Retained vs Contingency Executive Search: Which Is Right for Your SME? 

I spent seven years in contingency recruitment within the technology sector before I moved into executive search, placing senior leaders within SME businesses across Digital Health, MedTech and Healthcare.  I want to be transparent about that, because I think it is the most important thing I can tell you before you read the rest of this article. 

I know both models from the inside. I know what a contingency recruiter is incentivised to do, how they are measured, and what a two-week exclusivity window actually feels like when you are working a Director-level role. I also know what it feels like to present candidates I was not fully confident in because the clock was running and the fee depended on being first. I have been that person and I left because I wanted to do the job properly. 

That experience is why I can write this article without it being a sales pitch. Contingency recruitment is not a bad model. It is the wrong model for certain types of hire and understanding the difference will save your SME significant time, money and risk. 

I will show you what that costs when it goes wrong. I will also show you what it looks like when it goes right, a real search, a brief we pushed back on, and a hire who is still delivering 18 months later. 

What the Two Models Actually Are 

A contingency recruiter works on the basis that they only earn a fee if they make a placement. Multiple agencies can work the same role simultaneously and the fee goes to whoever gets a candidate over the line first. The incentive is clear, speed. In my experience speed and quality can absolutely be achieved together, but as the client you will never know what you do not know until the process is already underway. 

A retained executive search firm is engaged exclusively from the start of the assignment. A proportion of the fee is paid upfront, with the remainder structured across the process and at placement. The firm commits fully to your search and you commit to working with them. The incentive is the right outcome, not the fastest one. 

I believe the fee structure drives the behaviour and that is the most important sentence in this article. If you ask yourself what you want from a search partner. Speed alone is never going to be the answer. 

What Contingency Recruitment Is Good For 

I want to be direct about this, because too many executive search firms will not say it: contingency recruitment is the right approach for a significant proportion of hiring needs. 

Volume hiring should not be retained at the lower to mid level of a company. If you are an SME scaling a care team, a sales floor or a development function, the right approach is a well-designed inbound process, a compelling website, a clear EVP, structured attraction funnels, with pipeline management passed to an internal team as candidates come through. If you already have those things in place, there is no reason to retain a firm to find more of the same. 

Familiar talent pools do not need retained search. If your business has built a reliable bank of candidates for a recurring role type, care staff, field engineers, junior developers, you know where to find them and so does a contingency recruiter. The depth of process that retained search provides is not necessary here, and the cost is not justified. 

Roles with a clear, well-defined profile in a deep talent market are often well served by contingency too. If the candidate you need is actively looking, easy to identify and not in short supply, a contingency recruiter with a good database can find them quickly and cost-effectively. 

I would encourage you to ask not “should we use a recruiter?” but “how complex is this hire, and what does the talent market for this role actually look like?” 

Where Contingency Breaks Down 

The further up the seniority scale you go, the more the contingency model works against you. 

Early in my contingency career I worked on high-volume technology roles, development positions, mid-level technical appointments. The model worked reasonably well. The talent pool was broad, the profiles were clear and speed was genuinely useful. 

As I moved towards architecture and senior technology appointments, I started to see the cracks. Senior roles were sold to clients on exclusivity, typically a two-week window, with the expectation of serious candidate progress in that time. In practice, this meant CV matching and a degree of luck. I never had the time to do a job that warranted the fees, or the time, my clients were investing in the process. 

The clearest example I can give you is a director level data architecture search I worked on for a telecommunications business. They gave me two weeks to present candidates capable of running a large team through a transition to Google Cloud Platform, with experience of data at petabyte scale. I went into it without any talent mapping, without understanding how limited that pool was, and without benchmarking the salary against the market. We wasted weeks. The salary was wrong. The brief had constraints that made it a unicorn without anyone acknowledging or even knowing it. The client’s time was spent reviewing candidates who were out of budget and were not attracted to the challenge in the first place. 

A retained process would have caught all of this in the first week. The talent mapping stage alone would have told us how many people with the right profile existed in the market, what they were earning and whether the brief as written was achievable. That conversation would have happened before a single candidate was approached, not after several weeks of wasted effort. 

The Incentive Problem at Senior Level 

When a contingency recruiter is working a Director or C-suite role, I believe they are managing a fundamental conflict of interest that most clients do not fully appreciate. They are not paid to find the best person. They are paid to find a person who gets accepted. Those two things are often the same, but at senior level, the gap between them is where the risk to your business sits. 

A two-week exclusivity window does not allow for proper market mapping. It does not allow for the kind of deep candidate engagement that turns a passive, high-performing individual into a serious prospect. It does not allow for the cultural alignment work that determines whether someone will still be in post in 18 months. It creates pressure to present quickly, and pressure to present quickly creates shortcuts. 

