate the client’s requirements and understand the specifications better as they have open communication.

The recruiters and the client both work hand in hand here and build a long-lasting relationship along the journey. The client is bound to get the best candidate, as the search is highly exclusive, with a special team exclusively working on it.

The contingent search is non-exclusive. The client has the option of having multiple agencies work on a single opportunity. With it being non-exclusive, the recruitment agencies compete to submit and place the role first. Contingent search could be an option if you are just focusing on targeting active job seekers. In a contingent strategy, the recruiters cannot build a relationship with the client, as they have less time and immense competition. The clients also do not have the time to get into the details as they engage with multiple recruiters. Often, the strategies are weaker when the clients do not clearly express what specifications they are looking at, as they do not want to repeat themselves to each recruiter and just want to get the job done.

 

3. Fees - The most critical factor why clients often choose one over the other is the amount they have to shell out for a particular option. Which makes sense as no one would want to burn a hole in their pocket without getting the desired results. 

To speak for ourselves and give you an idea, here’s how much we, Kapital Data, charge for both the searches. Below is the breakdown - 

We charge 25% of the candidate’s first year’s compensation for our contingent recruitment once you decide to hire them.

For our retained searches, which would take you by surprise, we charge the same. That is, 25%; the only difference here is that you would have to pay the amount in 1/3rds. 

- 1/3rd is paid on signing of the contract.

- 1/3rd on the presentation of the final list of candidates.

- 1/3rd on the successful placement of the candidate.

The pricing structure is flexible to suit your requirements. For our retained searches, we have a 12 months risk reversal assurance and a proven 96% retention rate, which is the highest ever. We use our DreamHire platform for our retained searches, about which you can gather more information once you get in touch with us. 

 

As retained search is much more robust, recruiters charge an initial fee to compensate for their efforts and resources to map out candidates and present only the best to you. 

 

One final way to choose between Contingent v/s Retained is to experience it from a candidate’s perspective. The most sought-after candidates prefer being engaged by Retained Exclusive Recruiter - as they are much more informed and invested in the Search and the ultimate success of the position. 

 

So there you have it, two contrasting options to recruitment. The one you choose is ultimately your call, depending on the desired skill set you are looking for, the seniority of the role, the kind of candidate you are looking at, and other important factors. This is essentially a map that would help you do your comparative analysis and form a conclusion.

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