If you’re considering branching out to a third-party staffing agency to assist your in-house hiring efforts, you’ll likely be tasked with the question of “What type of search to use?”, and “A retained search or a contingent search?” But if you’ve never worked with a recruiting agency before, you may wonder what that even means.
The primary difference between the two search options is when the third-party agency gets paid for their services, and to help you decide what search is best for you we’re going to break down each one.
The Retained Search
A retained search is when you pay the staffing firm for services up front. There is an expected sum paid before the search even begins (on average, a retainer of 30-50%), then the remaining amount when the candidate is secured. In most retained searches, you are offering the exclusive on this role to that agency – meaning that they’re the only firm working on the search externally.
The Contingent Search
A contingent search is when you pay the staffing firm for services after a candidate has been selected. Depending on the terms of the placement, the fee is either paid in a sum after the candidate has been hired (permanent hires), or the fee is paid throughout the duration of the contract (temporary/contract hires). Although you can offer an exclusive on a contingency-based search, there is typically no requirement or expectation to do so.
Weighing the Benefits
There are several areas to consider when deciding what type of search to utilize when hiring for your organization.
- The type of contract you’re hiring for: permanent versus temporary
- The level of expertise required in a candidate: experience needed, managerial expectations
- The urgency behind the hire: how quickly do you need this hire in the door?
- Payment terms: are you prepared to pay a firm up front? How much are you willing to allocate towards the search?
How these factors contribute to your decision in a retained or contingent search may vary on what types of roles you’re recruiting for, and each type of search has its own benefits to evaluate.
Considerations of a Retained Search
The retained search can be used when the need to fill specific roles with your organization arises. While these may not be applicant searches that employers perform regularly, a retained search can help staff a difficult-to-fill or niche role, as these searches usually take more time, and are designed to produce fewer candidates with more relevant skills.
Payment terms & Fees
- The fees involved are typically higher for a retained search. ‘Retained search fees average 30-35% while contingency search fees are typically 20%’.
- Be sure to understand payment terms, as not all retained searches are set up equally. Fees are typically paid in either two or three payments.
Efficiency over Speed
- There can be a longer, more strict vetting process to find the right fit.
- Since you’re paying for this hire up front, there’s a strong expectation that you’re receiving a top-tiered candidate that fits the bill of what you’re looking for.
- The retained search will often come with an exclusive for the staffing firm. In translation, the firm you hire is the only external agency working on the opening. This can slow down your time to fill, as there’s less boots on the ground recruiting for you, a primary factor why urgency shouldn’t be motivator when using this type of applicant search.
- When there’s only one firm working on your opening, there’s less chance of the hiring activity getting back to your internal employees – relinquishing your ability to control the messaging and rollout plans.
- Confidential searches may include an NDA agreement if you choose, where breach of the NDA can result in returned fees that you’ve paid the firm on the front end.
Considerations for a Contingent Search
This type of search can be utilized for several reasons and is typically the most common type of applicant search, as it is the most versatile and offers employers exposure to a variety of potential hires. Unlike a retained search, when using this option an organization can hire both permanent, and temporary employees. Temporary employees can be beneficial in many ways and keep business running as usual. In the event you find a temporary hire that you’d like to make into a permanent team member, your staffing agency can help facilitate that transition!
Identifying top talent in the hiring pool is a staffing agency’s strongest contribution to the hiring process and providing clients with a variety of viable applicants to choose from is the biggest benefit of utilizing a contingent search.
Exclusives & Urgency
- You can still offer exclusives to your top firm while running a contingency-based search. In other words, you can give your best firm the jump on an opening before extending it to additional agencies.
- Exclusives can range from 1 day to multiple months.
- These also create a sense of urgency for the agency to deliver. No agency wants a partner to regret giving them an exclusive! An exclusive is often an urgent, call-to-action across the organization to put your job request on their priority list.
- Contingency-based searches require payment of fees after candidates have been hired. There is lower risk from a financial perspective.
- Be sure to understand the payment terms & fees of each agency that runs a contingency search for you.
- For permanent hires, fees are 20% on average. In today’s market, we’ve seen that grow beyond 25% for higher level roles that have urgency behind hiring. The fee is often paid after the candidate has been employed by the company for a set duration of time. Be sure to inquire about guarantees offered by the firm, in the off chance the new hire doesn’t work out for one reason or another.
- For temporary hires, fees are paid throughout the duration of the contract. These fees are charged by either a Markup or Bill Rate. Guarantees are often associated with temporary hires as well.
Attractiveness of Your Role
Since fees are paid on the backend of the hiring process, the role needs to be attractive to the recruiting team of the staffing agency. Especially during a candidate-driven market and record-breaking unemployment rates, it’s crucial that you attract recruiters to prioritize filling your role.
There are many ways to get recruiter’s eyes on your role until it’s filled:
- Prove a quick hiring process – prioritize responsiveness to your agencies, quickly get feedback to them on candidates that you’re both interested in and passing on, have urgency and conviction when committing to interviews, and bypass multiple interviews whenever possible. Staffing can be a fast-moving world and recruiters have metrics to meet, they will gravitate to the fasting-filling jobs.
- Offer fair wages & fees – research to better understand your markets. Learn the appropriate wages to offer candidates and the going rate for agency fees. You can lean on the expertise of multiple staffing experts. Reach out to colleagues within your network to understand what wages & fees they’re accustomed to paying and what results they’ve gotten against it. When a recruiter has ten jobs in front of them, and one is offering fees below the market rate, you can bet that position goes to the bottom of their list.
It’s clear that having a third-party staffing agency as part of your hiring team has several advantages, and just as many benefits whether a business chooses to hire retained or contingent. The primary differences in the two is when the organization is prepared to pay the staffing agency for services provided, and the timeframe they expect to hire an applicant in.
Deciding which option works best is a decision that is unique to each organization. What works for one, may not work for another, and similarly, what worked for one role may not apply to a different role down the road. It’s important to evaluate each situation and choose which option best serves the scenario at hand. With a full-service staffing firm like BANKW Staffing and its family of recruiting agencies in your corner to advise and support your organization’s hiring needs, you can be confident that you’ll always make the correct staffing decisions.
About BANKW Staffing
Through its portfolio companies, KBW Financial Staffing & Recruiting, Alexander Technology Group, The Nagler Group, Sales Search Partners, and KNF&T Staffing Resources, BANKW Staffing, LLC is the leading regional provider of temporary and direct-hire staffing services in the areas of finance, accounting, information technology, office and administration, legal, human resources, and sales.
BANKW Staffing companies have received over 100 awards for rapid growth, business excellence, and workplace quality. Recognition includes Inc. 500, Boston Business Journal’s “Best Places to Work” and Business NH Magazine’s “Business of the Year”.
Learn More – http://www.bankwstaffing.com
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