A retained consultant will typically invest a minimum of 80 hours per month on a single client assignment. That figure is not chosen arbitrarily. It reflects the research, direct outreach, candidate interviewing, market intelligence gathering and client communication that a rigorous search actually requires. A contingency recruiter working multiple assignments simultaneously, with no guarantee of payment, cannot make that investment. The economics do not allow it. There is also a problem I have seen play out repeatedly: in a contingency process, multiple agencies are often working the same role at the same time, meaning the same candidate can be approached about your opportunity by three different recruiters, each with their own version of your brief and their own commercial interest in getting there first. For a senior appointment in an SME, where the talent pool is relatively small and professional networks are tight, this creates a real risk of inconsistent messaging and reputational damage before you have even met a candidate. 

I have seen this play out since moving into executive search. A global industrial automation business came to us because they could not hire a sales leader that was a focal point for their expansion. We told them the job title was wrong, the salary was off, and the geographic scope of experience they were asking for was too narrow. They took that market intelligence, used it to reframe the role internally, and decided to give their internal team another attempt rather than retain us. Four weeks later, the role was still unfilled and they came back for another conversation. 

The information we gave them was accurate and useful. The decision not to retain us at that point was entirely their prerogative. But the outcome illustrates something I see regularly, the market intelligence that a retained search provides at the start of a process is often what makes the search possible at all. Without it, you are searching blind. 

When Retained Executive Search Is the Right Answer 

For an SME making a board-level, C-suite or senior leadership appointment, I believe retained executive search is almost always the right model. 

The talent you need is not looking. The best person for a Director or VP-level role in your business is, in all likelihood, performing well in their current position and not actively searching. They are not on job boards and will not respond to an advert. The only way to access them is through a structured, proactive search process built on genuine market knowledge and direct outreach. A contingency recruiter working a two-week window cannot do that work. 

The brief needs to be challenged. Senior roles in SMEs are often newly created, or replacing someone whose departure has left a gap that is not fully understood yet. A retained partner will push back on a brief that describes a unicorn, benchmark the package against the market before the search begins, and tell you when the role as written is not achievable. In my experience, that conversation is often worth more than the first shortlist. 

This is the search I mentioned at the start. We saw this play out with a digital health client hiring a Head of Marketing. The original brief called for someone with both digital health credibility and experience operating across the regulated, multi-market environments the business sold into, a narrow combination that would have taken months to fill on those terms alone. Through the talent mapping stage, we agreed with the client to broaden the profile beyond those original parameters and explore adjacent sectors. That process identified 64 potential candidates, led to 38 direct conversations, and produced a shortlist that included three “left-field” candidates the client would not otherwise have seen. The client hired one of them, a candidate who fell entirely outside the original brief. Eighteen months on, that hire has grown the marketing team by a third and is credited as a direct factor in the company securing further investment. The whole process, from initial call to candidate start date, took nine weeks with Christmas shutdown in the middle. I do not believe any of that would have happened inside a two-week contingency window built around the original, narrower brief. 

The stakes are too high for shortcuts. One estimate cited by the Harvard Business Review puts the cost of a failed executive hire at up to ten times the individual’s annual salary, once you account for wasted salary and fees, lost productivity, damaged client relationships and the strategic opportunities missed with the wrong person in post [1]. The same research found that 50% of executives who change jobs or get promoted fail within the first 18 months [1]. In an SME, where the leadership team is lean and every senior role carries disproportionate responsibility, a bad hire at Director level or above can set the business back 12 to 18 months. The retained search fee, at 25 to 33 per cent of first-year salary, is the premium you pay to significantly reduce the probability of that outcome. 

Confidentiality matters. If it becomes known in the market that you are replacing a senior leader or restructuring your leadership team, it can unsettle clients, alert competitors and create internal uncertainty at exactly the moment you need stability. A retained search firm manages confidentiality as a core part of the process, approaching candidates discreetly and often without revealing the client’s identity in the early stages. In a contingency process, where speed is the priority and multiple agencies may be working the role simultaneously, that level of control is simply not possible. 

Your brand in the market matters. The way candidates are treated during a search process reflects directly on your business, not just the recruiter. Professional networks are close-knit and reputations travel quickly. A senior candidate who receives no feedback, inconsistent information or a poor experience during a contingency process will remember it. A retained partner manages every candidate interaction as a brand ambassador for your business, because the quality of that experience is part of what they are being paid to deliver. 

The Question to Ask Before You Decide 

Before you choose between retained and contingency for your next senior hire, I would ask yourself one question: if this hire goes wrong, what does it cost us? 

If the answer is manageable, a few weeks of disruption, a straightforward restart, contingency may well be appropriate. If the answer involves lost revenue, damaged client relationships, a leadership team operating below capacity and a strategic plan that stalls while you start again, the retained search fee is not the cost you should be focused on. 

The fee is a fraction of what a failed appointment costs. The model you choose determines the probability of that outcome. 

If you are planning a senior leadership appointment and want to understand which approach is right for your specific situation, I would welcome a conversation. If you want to go deeper, our detailed comparison of retained and contingency search, our guide to justifying executive search fees to your board or investors, and our step-by-step breakdown of what to expect from a retained search process are all worth reading alongside this article. 

References 

[1] Nawaz, S. (2017). “The Biggest Mistakes New Executives Make.” Harvard Business Review. hbr.org/2017/05/the-biggest-mistakes-new-executives-make