We are often asked about the benefits of using a retained search over a contingent (fee on success) model when working with our clients. It is a common misconception that retained or executive search is restricted purely to a senior level hire in an organisation and that a retained search is less cost effective than contingent.
While true that when attracting senior level hires to an organisation, a retained service is more effective. It can also be more effective when a role is a technical or skilled hire or when a role is difficult to recruit for, such as a geographically restricted search.
In addition, a retained search does not need to be more expensive.
The purpose of a retainer is to demonstrate a business commitment for the extensive time and effort that that the firm will invest into a project.
From a search firm perspective, what we can commit to is the guarantee that a comprehensive and detailed search would be undertaken and all avenues explored to be able to attract the best candidates to shortlist for the organisation. It is estimated that a successful search requires approximately 150-200 man hours when done correctly.
Search firms are committed to delivery and outcomes. There is never any guarantee that a successful hire would be made on the back of a search, but a search firm can guarantee that they would work with the organisation to deliver the best profiles for consideration within the timeframes agreed and would continue consulting and guiding where required to accomplish a successful outcome for the client.
Is market expertise important for a search firm?
Boutique search consultancies specialising in niche sectors are bucking the trend in the industry. However, any experienced, professional and dedicated search consultant from any industry could manage a search project outside of their industry.
The benefit over using search firms with experience in specific industries is the added ability to “consult” with the client and challenge expectations based on market knowledge and competitor information. These consultants are able to guide clients through a selection process and identify specific market pitfalls or anomalies that may not be apparent outside of the specific industry.
Comparing the service of a contingent search and a retained search is purely down to commitment and dedicated resources. A reputable and successful search consultancy will always be busy with new business, repeat business and existing searches. Engaging with a consultancy with a retained search will ensure that your project will be a top priority and the resources required to deliver on this project will have been mapped out and assigned to ensure a successful result.
A reputable consultancy would never take on a project that they would not be able to complete and would be prepared to turn down business if they felt it was not feasible.
Operating under a contingent model, a consultancy, depending on their workload, would rarely assign specific resources on the project and would usually deliver candidates from an existing pool of candidates or candidates generated as a result of a similar campaign they are either currently or recently run. Some companies such as Chad Harrison International as an example, will always conduct a full ‘headhunt’ search on all retained campaigns and will do so on contingent campaigns, time permitting.
Retained business is always a top priority to any search firm.
Commitment can come in many forms and so can cost models.
A traditional approach to a retained search is a standard third on commencement, third on shortlist and final on payment. As outlined above, a retained search purely demonstrates commitment and many companies opt to engage in different structures such as a smaller commencement payment upfront with remaining balance on completion or a staggered payment over specific timeframes rather than milestones. Be creative and come up with something that works for everyone.
Financially however, a retained search does not always need to cost more than a contingent search as the time involved in the retained search is usually more than contingent but the commitment has already been secured.
What is important to consider when agreeing a retained search is to understand and agree the structure up front, ensuring there is a commencement fee in place to retain the search consultant’s time. What is also recommended is an agreement on milestones and timeframes. Agree the expectations from both parties and ensure continued communication throughout the process.
As outlined above, there are numerous benefits of a retained search model depending on the vacancy and using the right firm can ensure the client finds the best person available in the market.
Chad Harrison International specialises in senior level and skilled or technical hires in a range of industries on both a permanent and interim basis. For more information, please contact the team on +44 151 665 0250.