The contingent model of recruitment has long been the standard within the industry, with multiple agencies competing to fill the same role but only the one who places a candidate earning a financial reward for their hard work.

For the unsuccessful agency — where a competitor filled the role, recruitment activity was ceased by the client or an internal hire made — this constitutes to hours of hard work with zero financial return.

This can particularly be the case with positions which are challenging to source talent for. Almost 40% of businesses are burdened with hard-to-fill vacancies, perhaps due to the specialist skills or experience required or due to limitations such as pay or working hours. Between that and the well-known talent scarcity and the global economic conditions at play, it’s no wonder there is both growing frustration and delays with conventional recruitment methods. 

A Newer Way of Working

Among those disheartened by the “high volume, low reward” approach associated with the contingency model, there are an increasing number of agencies and headhunters in the US who are looking at a different way of working: the retained model.

This model promotes exclusivity and financial commitment combined with a rigorous search process, yielding the best result possible. Aside from more predictable revenue, with payments usually received at three key points — at the beginning, midway through and on completion of a successful placement — agencies can reap the additional benefits of establishing long-term client partnerships and the ability to forecast future finances. 

This comes hand in hand with providing a more comprehensive partnership that aligns with the business’ recruitment requirements both short and long term while also removing the chaos of having three or four other agencies approaching the same talent pool.

A Toe in Both Ponds

In the US, there are growing numbers of agencies which have decided to take steps towards the retained model of working but haven’t fully completed this journey. 

In these cases, we are seeing some recruiters stuck in a midway point between the two — working in a way sometimes called “retingent” or “contained.”

Some have begun taking deposits when they agree a new project with an employer but have not yet put the rigor, timelines, terms or processes in place to enjoy the benefits of a fully retained model — being committed partnerships with employers, near 100% fill rates, forecastable revenue and the resulting increased EBITDA and overall value of their business.

More worryingly, they may still be experiencing some of the pitfalls of the contingency model with the added pressure of the expectation from the employer which comes with having taken an upfront payment.

That’s why a crucial part of the journey is putting the processes in place around pricing, commitment and delivery; without those, the retained model simply doesn’t work well, and then they find themselves trapped (or “contained”) or even contemplating switching back to a contingent model.

But the reality is that, if implemented properly, a retained way of working — which opens the door to opportunities to headhunt and operate at C-suite — proves hugely successful for the agencies and search execs who’ve fully learned, embraced and adopted it.

It’s becoming increasingly clear that those who stick with the traditional contingent model face being left behind in the race to overcome such growth challenges as the “war for talent,” while those who find themselves with a toe in both ponds may be taking on the additional expectations that come with a retained model — without removing the headaches of the old way of working and without being properly equipped to benefit from the perks of the new.

The Solution?

The great news is, with some recruiters having already completed the journey to retained — and successfully grown their agencies as a result — there are some fantastic examples for those now looking to do the same. But with retained models rapidly becoming the new norm for the industry, anyone who doesn’t act now faces being left behind as a throwback to the old contingent days or unnecessarily stuck in retingent mode.