Contingent Hiring vs. Retained Recruitment: Which Is Right for Your Candidate Search?


Written By: Krissy Manzano


July 14, 2023

Time to Read: 7 Minutes

When it comes to the acquisition of job applicants, employers frequently seek help in sourcing qualified candidates through two primary methodologies: contingent hiring and retained recruitment. Each approach possesses distinct characteristics, benefits, and considerations, underscoring the importance of a comprehensive evaluation of both options to ensure alignment with their unique requirements. Which approach is right for you? Let’s take a look.

What is Contingent Hiring?

Contingent hiring refers to the practice of engaging an external contingent recruiter or contingent staffing agency on a temporary or project-specific basis to assist with sourcing and selecting job candidates. In contingent hiring arrangements, the recruiter or firm is compensated (typically in the form of a predetermined fee or a percentage of the candidate’s salary) on a “no placement, no fee” basis. This means a “finders fee” is only paid if a candidate they refer is successfully hired by the client’s organization, where exclusivity is not limited to either side.

Contingent Hiring Must-Haves; What to Look for in a Contingent Recruiter

Amidst the complexities of today’s economic landscape, organizations frequently encounter the demanding task of fulfilling their hiring requirements with precision and efficiency. Contingent recruiters typically have access to a broad network of potential candidates and employ various sourcing methods to identify and present qualified individuals for consideration. The contingent hiring approach allows employers to access a wider talent pool and leverage the expertise and resources of external recruiters temporarily to fill an immediate or short-term staffing need.

When evaluating the contingent hiring approach, it is important to consider several key factors to ensure an effective partnership with a contingency recruiter. Here are some aspects to look for:

  • Industry expertise and specialization
    Look for a contingent staffing agency that has a deep understanding of your industry, the specific roles you need to fill, and the market trends affecting talent acquisition in your field. Specialization enhances their ability to source qualified candidates and provide valuable insights. This aspect is particularly crucial for non-entry-level positions considering the reduced level of dedication you can anticipate due to there being no upfront payment.
  • Track record and reputation
    Research the firm’s track record and reputation in the recruitment industry. Look for client testimonials and referrals, reviews on third-party sites like G2, and stories of success that demonstrate their ability to deliver quality candidates. Consider their experience working with companies like yours and gain insights into their methodology for identifying exceptional candidates and understanding their track record in long-term retention within organizations.
  • Sourcing strategies and technology
    Evaluate the recruiter’s sourcing strategies and the technology they utilize for sourcing talent. Are they relying on their own candidate database, or have they invested in technology to execute an outbound strategy? Inquire about their sourcing methods, including how they attract and engage candidates, and evaluate the caliber and diversity of candidates they typically present.
  • Communication and collaboration
    Ensure that your contingent hiring partner maintains open lines of communication, provides regular updates on the hiring process, and promptly addresses any concerns or questions you may have. Look for someone that values collaboration.
  • An understanding of your company’s value proposition and culture
    If they cannot effectively articulate your company’s mission and unique selling points, how can a contingent recruiter successfully pitch and convey the value of your business to potential candidates? In addition, they should clearly understand your organizational goals, values, and the type of candidates that will thrive in your work environment. A strong cultural fit contributes to successful long-term hires and a cohesive team dynamic.

What is Retained Recruitment?

In a retained recruitment process, the client company hires a retained recruiter or professional search firm exclusively to conduct a thorough and customized search for highly qualified candidates. The recruiter or firm works closely with the client to understand the specific requirements and qualifications needed for the position. They then leverage their industry expertise, networks, and resources to identify and approach potential candidates who match the criteria.

Retained recruitment is typically utilized for critical positions where finding the right candidate is crucial for the organization’s success. It offers a dedicated, customized, and comprehensive approach to sourcing and attracting top talent, leveraging the expertise and resources of professional search firms.

Retained Recruitment Must-Haves; What to Look for in a Retained Recruiter

Retained recruiters are typically retained on a contractual basis and are paid a small fee regardless of whether a candidate is placed within an organization. This fee is generally credited against the initial candidate placement. Unlike contingent hiring firms, retained recruiters often focus on specialized mid-to-senior level roles or executive-level positions requiring a thorough and strategic search. This can range from individual contributor roles to senior leadership. In addition, they collaborate closely with their clients to grasp their hiring requirements, company culture, and long-term objectives, striving to enhance and support the entire recruiting and hiring process.

  • Expertise in specialized searches
    Retained recruiting firms should have a strong track record and expertise in the specific roles they are conducting searches for. Understand what they specialize in and assess their experience in recruiting for these positions. Review their process to determine their ability to identify candidates with specific skills or industry knowledge that align with your organization’s strategic goals.
  • Proven search methodology
    RA reputable firm should have a well-defined and proven search methodology. Inquire about their approach to candidate sourcing, evaluation, and selection while seeking firms that go beyond mere candidate sourcing and screening. They should integrate their process with yours and enhance the entire interview journey by ensuring alignment throughout every step.
  • Partnership and understanding of your organization
    Retained firms should invest time in understanding your company’s unique value proposition, specific hiring needs, and industry dynamics. They should demonstrate a clear understanding of your organizational goals, values, and the type of candidates that will thrive in your work environment. A strong partnership is crucial to ensure the firm can effectively represent your organization and find candidates who align with your values and objectives.
  • Commitment to diversity and inclusion
    In today’s business landscape, diversity and inclusion are essential for fostering innovation and long-term success. Evaluate whether the retained recruiting firm strongly emphasizes diversity and inclusion in its candidate searches. Inquire about their strategies for sourcing diverse candidates, commitment to unbiased evaluation processes, and ability to deliver a diverse slate of qualified candidates for your consideration.

Recruiting Red Flags

Regardless of which type of recruitment process you feel best suits your organization’s needs, every company should watch out for a handful of recruiting red flags. Here are four red flags to consider when choosing a contingent hiring or retained recruitment approach:

  1. Lack of specialized focus in search efforts

A proficient recruiter excels in recruiting for roles within their specialized domain, e.g., recruiting for engineers, sales, or executives. Exercise caution with recruiters who claim to be skilled in recruiting for any role, as their ability to excel across the board may not be their strongest suit.

  1. Unreasonable promises or guarantees

Be cautious of recruiters who make lofty promises or guarantees regarding the quantity or quality of candidates they can deliver. Recruiting is a complex and competitive process, and there are no guarantees. Unrealistic assurances may indicate a lack of integrity or a willingness to overpromise and underdeliver.

  1. Lack of transparency in their process

Understanding what their recruitment process looks like, including their sourcing strategies, candidate evaluation methods, and timeline, is key to ensuring alignment. If they are unwilling to share details or clarify their approach, it may raise concerns about their professionalism or the effectiveness of their process.

  1. High turnover of recruiters within the agency

If the recruiting agency experiences frequent turnover of recruiters, it can disrupt the continuity and efficiency of the hiring process. Consistently changing points of contact or dealing with a revolving door of recruiters may indicate instability or internal issues within the agency.

Check out our Go-To-Market Interview Guide for the top five tips to implement a diversity hiring plan.