choose retained search over contingenc

Why Choose Retained Search for Key Recruiting?  10 Valid Reasons 

When you choose retained search for key recruiting, your first consideration in the evaluation and selection process should not be on the fee itself, but how the fee is paid. While most charge three invoices at 1/3 each, regardless of the outcome, a few do use a Performance Based Fee Schedule.

We adopted and expanded upon performance based recruiting techniques, many of which were pioneered by Lou Adler.   That is much of the basis of why NextGen Global Executive Search is successful and client feedback is the candidates we place not only meet, but exceed their expectations. .

Choose Retained Search as Optimal Choice

1. Majority of the Performance Based Search Fee is Paid on Deliverables

A performance based method means that after the initial deposit, the remainder of the fee is paid according to meeting deliverables and the hire.  For instance, the 2nd installment should be paid when the search firm has delivered a viable shortlist of candidates that the company has accepted and scheduled for face-to-face interviews.   The final installment should be paid upon hiring one of the candidates the search firm has provided.

2. Search Transparency

Many search firms use an applicant tracking systems, aka ATS, to allow Hiring Managers to view candidates resumes and interview notes.  The problem is that an ATS is not built for client presentation, rather it is for tracking applicants and candidates through the search process.  It assumes the resume, which all senior hiring managers know to be a "one-size-fits-all" document, fails to reveal if the candidates can meet the objectives of the role.  If you want true search transparency, then make the right choice to choose retained search firm means that the search strategy developed by the recruiting team, the signed fee agreement, team profile, and all aspects of where the recruiting team is in the search process is available 24/7 online access to the company.

3. Discovery stage reveals much more than a job spec 

95% of all job specs reveal the same criteria:  a bit of company branding and corporate culture, responsibilities, preferred and desired skills.  In  deciding to choose retained search firm, look for those who schedule a discovery conference call or in-person meeting so that the recruiting team can learn many things including the past / present / future vision of the company as well as the team this role will work within.  Next they will want to know revenues, profit and loss, and where the products and /or services stand in R&D, production, delivery to the marketplace, and how the supply chain / CE service/ field engineering is working as of now.

The recruiter will then want to go beyond the requirements of the role to determine not just the skills and experience desired, but rather what the candidate will DO with those Skills.  What we use at NextGen is SMARTe techniques, which stands for:

  • Specific - details of what should be done (task, challenge, project, or problem)
  • Measureable – amounts of change / % of change required
  • Action oriented - what will the person in this role actually do
  • Results defined - what needs to happen to accomplish the major objectives
  • Time based – how long will it take from start to finish for each major objective to succeed
  • environment – corporate culture and team dynamics of the group


4.  It's not just a Role Fit but Team Fit that Counts

While a good recruiter will develop a search strategy that includes measured screening criteria including past accomplishments, key performance indicators, relative numbers performance in sales and/or P&L, depth of industry contacts and relationships, that is all used to determine role fit and whether the candidates can meet the objectives of the role.

Even if Elon Musk or Jack Welch were to appear to be dream candidates, if they don't fit the team, the new hire simply will will not work out.  When you choose retained search firm, one would expect them to use a valid system of psychometric analysis.  What we do at NextGen is to conduct brief 10-12 minute online Job Survey of at least four from the client company who are direct stakeholders for the role.  This generally includes a direct report, an internal customer ( i.e. a department head the role will interface with daily/weekly), a key colleague or peer on the team, and when needed, an external vendor or customer.   Human resources is not included as they are not part of the team the new hire will work within.

The Job Survey interprets the role as in terms how the stakeholders view the role.  It also reveals team dynamics (values and motivations, leadership traits, relational communications style, and decision making traits). The Job Surveys are combined into a Composite which then helps the recruiting team to develop a Target Candidate Profile.  Each potential shortlisted candidate who passes the screening, deep interviews, background and reference checks are given a corresponding survey and scored against the Composite Job Survey to verify Team Fit by a strong match.   The number 1 reason for new hire failure, according to Leadership IQ, is the wrong interpersonal communications skills.  At NextGen we eliminate that from happening.

5. Flat Fees are better than compensation based fees

There has always been an issue with compensation based fees.  Human Resources likes to base the fee on base salary, which is not the actual cash compensation as it fails to take into account commissions, bonuses, or MBO targets / objectives.    Furthermore, compensation based search fees  have an inherit conflict of interest as the company knows that when negotiating an offer, the higher the cash compensation the more the final search fee increases. Look for a flat fee when you choose retained search.  At NextGen we have eliminated that issue by using a flat success based search fee, which is determined by the difficulty level of the search, geographic limitations, relocation package if used, the competitiveness of the compensation package, and the resources required to conduct the search.  That eliminates the conflict of interest entirely.

