What's the difference?
Contingency and retained recruitment agencies are named after their payment terms.
If you are looking to hire a recruitment agency, you have the option to engage one that works on a contingency or retained basis. Here is an outline of how the two models work, so you can decide which best suits you.
If you want to learn more about our retained search services, please feel free to call us on (08) 9225 6211 or click the button below. We'd be delighted to tell you more, so you can decide whether we're the right fit for you.
The contingency model
Agencies that work on a contingency basis essentially just make introductions and sell CVs. They typically provide a short-term replacement guarantee of 3 months, as they have not done an in-depth assessment of the vacancy or the candidate.
Contingency agencies operate in a transactional manner - they are motivated to get someone into the role as soon as possible to land the sale. This push to fill roles quickly rarely results in the best or most qualified candidates.
As these agencies are not guaranteed to receive payment for the roles they working on, they will be reluctant to invest significant time or resources into sourcing candidates. Plus, taking the time to conduct an in-depth assessment may cost them the job, as another agency could beat them to placement.
Consultants at contingency agencies will typically be working on 10-20 vacancies at any given time, with a filling ratio of just 20%. They will not usually participate in any interviews for these roles and will be unwilling to share any negative observations. This is due to a conflict of interest - the consultant won't want to say anything that discounts the candidate, as this will result in the agency not being paid.
In essence, contingency agencies use a sourcing model, rather than a true recruitment model.
The retained search model
The retained search model supports the process of finding the best possible candidate, as it requires a more personalised and consultative process.
Under the retained model, the agency is paid over the course of the engagement, regardless of whether the search ends in a placement or not.
The employer pays the agency to establish a holistic picture of the vacancy, which includes assessing the:
The consultant will then develop a talent and market mapping strategy, plus an advertising strategy to find, engage with, and assess the most qualified candidates.
Retained agencies typically offer a longer replacement guarantee of 12+ months, as they are confident in their final recommendation. Additionally, consultants working on retained assignments will typically only be working on 2-3 vacancies at any given time, with a filling ration of more than 95%.
Contingency
Retained
Cost
Paid a fee upon successful placement of the candidate.
Paid an upfront or scheduled fee over the course of the engagement.
Payment
Payment is made in one lump sum upon placement of the candidate.
Payment is typically made across three equal payments over the engagement.
Motivation
Consultants motivated to place candidates ASAP, so they get paid.
Consultants motivated to partner with clients to source the best candidates.
Candidates
Effective for attracting active candidates, who are ready immediately.
Effective for attracting both passive and active candidates.
Culture
Understanding of company culture is less important - focus is speed over fit.
Understanding of company culture is crucial to properly represent the client.
Exclusivity
Multiple agencies may be engaged by the client, and the candidate will not be exclusive to that vacancy.
The retained agency will be the only agency engaged, and their candidate will be exclusive to that vacancy.
Specialty
Generalist services - reluctant to spend significant time or resources filling a role.
Specialist services - take the time to understand the role and requirements.
Filling ratio
Consultants typically work on 10-20 roles at a time. Filling ratio is just 20%.
Consultants typically work on 2-3 roles at a time. Filling ratio is over 95%.
Guarantee
Offer a 3-month guarantee, as they have not conducted an in-depth assessment.
Offer a 12+ month guarantee, as they are confident in their recommendation.
Background
Consultants have a background in sales.
Consultants have a background in HR, recruitment and/or management.
Matching
Match based on candidates' skills, resulting in horizontal moves.
Match based on transferable skills and behaviour (DISC, Evalex), resulting in vertical moves.
Approach
Transactional approach - motivated to fill the role as ASAP so they get paid.
Consultative approach - motivated to find the best possible candidate.
Commitment
No commitment on either side, so the agency will move to easier roles if yours is too difficult to fill.
Strong commitment on both sides, as the client has paid upfront.
At 11 Recruitment, we only work under the retained model, and we offer an 18-month replacement guarantee. So, which model do you think best suits your requirements? We will leave for you to decide.
Recruit top talent