Retained vs. Contingency -- what's the big diff?
Let's start with the basics. Contingency search is simple; you hire someone from a contingency firm and pay them a fee when the candidate starts. You'll spend about 15 minutes on the phone with someone taking a "job order" that will sound like you're at a fast food restaurant: "I need an accountant with five years experience, a CPA and big six experience who knows SEC reporting and Oracle financials." You almost expect the voice on the other end of the line to say: "Anything to drink with your order?" or "Would you like to super size that CPA for .99 cents?" The search becomes a commodity, in some cases posted openly so any recruiter with any candidate can throw a resume against your office wall praying one sticks long enough for the invoice to be paid. Guarantees are typically no more than 30 days; ironically the same period in which the invoice is due. There are no commitments from the recruiter that they won't recruit from your company next week; like I said, it's simple: you hire someone -- you pay. End of story.
In a contingency search, you have the option of working with as many recruiters as you can handle, you can play the numbers and cast a wide net. You'll be deluged with calls from other recruiters and a veritable sea of resumes will land on your desk with the only filter in the recruiters mind being: "If they can do the job, send them out." Trust me I know, this is what I was taught when I began recruiting some 12 years ago. The life span of a contingency recruiter is three to five years. They either burnout or get smart and learn to create value as a retained recruiter.
Retained search has a myriad of fee structures. The big guns like Korn-Ferry & Heidrick & Struggles charge one third of the first years total income (base, bonus, relocation expense -- whatever income can be taxed). The estimated fee is paid over the first 90 days and the client (you) are billed for travel, postage, copies, video conferences and cocktails. Anyone you hire during the course of the search, regardless of where they come from is a billable placement. This is the top and as you might expect everything is negotiable. There are hybrids, such as the way I work, where a portion of the estimated fee is paid to initiate the search and the balance is due on completion. The search is conducted on an exclusive basis, but you have the option of submitting a list of candidates currently under consideration and/or any resumes that come to you from other sources (including those ambulance chasing contingency recruiters in the first paragraph...) can be excluded as non-billable placements. Expect to have an unconditional guarantee of at least six months to one year and at least one year where your company will be considered "off-limits" as a place to recruit from.
So what are the candidates saying?
The best candidates already know the game. Their first question to a cold call from a recruiter will most likely be "Is this a retained or contingent search?" They're concerned about their confidentiality and if they'll be getting 10 calls this week from other recruiters, not knowing who's most likely to help them get the job. They're also measuring you to find out how you do business and how serious you are about hiring someone to do more than just fill an empty seat. When a candidate learns the search is retained they're more apt to sing the head hunters favorite song: "Let Me Close My Door." for either their own interest or on a referral basis They know a relationship is in place and that the recruiter is going to be able to tell them about more than a job order; and their going to tell the recruiter more than what's on their resume.
Which is best for you?
If you're in a hurry to fill an empty seat -- call the contingency recruiter. If you're looking for something more than a warm body, maybe you've got challenges the current team can't fix or maybe you're looking for some advice on the who/what/when/where/why & how of recruiting then schedule an appointment for the retained recruiter to visit your office, sample your culture and help you write a job profile.