Is Retained Search More Lucrative?
For years, consultants in executive search have been explaining the difference between contingency and retained executive search firms. It has always been hard to do without sounding self-serving. I have attached a definition of Executive Search which I believe makes the differentiation quite clear.
Executive search is the consultative process of recruiting individuals to fill senior executive positions in organizations. Executive search may be performed by an organization’s board of directors, or by an outside executive search organization, with a portion of the retainer being paid up front.
Retained search firms are paid a retainer equal to one-third of the fee up front to launch the search process, a third of the fee after a specific number of candidates have been presented and the final third when a candidate is hired.
Contingency search firms, on the other hand, receive their entire fee at the conclusion of the search process. Over the years, many contingency firms have begun receiving retainers while retained firms have expanded their models to include flat fees, capped fees, etc.
It can be more difficult to attract retained search assignments as a new business owner. Retained clients expect more service and details and they own all candidates surfaced until a hiring decision is reached.
Even though retained searches guarantee money is paid up front, there is no guarantee Retained Search is more lucrative. High level searches can take much longer and can be more difficult to fill. Whereas mid-level searches can be filled faster and could result in a higher level of revenue being generated.
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