As of 2023, there are 5,846 businesses in the United States categorized as Executive Search Recruiters. That number consists of sole proprietors, small- and mid-sized firms, as well as large companies, leaving hiring organizations with an overwhelming number of choices. In our last Insight Blog post, we covered the reasons to engage a search firm and questions to ask a potential firm before committing to working together.

This post outlines the differences between search firms.

Search firms can employ a variety of business models. Some focus on a client’s entire talent acquisition. Called recruitment process outsourcing (RPO), it occurs when an organization contracts an external firm to manage its permanent recruitment efforts. Other search firms may specialize in recruiting for interim roles while an organization is in transition or recruiting employees specifically for a project that may last for months, years, or a decade. The retained model, used often by executive search firms, involves a commitment to a client to identify, recruit, and secure a highly qualified candidate and a commitment by the client to only engage that firm on the search. Clients pay professional service fees to the firm. The contingency model is similar but does not require a commitment, and a client pays a firm at the conclusion of search if the client decides to hire a candidate presented by the firm. In other words, payment is contingent upon the results of the search.

How firms are compensated is only one difference. Each type of firm has its own approach, methods, and advantages, and each type can be effective in meeting hiring needs. The key is to evaluate which approach is best for your organization.

In summary: Retained search firms are valuable when a hiring organization wants to partner with a team that understands its organizational goals and can execute a strategic effort to secure the most suitable professional for a critical and/or senior-level role.

Contingency search firms are valuable when there are likely to be many qualified candidates who could perform well in the role or roles, and the hiring organization is willing and able to manage components of the search internally, such as screening and evaluating candidates. Knowing the differences between retained and contingency search firms makes it easier to choose the type of firm that meets your hiring needs. The next blog post in our three-part series will feature advice on how to collaborate with a search firm during the search process.

If you would like to discuss a hiring need at your organization or learn more about working with a search firm, click here to contact a ZRG search consultant.

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