Summary of Key Points
- Retained and contingency executive search differ mainly in fee timing and financial risk. Retained firms typically charge 25–33% of first-year cash compensation in installments during the search, while contingency firms generally charge 20–25% only when a candidate is successfully placed.
- In a retained search, the client carries more financial risk if no hire is made. Early installments are usually non-refundable, whereas a contingency firm absorbs the cost of an unsuccessful search because the client owes nothing without a placement.
- Search quality, confidentiality, documentation, and timelines are not inherently determined by the fee model. The article states that either model can include market mapping, passive candidate outreach, confidential replacement searches, documented candidate processes, and a typical 90–120 day timeline to a signed offer.
- Elliott International positions its model as retained-quality executive search delivered on a contingency basis. The firm says its searches include research, direct outreach, industry expertise, and a global professional network, while fees become due only when the placed candidate starts.
- The article recommends choosing a search model based largely on who should carry the risk of a failed search. In its CFO example, a $300,000 compensation base produces a $90,000 retained fee at 30% versus a $66,000 contingency fee at 22%; if the retained search stops after the slate stage, the client could have already paid $60,000 without making a hire.
When an organization seeks outside support for a leadership hire, one of the first decisions is which type of search firm to engage. Executive search firms generally operate under one of two fee models: retained or contingency.
The distinction determines how fees are structured, when payment occurs, and which party carries the financial risk if the search does not produce a hire.
Many search firms present this as a tradeoff: the depth and rigor of a retained search, or the flexibility and reduced financial exposure of contingency recruiting.
This guide explains how each model works, compares the two side by side, and examines whether that tradeoff is as fixed as it is commonly presented.
What Is Retained Executive Search?
A retained search is an exclusive engagement in which the client pays the search firm in installments over the course of the search. The most common structure is thirds: one-third at kickoff, one-third when the candidate slate is presented, and one-third at placement.
These fees are typically owed regardless of whether a hire is ultimately made, and the first two installments are usually non-refundable.
Retained fees generally run 25 to 33% of the placed executive's first-year cash compensation.
What Is Contingency Executive Search?
A contingency search is an engagement in which the search firm is paid only if the client hires a candidate the firm introduced. There is no upfront fee and no installment schedule. If the search does not result in a hire, the client owes nothing, and the firm absorbs the cost of the work it performed.
Contingency fees generally run 20 to 25% of first-year cash compensation, invoiced when the placed candidate starts.
Retained vs. Contingency: Side-by-Side Comparison
| Retained | Contingency | |
|---|---|---|
| Fee structure | 25 to 33% of first-year cash compensation | 20 to 25% of first-year cash compensation |
| Payment timing | Thirds: kickoff, slate, placement | 100% on placement |
| Paid if no hire is made | Yes. First two installments typically non-refundable | No |
| Exclusivity | Exclusive | Often non-exclusive; may be exclusive by agreement |
| Sourcing method | Direct approach to passive candidates | Direct approach plus existing network and pipeline |
| Typical timeline to signed offer | 90 to 120 days | 90 to 120 days |
| Who carries the risk of a failed search | The client | The firm |
The Key Differences Explained
Executive Search Payment and Risk
The core difference between the two models is who pays for a search that does not produce a hire. In a retained engagement, the client funds the search as it progresses. If the search is abandoned or fails, the fees already paid are generally not recoverable.
In a contingency engagement, the firm funds the search and is compensated only by a successful placement.
Not every executive search ends in a hire. Priorities shift, roles are restructured, internal candidates emerge, and budgets change. The fee model determines whether those outcomes cost the client money.
Timeline for an Executive Search
Timelines for the two models are similar. What actually determines the length of a search is the notice period the finalists must give, how quickly the interview team can coordinate schedules, and the organization's internal approval process.
A firm's payment structure does not change any of those factors. A well-run search under either model typically reaches a signed offer in 90 to 120 days.
Executive Search Quality
Retained firms often describe their research as more thorough, and contingency firms are sometimes characterized as faster but less rigorous. This is where the conventional tradeoff breaks down: search quality is a function of the firm, not the fee model.
The choice between depth and flexibility is a false one when the firm runs a full search process under either structure.
This is the model Elliott International was built on: retained-quality executive search on a contingency basis, with every search backed by thorough research, direct candidate outreach, industry expertise, and a global network of professionals.
The result is the same strategic recruiting process a retained firm would run, without the upfront commitment of a traditional retained engagement.
Common Questions About the Two Executive Search Models
Do confidential searches require a retained firm?
No. Confidentiality is a function of how the search is run, not how it is paid for. A confidential replacement search requires an exclusive engagement, a controlled candidate list, no public postings, and staged disclosure of the company's identity. All of these can be written into a contingency agreement. Elliott International specializes in confidential replacement searches on a contingency basis.
Does a small candidate pool require a retainer?
A thin market makes a search harder, and a harder search carries a higher chance of not producing a hire. Under a retained model, the client funds that risk. Under a contingency model, the firm does. Organizations facing a difficult search should weigh whether they want to pay in advance for an outcome that is less certain, or engage a firm willing to carry that uncertainty itself.
What if the board needs a documented process?
Some searches require a paper trail: a market map, a candidate log, and a record of who was considered and why. These are deliverables that can be specified in either type of agreement. Documentation requirements do not dictate a fee model.
Does the retainer buy the firm's commitment?
A retained firm has typically collected two-thirds of its fee before the finalist signs. A contingency firm has collected nothing until the candidate starts. The firm with the most riding on a successful close is the one that has not yet been paid.
How to Choose: Five Questions to Ask
1. Is this search confidential?
If so, make exclusivity and staged disclosure part of the agreement. Both models can accommodate this.
2. How many candidates could genuinely fill this role?
A deep candidate pool favors speed and access. A thin pool raises the odds of a failed search, which makes the question of who funds that risk more important, not less.
3. Does anyone need to see the process?
If a board or investor requires documentation, specify it as a deliverable in the agreement.
4. What does the vacancy cost per month?
An expensive vacancy favors the firm with the strongest financial incentive to close, which is the firm that is paid on placement.
5. Where do you want the risk of a failed search?
This is the question that underlies the other four. A retained engagement leaves the financial risk of an unsuccessful search with the client. A contingency engagement transfers that risk to the firm.
The Fee Difference: A Worked Example
Consider a CFO hire with a base salary of $250,000 and a target bonus of $50,000. Most firms calculate fees against first-year cash compensation, which places the fee base at $300,000.
A retained engagement at 30% totals $90,000, paid in three installments: $30,000 at kickoff, $30,000 at slate presentation, and $30,000 at placement.
If the search is discontinued after the slate is presented, the client has paid $60,000 without securing a hire.
A contingency engagement at 22% totals $66,000, invoiced when the placed candidate begins employment. If no hire is made, no fee is owed.
The difference on a completed search is $24,000. The difference on a discontinued search is $60,000.
For organizations filling several leadership positions over a period of years, the savings compound into six figures, and they derive from the fee structure itself rather than from any reduction in the search work performed.
Retained vs. Contingency: The Bottom Line
When executed properly, retained and contingency searches involve the same underlying work: market mapping, direct outreach to passive candidates, candidate assessments, and management of the offer and closing process.
The difference lies in when payment occurs and what happens if the search does not produce a hire.
Elliot International is different because we believe organizations should not have to choose between the depth of a retained search and the flexibility of contingency recruiting. We provide both: retained-quality executive search, with fees due only when the placed candidate starts.
If you are planning a leadership hire and would like to discuss how this model would apply to your search, we welcome a brief introductory conversation. You can call us at (470) 416-0100 or contact us here.
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