Definition · Staffing and agencies
Retained Search
Definition
Retained search is a recruiting model in which an employer engages one search firm exclusively and pays part of the fee up front, with the rest paid at milestones during the search. Fees are typically around one-third of the hire's first-year total cash compensation. It is used mainly for senior, confidential and hard-to-fill roles.
Also called: Retained recruiting, Retained executive search, Retainer search, Retained recruitment
Formula
Retained fee = First-year total cash compensation × Fee % (paid in installments, often thirds)
- First-year total cash compensation
- Base salary plus target annual bonus; sometimes includes sign-on bonus. Equity is usually excluded or capped.
- Fee %
- Commonly around 30% to 35%.
- Installments
- Often one-third on signing, one-third at 30 days or slate delivery, one-third on hire, adjusted to actual compensation.
Worked example
A health system retains a firm at 33% to find a VP of revenue cycle, estimated at $240,000 base plus a 25% target bonus ($300,000 total cash). Estimated fee: $99,000, billed $33,000 at signing, $33,000 at 30 days and the balance on hire. If the final offer is $255,000 base, total cash is $318,750 and the last invoice is adjusted up to bring the fee to $105,188.
How retained recruiting works
The firm and employer sign an engagement letter describing the role, the fee, the timeline and the guarantee. The firm assigns a partner who leads the search and a research team that does the legwork. A typical sequence:
- Kickoff: interviews with the hiring executive, board members or peers to define the role and what success looks like in the first 18 months.
- Position specification: a written profile used to approach candidates.
- Research and talent mapping: identifying target companies and individuals, often 100 to 300 names for a senior role.
- Outreach and assessment: approaching people who are not looking, interviewing and assessing them.
- Slate: usually three to six assessed finalists, presented with detailed write-ups.
- Client interviews, references and offer support.
Most retained searches take 90 to 150 days from kickoff to accepted offer.
Retained vs contingency search
With contingency search, the employer pays only on a hire and can use several agencies, but has little control over how much effort each puts in. With retained search, the employer pays for a dedicated process and an exclusive partner. The firm commits a team and reports on progress weekly, including who was approached and why they declined. That market information has value even if the search changes direction.
The trade-off is cost and commitment. The retainer is owed even if the employer cancels the search, hires an internal candidate or changes its mind. Retained search makes sense when a bad hire or long vacancy would be expensive, when the role needs discretion (replacing an incumbent), or when the right people are all happily employed elsewhere.
What to look for in a retained firm
- Recent searches for similar roles in your industry, with references you can call.
- The partner who sells the search also leads it.
- A clear list of companies the firm cannot recruit from because they are clients (off-limits).
- Weekly reporting with real names and status, not just activity counts.
- A guarantee, typically a free replacement search if the hire leaves within six to twelve months.
- Diversity of slates, and how they build them.
The off-limits question matters more than most buyers realize. A firm that counts your three biggest competitors as clients cannot approach their people, which may remove the most obvious candidates.
Common mistakes
Starting a retained search before the leadership team agrees on the role. Changing the specification halfway through. Moving slowly once finalists are presented, so the best candidate accepts another offer. And treating the firm as a resume service rather than an advisor on compensation, market conditions and candidate motivations. Retained search is the standard model for executive search; it works best when the client invests similar time and attention.
Frequently asked questions
What is retained recruiting?
A search model where an employer hires one firm exclusively, pays part of the fee before the search is complete and receives a structured process ending with a slate of assessed finalists.
How much does a retained search cost?
Typically around 30% to 35% of the hire's first-year total cash compensation, paid in installments. Some firms charge a fixed fee agreed at the start.
Is the retainer refundable if the search fails?
Usually not. Retainer installments pay for the work done. Most firms continue the search at no extra fee or offer a replacement if the hire leaves within the guarantee period.
How long does a retained executive search take?
Commonly three to five months from kickoff to accepted offer, longer for CEO or board searches.
When should you use retained search instead of contingency?
For senior, confidential or very scarce roles where the hire is expensive to get wrong and you need a dedicated firm running a full search.