Contingent vs Retained vs Contained Recruitment

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With the holiday season in full swing, I thought I should provide some easy reading to help you while the hours away on the beach!

Within the recruitment world, there are many offerings all aimed at making the fee valuable, palatable and worthwhile and they are all variations on a theme of contingent and retained recruitment. This article is designed to explain how these methods differ and which to select for a particular role. We will start with contingent recruitment and then move through to retained recruitment, which sets the context for contained recruitment. Enjoy the read.

This diagram shows you what solution would be suitable depending on the assignment that you have, remember it’s the balance between generic and specific which determines what approach you should use and ensure you check on the experience of the recruitment company and consultant before embarking on a retained or contained project as with any kind of headhunting the training and skills are paramount in the outcome.

To learn about contained we must first set the current context of contingent and retained so please read through to the end to really understand the whole concept. Let’s start with the recruitment method we are often most familiar with.

Contingent Recruitment

For the uninitiated; contingent recruitment could be considered a success-based fee, in other words, once the successful candidate has started in the role then a fee based on a percentage of the salary is paid to the recruitment consultant, this typically involves a rebate payable should anything happen to the placement during a cooling off period.

Retained is the other most common approach to providing a recruitment solution and is typically employed when the role is of a high-value nature. The recruitment consultant in this case is usually referred to as a head-hunter and the process is known as paid search. There are benefits to this and there are some disadvantages.

In essence, there shouldn’t be any disadvantages at all as the process is aimed at ensuring the depth of search will be sufficient to source the candidate and the search company shouldn’t take on an assignment, which they believe is a paid search process unless they are certain that the role will be filled.

If we were to look at the two processes in terms of fees then it would look something like this:

The contingent world is effective in a generic application, high supply and a balanced demand make this approach a sensible way to provide the recruitment solution. The client company will typically be working with a number of recruitment companies and the consultant who provides the most suitable candidate in the quickest time wins the race for the placement.

This approach drives quantity and lowers quality over the longer term. You can also expect to have the same CV from a number of agents as the contingent world is mainly focused on the job seeker, the active market. Fee levels in this market are usually around 10% to 22%, there is little risk to the client in terms of cash outlay but there is risk in terms of time as if the role demands any kind of niche skill or trait then contingent will not resolve the process.

When a role demands a niche skill, culture or trait then contingent recruitment becomes much less effective as the number of candidates is reduced with each and every specific demand. This is in fact the method that head-hunters use to disqualify people, the tighter the search the more definitive the recruiter can be. We now enter the world of the retained search, which seems to be surrounded by secrecy and mystique.

Retained Recruitment

Retained searches have a mixed reputation within the marketplace; the reason for this is poor delivery of service and management of expectations on the client and candidate sides. Carrying out a headhunt takes skill and experience and isn’t something that should be taken on irresponsibly by the recruitment consultant.

The challenges the recruiter would face are a very narrow market, difficulty in contacting a suitable candidate with PAs and gatekeepers and high expectations from the client, as promises made to secure the retainer and justify the fee are high. Significant training should be given before any of the recruitment consultants can embark on a fully retained search and the job role should be analysed in depth to ensure the retained route is the most suitable solution.

One aspect of retained searches, which usually baffles the market, is that retained searches are a much higher fee than contingent despite the fact that the search is much more targeted and the client is working on an exclusive basis. The reality is that the search is very in-depth and gaining traction in a particular part of the market is difficult.

For example; I once carried out a retained search for a major FMCG company, the search led me to Italy, as I don’t speak Italian I needed some help with getting past the gatekeepers so I employed a local waiter from the Italian restaurant to open the doors for me and get me through to the potential candidate at which point the level of candidate was able to speak English.

So retained searches do take much more time than a contingent CV race hence the higher cost. The fee is structured as 1/3rd on assignment, 1/3rd on shortlist and 1/3rd on success. The structure of the assignment is such due to the high level of research required to source the candidates and the time required by the consultant to open the market up gently.

Contained Recruitment

Our experience in recruitment led us to develop the contained solution from a demand from our clients to end the CV race, repeat CVs and low quality that they had been experiencing from their providers at the time. They wanted a different result and as such they needed to find a different approach in order to change what was happening to them.

The way in which Contained differs from Contingent is the ‘Contained’ search allows more depth of search than Contingent would, this allows the consultant to deal with the more niche elements of the job specs and person specs which contingent recruitment does not allow.

If you can imagine a pond out in a field, around the pond are a series of fishermen all using their hands to reach into the water to try and catch a fish, the fish they would typically catch would be those fish that swim near the surface, it’s possible that the same fish would be approached by different fishermen and whichever fishermen dipped their hands in the most would probably find the most fish.

Now consider what would happen if another fisherman can to the pond and were to use a fishing rod? This would allow the fisherman to send his line out further and his bait down deeper meaning the fisherman would be working with different fish than those feeding on the top, his approach would be more controlled and the other fishermen wouldn’t bother the fish.

This analogy would try to explain the difference between Contingent and Contained recruitment. To add Retained to this then the analogy would be a diver and a harpoon, this approach would be expensive and very targeted.

With regard to the fee in a Contained search, the structure is a mix of the two previous solutions, an assignment fee (typically 1/3rd) is applicable to allow for the more in-depth search technique and the balance (2/3rds) is payable on success much the same as a contingent role.

As this type of assignment means exclusivity with the client and consultant the fee level can mitigate this meaning that this method is much more cost effective than retained and usually competitive with contingent. As the balance between candidate and client is specific but not actually niche then the search is more efficient in terms of time which is reflected in the fee charged.

In Summary

The Contingent assignment is useful when the role is more generic and the market is balanced well in terms of demand and supply.

Contained is very useful when it comes to a candidate-driven role when the demand and supply are balanced more toward demand. This method allows more depth of search and some head hunting along with some of the other methods such as DB and boards.

Retained is a pure search assignment when the market is totally candidate-driven and demand is far greater than supply.

We hope we’ve answered most of the commonly asked questions around these recruitment methods, however, if you’re not sure which one is most applicable to your situation, get in touch for a no-obligation chat. We’d be more than happy to talk through the options with you.