I wanted to write this post since nearly every new client we initially speak to is often unsure as to whether or not a retained search or a contingent search is better for their business.
For those who are not familiar with these terms a retained search assignment is where a recruitment firm is paid an upfront fee to engage them with the remainder being paid upon completion. A contingent search assignment is where the entire fee is paid to the recruitment fee only when the candidate is selected.
1. A retained search is quicker….
We asked 50 clients who had recently undergone similar level hires using both retained and contingent approaches. On average a retained approach selected a candidate after 5.4 weeks from search initiation and a contingent approach selected a candidate within 10.4 weeks. In other words a retained approach was nearly twice as quick! Interestingly, a retained search was also quicker than those candidates that were internal referrals (average of 6.8 weeks).
2. A retained search attracts better quality candidates….
As part of Iopa Solutions approach we monitor candidates for pre-agreed performance criteria at 3 months, 6 months and 12 months after candidate start date. These criteria are established during our vacancy qualification and allows our clients to measure the quality of our candidates. When we compared our candidates to those hired using a contingent approach the results were noticeable. Retained search candidates performed 12%, 28% and 39% better than those hired through a contingent process. We attribute two major reasons for this. Firstly, since our clients work with us exclusively on a retained search, we are able to spend more time on mapping out the available candidate pool resulting in us recommending the better candidates. And secondly there is no reason to make rushed hiring decisions that could result if multiple recruitment firms were being used.
3. A retained search makes the hiring process smoother….
Rightfully, when a client pays a retainer fee they want to know exactly what service they will be getting in return and when. Retained search firms like us should provide an accurate timeline and detailed process through all the phases of hiring. Often hiring is complicated since a candidate is unavailable due to travel or the client is unsure as to how many interviews are necessary. Formalising the hiring process from the start through a retainer prevents this. All three parties – the recruitment firm, client and candidate are more likely to stick to the pre-agreed process.
4. A retained search increases confidentiality….
All recruitment searches should be treated confidential if the client wishes to do so, but the facts are that retained searches allow the client to control confidentiality better. Firstly, retained searches often come accompanied with non- disclosure agreements which are often overlooked in contingent searches. Also, many companies use multiple recruitment firms when using a contingent approach, making it more difficult to control and trace recruitment firm accountability.
5. A retained search prevents indecision and is more likely to result in a positive outcome….
A survey we conducted for 50 contingent “high urgency” searches and 50 retained “high urgency” searches yielded interesting results. 49 of the 50 retained searches resulted in a candidate being hired whilst only 34 of the contingent searches were completed. The 16 searches that were not completed were open for a mean time of nearly 11 months. This extra time for no end result is a huge cost for clients and can easily be prevented by adopting a retained approach.
6. A retained search approach is considered more serious and professional by senior executives….
Senior level executives are naturally more scarce in organisations and are therefore commonly contacted by search firms. Since these individuals are usually happy in their high profile jobs and are pushed for time, they will only consider roles that are truly attractive. A common question we are asked by executives when we initially approach them for roles is whether Iopa Solutions has been retained by the client. There are many reasons for this (such as 1-5 above) and since these individuals are usually regular hiring managers themselves they are aware of the benefits and necessities of a retained approach. Regardless of the reasons they will regularly only engage if the client is using a retained search firm.
7. A retained search firm allows clients to build a more successful partnership with recruitment firms….
Any successful partnership whether in business, friendship or family requires commitment. The more committed two parties are to working successfully to reach a common goal the better the results will be for both sides. By using a retained approach a client commits to using a particular firm and the recruitment firm agrees to spend more time and treats the requirement as a priority. Since both parties are now committed to reaching the same goal, communication and assistance increases. Not only does this improve productivity during the search, but over time allows the retained firm to build an in depth understanding of the clients business making them a valuable asset. As the competition for talent continues to increase partnerships such as these will become critical for ever business.
To summarise as our results show a retained search approach has many significant advantages over a contingent approach. Supporters of the contingent approach will probably argue that a contingent approach is less risky (no money is paid up front) and also allows them to explore multiple agencies at no cost. This is true, however if you are diligent in selecting the right partner then this does not apply. Also, does taking the risk of paying a small retainer fee outweigh the chance of attracting the best candidates, saving months of interviewing time or finding the best partner for your business long term?
Jas Singh, Iopa Solutions