I’m frequently asked how to convert a contingency search to a retainer. As a recruiter who made the switch to retainer three years ago, I can tell you what I’ve learned, including some things you may not want to hear.

To begin with, there are many differences between the two types of services beyond the superficial difference of how the recruiter is paid. In some ways, a true retained search practice resembles a temp agency more than a perm-placement business, for the simple reason that both use a “division of labor” business model. 

For example, in a large retainer practice, a search director will delegate the research and screening to a support staff, in much the same way an account manager or sales manager will delegate the “recruiting” function to a staffing coordinator. In contrast, the vast majority of contingency recruiters do their own research and screening to fill their job orders.

Regarding payment terms: A retained executive search is defined as an exclusive project undertaken on behalf of a client to identify and screen suitable candidates for a particular position. Typically, the estimated fee is prepaid in three 30-day installments. An open-ended payment schedule with the majority of the fee contingent upon “successful completion” is not considered a retained executive search. So, if you receive a $1,000 “engagement fee,” your service is really a contingency search with a cover charge.

Before you decide to offer retained search services, first look at the level of candidate you’re associated with. Rarely are retainers paid for positions that pay less than $100,000 annually. So if you deal in mid-market or “commodity” candidates such as engineers, accountants or programmers, it’s unlikely you’ll do much retained work. And you should consider yourself lucky.

I’ve found that retained searches to fill mid-level or non-management positions usually aren’t worth the trouble, and often end in disaster. From an economic standpoint, you’re risking an open-ended commitment of your time, but at a fixed rate. The money may be guaranteed, but if the search bogs down, you’re stuck working for a dollar an hour. To complicate matters, many lower- or mid-level hiring managers fail to put forth the effort necessary to attract suitable talent, and lack the sense of urgency to effectively close qualified candidates.

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