6.  Replacement Guarantees and Onboarding

In how you choose retained search, a key factor is how do they stand behind the placement and the new hire?  Many provide a 90 days and up to six months replacement guarantee.  A few provide up to one year.  But as a company your intention was to pay a search fee for a new hire who would meet or exceed the objectives of the  role.  Each new hire generally has a set of criteria the company wants to see met in a particular time frame.  If an engineering role, it may be product deliverables or cost reduction; for a sales related role it may be attaining revenue increases or market share; for a CXO or senior VP, it may be MBOs that have a three year plan to achieve.  The replacement guarantee should reflect that criteria, whether it is 12, 24, or 36 months.

When you choose retained search wisely, expect a free custom onboarding plan.  While all companies have some sort of onboarding, in reality it is mostly orientation.  And many executives hate the "one-size-fits-all" company wide onboarding plan as it requires too many meetings or too much intrusion into the executive's time.

What we produce at NextGen with each new hire is a custom onboarding plan which includes a Personal Action Plan for the new hire and a corresponding plan for the designated mentor.    The onboarding plan focuses on the new hire's strengths and weaknesses they bring to the team.  The new hire creates actionable items to work on and the mentor simply advises and mentors without having to demand a great deal of time from multiple executives.   Clients tell us the custom onboarding plan that NextGen delivered proved to be an essential tool in the new hire's quick assimilation into the team culture, faster production, and increased the communications skills of the new hire.

7. Retention Rate

Consider the facts:  according to Leadership IQ and Oliver Wyman/Mercer Management studies, 46% of ALL NEW HIRES FAIL WITHIN 18 MONTHS, while 83% of executives fail as they lack the right interpersonal relationship skills for the team they manage and interact with.  Every week we get calls from venture capital firms, CXOs and SVPs about conducting a search.  Many of them use several contingency recruiting firms on each search, thinking that the more candidates or resumes they receive creates a large enough pool to choose from. The solution to choose retained search firm wisely is pick one that utilizes a performance based recruiting methodology.  At NextGen, our award-winning Leadership Vault search process has proven to work as revealed by client testimonials that the new hire "not only met, but exceeded their expectations.  Case in point - at NextGen we have  a 93% new hire retention rate of placements still working at the client company in 3.5 years, 

8. Contingency and RPOs vs. Retained 

First, let’s look at the drawbacks to using multiple search firms and RPOs (recruitment process outsourcing) to compete on each role you need to fill.  You will have most of them posting job descriptions all over the Internet and job boards, resulting in many terrible applicants and even worse messaging.  Contingency search firms have a quota.  Each recruiter has to have an x number of sendouts per day (resumes sent to clients) and often each recruiter works on 15 to 25 searches at a time.   They never intend to fill all positions.  It's the "let's see what sticks" agenda.

Most fail to use performance objectives in the job advert and failing to use performance based recruiting messaging about the position results in applicants by and large that are not ideal.  They will also post to multiple job boards and social media with the #jobs hash-tag.  Since all of these job titles and descriptions look alike, this will turn off passive candidates.  This is a key area in how you decide to choose retained search.  Again the cost overall is the same.  Let;s face it - the vast majority of these applicants are active job seekers who are unhappy in their current role or under-performers.  Is that really what you want?  HR likes it because it keeps the candidate database growing at all times.

9.  What Performer Types does the Search Firm look for

There is a huge misconception about “A Players”.  The assumption is that these are only executives which is not true.  These "A players", who make up to 14% of the workforce, produce 8 to 10 times more than “B Players”.   They can range from janitor to CEO.  They simply outperform most others.  They never look at job boards because they are so highly sought after by their employer's competitors and are rarely ever without a job.

They are very happy where they are now, well compensated, and must be approached delicately- as in building a relationship based on what is important to the potential target and bringing forth what may be a more challenging environment or more responsibility.  It's rarely about the money.    By the way, "B players" make up 34% of the workforce, therefore most job board candidates and that includes Linkedin job posting applicants, are "C players" - they show up and can do a job but add no real value and are easily replaced by robotics, artificial intelligence, or software automation.

10.  Knowledge is Power - does the search firm Intimately know your Industry?

Be careful about generalist retained search firms.  To choose a retained search firm, make sure the lead recruiter or practice lead has intimate knowledge about you industry, markets, products and services, customer base, and competitors.  At NextGen our recruiters come from within the industry they serve For instance, I sent my wireless recruiting team to Mankato State University for a two week intensive course in Wireless to add to their knowledge of mobile networks and wireless infrastructure.  

Choose Retained Search Firm Final Analysis

It;s not about picking a staffing partner per se. One of the things that Hubspot founder Dharmesh Shah states is that “culture is to recruiting as product is to marketing”.

Before getting into specific deals about the role, we want to know what the end game is. Not only why this position is being created or replaced, but specifically what internal or external customer(s) does the role serve and what solutions the Client is looking to be accomplished or delivered by the person hired in this role. That is the beginning of the performance based recruiting process and what a Hiring Manager should consider when you choose retained search firm. 

choose retained search

Charles Moore

Managing Partner | Retained Executive Search Consultant for Artificial Intelligence, Cyber Security, and Wireless Connectivity. Have placed 100s of CXOs, SVPs, and functional leaders over 20+ years.

Click Here to Leave a Comment Below

Leave a Comment: