Two models. Completely different economics, incentives, and outcomes. Here is what the data shows.
Two models. Completely different economics, incentives, and outcomes. Here is what the data shows.
Contingency and retained search are not two versions of the same service. They are structurally different models with different incentives, different candidate access, and different outcomes. Understanding the difference — beyond the fee structure — is essential to making the right decision for a VP or C-suite search.
In a contingency model, the firm is paid only if they place a candidate. This sounds like a lower-risk option. In practice, it means the firm has no exclusive commitment to the search, is sourcing from the same candidate database as 3–5 other firms simultaneously, and is incentivised to move quickly rather than accurately. The fastest-submitted candidate wins the fee — which is not the same as the best candidate.
In a retained model, the company pays a portion of the fee upfront in exchange for exclusivity, dedicated capacity, and a methodology that prioritises fit over speed of submission. The firm's financial incentive is aligned with a completed placement — not the fastest submission.
| Factor | Contingency | Retained |
|---|---|---|
| Fee structure | 18–22% of comp, paid on placement only | 20–25% of comp, structured across search |
| Upfront cost | $0 upfront | 1/3 of fee at signing |
| Exclusivity | None — multiple firms working simultaneously | Exclusive — firm is committed to your search |
| Candidate pool | Active candidates; database-heavy | Passive + active; deep network sourcing |
| Firm incentive | Submit fastest; any placement wins fee | Place correctly; retention matters |
| Intake depth | Typically brief — 30–45 min | Deep — 90–120 min structured session |
| Search failure rate | ~30–35% produce no placement | <15% (Majhi Group: <5%) |
| Average timeline | 75–110 days (if successful) | 65–90 days industry; 41 days Majhi Group |
| Replacement guarantee | Rarely — and limited if offered | 90-day replacement at no charge (Majhi Group) |
| 18-month retention | Industry average (~60–65%) | Higher — driven by assessment rigour |
Contingency search is not always the wrong choice. It works for: volume mid-level hiring where submission speed has value; roles where the candidate pool is large and primarily active; situations where the company has strong internal capacity to evaluate and close candidates quickly; and searches where the cost of a failed search is low relative to the upfront fee. For most VP and C-suite searches at growth-stage companies, none of these conditions apply.
The 40% executive failure rate is not distributed evenly across search methodologies. Contingency-placed executives fail at significantly higher rates than retained-placed executives — because the contingency incentive rewards submission speed over fit accuracy. The fee you don't pay upfront is often the cost you pay in the 18-month replacement.
The most important difference between the models is not the fee — it is the incentive. A contingency firm earns its fee the moment the candidate signs. Their financial interest in the outcome ends at the offer letter. A retained firm with a 90-day replacement guarantee has a financial stake in whether the candidate is still performing in month 4. That incentive difference shapes every decision the firm makes during the search — from intake depth to assessment rigour to counter-offer management.
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