Am I Talking to a Contingent Firm or a Retained Firm?

• There’s often no easy way to tell if a firm is contingent or retained.  But it’s critical that you know which type you're dealing with when you're talking to a recruiter.

• One of the key ways to tell is by how enthusiastically you are received if you are the one who reaches out to the recruiter.  If they seem overjoyed, the firm is probably contingent (many make their money by marketing good candidates).  If they act disinterested, it is probably a retained firm, because they make their money filling just a few narrowly-defined positions at a time.
  

Although they're both paid by the employer, you need to know if the recruiter you're dealing with is working on contingency or retainer. Contingent firms are generally not the best job avenues for six-figure executives. If you’re well into six figures, you probably don’t want to deal with contingent firms at all. If you’re earning $100,000, you may be willing to deal with either type (but you want to make sure that the contingent firm isn’t going to send your résumé to your most likely employers – you can do that yourself). If you’re unsure of the difference between the two types, see Headhunters – Contingent & Retained:  What’s the Difference, and Why Should I Care?

Firm names are not revealing. Unless the name is one that is prominent in the industry (Heidrick & Struggles and Korn Ferry are retained; Management Recruiters branches are contingency firms), the name won’t tell you a thing. A firm name such as Bowzer Search Consultants could be contingency or retained, as could Fife & Flugelhorn Partners.

The Methods They Use to Contact You Are Not Clear Indicators:

Position is Advertised:  This is a tough one.  It used to be a dead giveaway if a job was advertised – the firm was contingent.  Now, you’ll find retained firms advertising everywhere from membership-only, $100,000+ sites like Ladders, RiteSite and ExecuNet to the popular job boards Monster and Career Builder.  You’ll also find contingent firms advertising on the member-only sites that used to be reserved for retained search firms, who in the past refused to pay for advertising.

They Cold Call You:  Retained firms make an enormous number of cold calls to candidates not in the job market.  Contingency firms do this as well, although far less frequently, and they are more likely to do so if they are referred to you by a friend.  Unfortunately, if you’re at your desk at work and a recruiter calls out of the blue, he or she could be retained or contingent.

 
Search Firm Web Sites: You can often determine whether a firm is contingent or retained by checking their web site, but read carefully.  There is usually an About Us or an Our Methodology section on a firm’s web site. 

Retained firms will talk about an extensive process that includes: 

• Meetings at the client’s site with the hiring manager and other key people there. Developing a detailed job specification.

• Targeting companies in the industry, and contacting key candidates at them.

• A description of their interviewing process.

• Candidate reference checking techniques.

Contingent firms can’t afford to do much if any of what is described above, because they’re not guaranteed payment. Most normally will speak by phone to HR, and once in a while to the hiring manager, take the company’s job description and then run with it.  Their web sites usually aren’t explicit about whether they’re contingent or retained, but if you dig around, you may find a statement that tells the client that they only pay when they hire a candidate.  Look for indications of how much work they do and how many steps they use.  When a very intricate recruiting process is described, the firm is far less likely to be contingent.

 
Position and Company Information Released:  Unless the search is confidential (because the incumbent is going to get fired), a retained firm will be able to tell you not only the name of the company, but will also be able to tell you extensive information about the position, what the hiring manager is like, and provide extensive information about what is expected from the position.  Contingent firms generally won’t tell you who the company is (because they don’t want you to go backdoor, or get the word out on the street about the position, which will allow everyone to go backdoor). If they do reveal the client’s name, they rarely will be able to give you extensive information about the position, because they haven’t made site visits, and frequently haven’t even talked to the hiring manager.

 
Watch out if the search firm rolls out the welcome wagon if you call them cold. The biggest thing to remember is that the contingent firm wants to get you hired or they don’t make any money because of you. The retained firm doesn’t care whether you get hired or not – they only want to complete their searches to their clients’ satisfaction.

If you call a retained firm up, you’ll most likely get blocked by the secretary, and you’ll probably get the cold shoulder if you do reach one of their consultants.  The chance that your background is a match for one of the three to six searches that the search consultant is working on at the time is miniscule. Retained firms don’t have time to spend with candidates who are not possible candidates for their current work.

Contingent firms, on the other hand, look for marketable candidates. If you call them and they act very interested in your candidacy, especially if they don’t mention a particular job, you’re most likely dealing with a contingency firm.

If they talk to you about more than one job, it’s a dead giveaway. With a few rare (and controversial) exceptions, retained firms don’t present a candidate to more than one client at a time. Clients get touchy when they’re paying a guaranteed fee of $35,000 to $200,000 to a search firm, and they find that the firm has also presented the candidate they want to a competitor, setting up a bidding war. The contingent firm has no commitment to the client or any commitment from the client. If they can present you to a dozen clients, they have a twelve-times greater chance of earning a fee. If the recruiter starts talking to you about more than one job, or in any way suggests that they’ll be presenting you to more than one client, the chance is almost 100% that the recruiter is contingent.

 
Asking directly if they’re on a retainer may get you a lie, but it’s a way to start.  You can gently ask the search consultant if he is working on a retainer or on contingency, but you often won’t get a truthful answer. Some will give you an out-and-out lie, and some will give you an ambiguous answer that will make it sound like they are working on retainer. (Some contingent firms may have an exclusive contingency listing and consider that working on retainer.  An exclusive contingency listing means that no other recruiter is working on the position, but the client has no commitment to hire someone that the firm brings to them, and can hire anyone they uncover through their own methods).

Another way to check is by looking up the firm in Kennedy’s Directory of Executive Recruiters (The Red Book).  If you’re actively looking for a job, you should buy a copy of this book.  Firms are listed as contingent or retained in the Red Book. Unfortunately, even firms in the retained section may not be what you consider retained. Some will take a $4,000 retainer, and get the remainder of the fee on completion – they’re primarily a contingent operation, and will operate much like a contingent firm.  Others will do a mix of contingent and retained searches, but tell Kennedy that they only take on retained searches, or that they accept contingent assignments occasionally, and make their way into the retained section of the Red Book. Some boutique retained firms don’t care to be listed in the Red Book at all, because almost no client uses the book to select a search firm, and they can’t handle the barrage of resumes that it generates.

RiteSite’s list of 600 retained firms contains most (but not 100%) of the true retainer-only firms in the country. If the firm is on that list, you can feel comfortable that it is a  retained firm.

*

Do the reputable retainer-only firms ever work on contingency?  Yes, on rare occasion.  They’ll be really sneaky about it, because they don’t want word to get out. If they do so, they’ll most likely act as if they are working on a retained basis.