London: 0203 544 7476 / Manchester: 0161 641 0897

Retained Consultancy v Contingent Agency

There can be a misconception among ‘line’ or ‘hiring’ managers that the market is flooded with suitable candidates and that therefore recruitment is a straightforward process. However, the reality is that those responsible for finding new talent for their organisation work very hard to identify the right people

The myriad of tools available to the corporate recruiter includes external consultancies. These are usually defined as either retained consultants, with a retainer paid up front and further staged fees, or contingent agencies, where a single fee is paid at the point when the position is filled. Many of our clients use a mixture of both to fulfil their recruitment needs and this article looks at some of the advantages and disadvantages of each type of external supplier.

When you work with a retained consultancy, after payment of the retainer further agreed stages for payment are clearly linked to specific deliverables. As well as a final appointment, these will ideally include a fully qualified, professionally interviewed shortlist with the necessary checks and early referencing completed. As a client you will typically receive better results from a retained partner because there is a mutual commitment from the outset. And the quality of the shortlist should also reduce the risk of failure late in the appointment process. But do watch out for consultancies that charge a monthly fee, whatever the outcome.

Despite the many positives of working with a retained consultancy, it can still be tempting to engage with a number of contingent agencies. However, as a client you have fired the starting gun for a race to get CVs that exist on multiple databases to you first. As contingent agencies are only paid when a final appointment is made, they tend to send a number of CVs in the hope that one may be appropriate and candidates may not always have been interviewed by the contingent agency for the specific role in question, which increases the burden for the client. On the plus side, using a contingent agency does allow clients to pursue other avenues, such as internal candidates or their own advertising process, without incurring extra cost unless an appointment is made. But do ensure you are fully aware of the contingent agency’s terms and conditions: complications may arise if you recruit a candidate whose details you have received from more than one source, for example.

Contingent agencies tend to operate at the lower end of the salary scale where there are more roles to fill – usually on a ‘No Win, No Fee’ basis. Conversely, retained consultancies tend to be used at the higher levels of management where there are fewer roles and the talent base is arguably smaller. The result of this separation in the market is that whilst contingent agencies try to move up the management chain with limited success, high end, retained consultants tend to try to move down the management chain. In the latter case, percentage-based fees are often too low for the consultancy business model, which calls into question whether the commitment from the retained consultant can be as great. For clients recruiting at middle-management level this separation means becoming squeezed between the two styles of external recruiter.

GKI Resourcing has been established to bridge this gap with a business model created around specialising in retained recruitment for middle-management positions and an ability to deliver effectively at the £40k to £95k salary level. We don’t want to paint the picture that working with a retained consultancy is the magic solution for filling all mid-level positions within an organisation: there is a balance that exists between the benefits gained from the added focus of a retained consultancy partner and financial viability. That being said, we do believe that a retained consultancy approach should be more frequently utilised when it comes to filling challenging roles. Ultimately, the placement fee is likely to be similar and the rate of success is likely to be higher.

Our Thoughts