Advantages of Using a Retained Search Firm

What are the advantages of using a retained search firm?  Should you use one?  Many people have asked me why a company should use a retained search firm when they can outsource a search to multiple recruiters without retaining (this is called contingency or contingent recruiting).  It’s a fair question and, being transparent, it is the most challenging aspect of selling retained search services.  There are significant advantages to using a retained search firm.  They may not be obvious, so I’ve detailed these benefits to make it easier to decide if a retained search is right for you.

What is retained search?

Retained search is a recruiting method that creates a highly successful partnership between a hiring company and a recruiting firm.  Both parties share a vested interest in a successful outcome and work together exclusively to find the very best candidate for a position.  This method is also referred to as “headhunting”, “executive search”, and “engaged search”.

Advantages of retained executive search

What’s the difference between contingent and retained search?

The best way to understand the difference is to illustrate what happens on a contingent search.  Hiring companies will often send a search to many different contingent recruiters.  They will only pay a fee to the one agency that first sent the hired candidate.  This type of arrangement promotes speed over accuracy.  Because of this, contingent recruiters will send large quantities of resumes with minimal vetting to improve their chances of earning a fee.  The client company has to screen and filter through the large volume of candidates they receive from the different agencies.  For these reasons, contingent recruiters work on a lot of openings (I’ve seen as many as 30) at any given time, not doing a deep dive on any.

A retained search firm exclusively performs all aspects of the search and screening to minimize the client company’s workload.  They are not racing against another firm, so there is no sacrifice of quality.  A retained recruiting firm specializes in finding the most qualified candidate.  BlueSteps explains further differences here.


Search fees and guarantees

Total fees for both retained and contingent search models are similar, though timing of payment is usually different.  A company will pay full contingent fees after making a hire.  Retained firms receive a portion of their fee up front to offset the cost of dedicating resources on the search, leaving a smaller balance after hire.

Contingent agencies rarely guarantee their candidates beyond 90 days, if they offer any guarantee.  Retained search firms focus on accuracy, so you should receive longer guarantees on this type of search.  Some guarantees from retained search firms can be as long as one-year after a hire is made.


Advantages of using retained search

1. Recruiting and industry expertise

Emphasizing quality over quantity and speed allows retained recruiters to leverage their expertise.  Retained recruiters are experts in their clients’ industry and can also apply their knowledge to new industry sectors very quickly.  They will also have expertise in finding and recruiting career-minded people who are long term solutions.  Most contingent recruiters work for staffing agencies whose core competency is recruiting contract or temporary employees.

2. Exclusivity

By working exclusively with a retained firm, you will experience a more productive working relationship.  A retained firm dedicates time and resources towards a search that a contingent agency can’t.  This will ensure your search gets the proper attention required to culminate in a successful hire.  Exclusivity gives a recruiter the opportunity to emphasize accuracy over quantity.

3. Priority attention

Retained recruiters will rarely work on more than 2 or 3 searches at a time.  A retained firm gives clients the priority attention necessary for a successful outcome.  The recruiter is able to invest the appropriate amount of time to find the best candidates.  Each search is unique with its own set of challenges, so a retained firm can customize their approach to maximize results.

4. Access to talent

Recruiters meeting talented people

The best candidates are often working and not applying to job postings.  Retained firms maintain relationships with top performers.  They are adept at networking and getting to the hidden talent who isn’t actively seeking a career change.  Contingency recruiters typically have a database of applicants found on job boards.  Many of these candidates are unemployed, disgruntled, or simply lacking longevity.  Their database aids with speed but they rarely get to the passive top performers.  Helios explains this well here.

5. Headhunters are experts at confidentiality AND marketing

If your search requires confidentiality, it’s crucial that you don’t allow many contingent firms to make the industry aware of your opening.  Retained search firms are stealthy and experts at maintaining confidentiality.  If your search is not confidential, retained firms are also marketing professionals who can leverage your corporate identity and employer brand (more here) while recruiting.  Openly marketing your company will also improve your brand.  As a result, your company may experience residual effects that lead to hires beyond the retained search.  Contingent firms can’t advertise or even mention your company name because it will likely lose them a placement fee.

6. Retained relationships create a partnership

A retained firm works hand in hand with a client to find, select, and recruit the best candidate.  Both companies (client and firm) have a vested interest in a successful outcome and want the partnership to work.  This is a key advantage to using a retained search firm.  Contingent recruiters and their clients naturally compete against each other.  This is because the client company will save on recruiting fees if they fill position through their own efforts.  Also, it will often benefit a contingent agency to send your candidates to a different client if there is another opportunity for a fee.  Neither of these scenarios promote a healthy partnership.

7. Communication and sharing of data

Throughout a search, retained search firms will be able to share significant information.  They can gather competitive intelligence, compensation information, industry data, etc.  All of this can help substantiate client qualifications or temper hiring expectations (Gene explains that here).  They will also be able to share lists of candidates who have been considered or targeted for your opening, promoting collaboration.  The competitive nature of contingent searches precludes an agency from sharing this type of data, so they typically don’t collect it.

Sharing data is a an advantage of retained search.

8. Retained search saves the client time

Though speed is not a focus, a retained search will still save a company considerable time.  Retained firms deliver greater quality, because they are dedicating the resources and time to scour the industry and thoroughly vet people for their client.  The client won’t need to review large quantities of resume submissions and exhaust time screening and filtering candidates.  By hiring a retained search firm you can spend more quality time with the best candidates and still have the time you need for your core responsibilities.

9. Retained search is more cost-effective

With time saved searching/interviewing and fees roughly the same, retained search is much more cost-effective than contingent.  I’ve known some hiring companies to employ people just to interface with contingent recruiters, because of the sheer volume of unvetted resumes they receive.  When outsourcing to a retained search firm, you can stick to your core competencies and let the recruiting firm vet and recommend the right candidate.  You will likely only need to meet with your engaged recruiter every week or two.  Their accuracy will also increase your retention and decrease the likelihood of making a wrong hire.  All of which impacts your bottom line.


When should you retain a search firm?

Now that you understand the advantages of using a retained search model, when do you retain a search firm?  Both recruiting models can work, depending on how much time you want to invest.  Executek has provided both types of recruiting services for our clients.  The truth is, when performing contingent search, I feel we are doing the client a disservice.  My preference and recommendation is almost always a retained search model.   For the same fee, we can provide priority attention, focus on quality over speed, and dedicate resources until the position is filled.  Once they’ve utilized our retained search services, my clients have reported a greater appreciation and a preference for that level of service.

Generally speaking, you should truly consider a retained search if:

  • You’ve been unsuccessful filling a position on your own.
  • You’ve used contingent recruiters with mixed or no success.
  • You need a top performer in a critical role.
  • You receive too many candidates to screen and interview.
  • You’ve made the wrong hire.
  • Qualified candidates remain elusive.
  • You need to keep the search confidential.
  • Your offers are not being accepted.
  • Competition is high for the skill set you are seeking to hire.
  • You want to improve your employment brand or reputation.
  • You need data and competitive intelligence.


Brad Stemmler is a Managing Partner with Executek, a retained executive search firm dedicated to manufacturing and industrial companies.  If you would like to learn more about the benefits of retained search, contact us today.  We never charge a fee for a phone call.

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