I get the question from candidates occasionally whether my firm is Retained or Contingent. It is a legitimate qualifying question by a someone who is seeking credibility in a search firm. Although the perception is that being on a retained search would validate the legitimacy of my firm; the reality is that there are many advantages as a small business owner to work on a contingent basis. Obviously there is something to be said for being paid in advance of putting time and resources into a filling a search. It demonstrates urgency of the hire if a company is willing to spend money up front to fill a position. Also, you get the money now! No negotiating time frame of payment on invoices, calls to accounts payable, employees hounding me for commissions, etc. These are some of the pros for working on retained searches, however, there are many factors that go along with a retained search that can affect my company’s ability to produce maximum revenue.
A huge positive in working contingent searches is autonomy, especially since we are a smaller, niche firm. As anyone working in a sales capacity knows, time management is one of the most important keys to success and maximizing revenue. A retained search can be very limiting to your ability to manage where you are prioritizing your time and resources. There are around a dozen variables to each new client and search that indicate whether it is a good use of time to work on filling roles with that company. Any solid Headhunter will evaluate all of these closely while deciding how much of his or her time to spend on a particular client. Probably the most important factor in this decision process is how excited candidates get to go work there, which is right away half the battle of closing deals in Executive Search. Other factors are the product/platform, scalability, the engineers and team support, senior leadership, interview process, compensation, commission structure, benefits, and the list goes on. With a new client, it is impossible to evaluate up front how good they will end up being in the long run. On a retained search, the ability to prioritize is eliminated, because once you accept the retainer you are obligated to work on that search until it is filled. I can easily fill five roles with an established, proven contingent client in the same time it takes me to fill one retained search with a new client. Having the ability to prioritize which clients I choose to spend my company’s time and resources with is invaluable. It gives me the ability to have a direct impact on sales, billings and success.
So I would rather have the ability to walk away from a search and prioritize where I spend my time. In my experience, having that flexibility is much more important than the security of getting paid in advance. The confidence to fill any search within my industry before the competition plays a good part in this thinking as well.