Contingency Search and Retained Search Agreements for Recruiters

Contingency-based recruitment is a common search method used by employers and provided by independent recruiters. Contingent search can be NON-EXCLUSIVE or EXCLUSIVE. Some exclusive searches are also incentivized with an ENGAGEMENT FEE, sometimes referred to as ENGAGED contingent search.

Non-exclusive contingent recruitment offers the least incentive and a limited level of commitment on either the part of the employer or the recruitment agency. The agency is not paid unless and until a candidate is hired by the employer. Hence the moniker “contingent” where the fee is paid upon the company hiring their candidate. The recruiter or firm owner will decide the time, energy, and resources to invest in each contingent recruitment assignment. The employer is likely to offer the job opening to other recruitment firms. There is little guarantee that specific work will be done and no promise of success for any of the parties to these non-exclusive searches.

Exclusive contingent search is when a client company/employer agrees to use a single recruitment service provider. This allows the identified recruitment firm to do the search for candidates in a non-competitive marketplace. This offers incentive to the contingent recruiter, still paid only when a hire is made of that recruiter’s candidate. The exclusivity may have a time limit but increases the probability of time and effort invested by the recruiter into the search as there is a significantly greater probability of success and a fee being collected.

Engaged contingent search is a precursor to a retained search. It is an exclusive search where the recruiter is provided a fee in advance to cover and compensate for some portion of the work being done to search for appropriate candidates for the client’s job opening. The amount varies but can often be between 25% to 33% of the anticipated fee for placing a candidate. The firm will receive the remainder of the fee if and when a candidate is placed. Some recruitment companies will use a smaller up-front flat fee rather than a percentage just to ensure client buy-in to their process. This payment is non-refundable even if the client cancels or fails to make a hiring decision. Under certain market conditions, this is the only way to ensure effort from very busy contingent recruitment firms.