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Retainer Vs Success Fee


Retained vs. Success Fee

Precise circumstances for which organizations prefer to call on a supplier in retainer mode.

Success fee / Contingency firms

  1. Frequently represent individuals seeking placement.

  2. Are usually in competition with other similar agencies for the placement.

  3. Professional staff is usually compensated on commission for placements made.

  4. Usually search for lower-level organizational positions including but not restricted to individual contributors.

  5. Tend to spend little time on initial research and specification; often never meet company management or prospects.

  6. Focus primarily on applicants / candidates actively seeking employment; recruiting is placement oriented.

  7. Search consultant works concurrently with a multitude of open jobs.

  8. With no guarantee of payment for services performed, the consultant cannot afford to invest much time in a search beyond basic recruiting and submission of resumes.

  9. Will present most candidates within 1-2 weeks of obtaining job order; may submit substantial paperwork to increase probability of a placement by pushing for interviews and hoping for interest on both sides.

  10. Contingency search requires considerable client’s Human Resource involvement in screening, interviewing, and evaluating candidates presented.

  11. Under no obligation to guarantee or produce results due to contingency fee arrangement (paid on placement only).

  12. Fees range from 15-30% of compensation and are paid by company on placement (or shortly there after).

  13. Decision to pay a fee is usually made by Human Resources and is budgetary motivated.

Retainer firms

  1. Represent Companies employer only.

  2. Conduct search assignments on an exclusive contract basis only.

  3. Professional staff is usually compensated on salary and bonus with incentives for client business development.

  4. Usually work at middle to senior management organizational levels.

  5. Must know client organization and position responsibility / requirements thoroughly before initiating search. Typically document this in a position description and precise profile chart (PSS, Project Scope Summary).

  6. Recruiting efforts are strategically focused on a broadly targeted range of potential candidates, most of them are not active in the job market; recruiting is process and result oriented.

  7. Typically the search consultant is personally committed to 1 assignment at any given time and is responsible for the success or failure of each.

  8. Search consultant and researchers typically invests 80-120 hours each per month per client assignment in recruiting, evaluation, screening, and client interaction.

  9. Usually recommends 3-10 highly qualified and ranked candidates to client company in 4-8 weeks.

  10. Requires minimal Human Resources and General Management time investment until interview process begins.

  11. Reputable firms offer a professional guarantee of candidate success and are committed to thorough and ethical practices and results including an off-limits policy.

  12. Fees range from 20-30% of compensation (or flat quote) plus expenses and are paid by company in installments.

  13. Authorization for search is usually made by company General Management and Human Resources Management with rigorous selection criteria.

Precise circumstances for which organizations prefer to call on a supplier in retainer mode rather than an agency operating on success fees.

1. When high confidentiality is requested.

  • Internal: Client wants to replace a person who is currently on board and who doesn't know he will be replaced.

  • External: Client enters a new market and doesn't want all competitors from the same industry to be informed of this new strategic orientation.

2. When searching for a strategic position.

  • Recruiting a key person is crucial for the future of any company.

  • High confidentiality and a very professional approach are mandatory.

3. When searching for a profile with very accurate skills.

  • When candidates are very few, very rare on the market and not open to new challenges.

4. When client want to control its company’ image approaching candidates.

  • To avoid 3, 5 or 10 different agencies to approach people, with consultants whose style is not under control, contacting a lot of people in client's industry repetitively, week after weeks, showing to competitors’ client difficulty to attract the right person or with poor professional approach.

5. When timing is important, guaranteed date for interviews is important.

  • Contingency business appears faster than retained: to get the contract 1 or 2 weeks is frequently promised by contingency suppliers (success fee contracts).

  • It is not rare a position to stay vacant during 6 to 10 months using several success fee suppliers.

  • The retained agency must provide a precise guaranteed timing (i.e. a precise contractual date to deliver the relevant short list).

  • “Relevant” means a short list including candidates whose professional expertise, personality and motivation has been evaluated.

6. When scope of search is wide.

  • Some search requires going deep in the industry to scan candidates. It needs time and experienced consultants.

  • Generally, non-exclusive agencies (contingency) will not invest the necessary resources (time and money) to conduct complex searches or do a thorough investigation of an industry. They prefer using a business model that consists of acting fast instead of profoundly.

7. To avoid screening a lot of non-relevant resumes.

  • Receiving hundreds of non-relevant resumes or candidates from success fee agencies is a huge waste of time for HR and Hiring manager.

8. When client wants to minimize risk.

  • In a fast and extremely competitive environment like China, timing is crucial. Your competitors are active and effective in their recruiting. Posting jobs on job boards and working in a contingency mode is only suggested when recruiting for easy to fill positions. Otherwise, using contingency mode to attract star talent is considered a high-risk gamble.


Success fee contracts are contracts without any commitment on both sides, neither on the supplier’s side nor on the customer’s side.

Companies decide to retain an executive search supplier in retainer mode when they want to fully control the recruitment process.

The retainer mode is a type of contract with a strong commitment on both sides: the customer grants his trust and the service provider commits to success.

At Acropolis Associates, we have made the choice of the retainer from the beginning, 22 years ago and the strong commitment to our customers.

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