When you bring in an outside recruiter, the first real decision isn't who — it's how you pay them. The contingency vs. retained search choice shapes how much focus your search gets, who carries the financial risk, and whether you end up with a fast hire or the right hire. This guide breaks down both recruiting fee models in plain terms, shows when each one fits, and explains how LockLeed applies them to veteran and cleared-executive placement.
Contingency vs. retained search: the core difference
Both models do the same job — find, vet, and deliver candidates — but they invert the risk. The difference comes down to when you pay and how exclusively the firm works your role.
Contingency recruiting means the firm is paid only when you hire someone they introduced. There's no upfront cost. If no candidate of theirs lands the job, you owe nothing. That sounds like a clean deal for the employer, and for many roles it is — but it also means the recruiter is typically running several searches at once and is rewarded for speed, not depth. Your req competes for their attention.
Retained executive search flips that. You pay a portion of the fee upfront to engage the firm, which commits dedicated, senior capacity to your search on an exclusive basis. The recruiter is paid for the work itself — market mapping, research, outreach, calibration — not just the final hire. Because a large share of that work happens early, the fee is structured to fund it.
How the recruiting fee models actually work
Recruiting fees are calculated as a percentage of the placed candidate's first-year compensation — but the base they're figured on differs. Contingency fees are often calculated on first-year base salary, while retained fees more commonly use total compensation (base plus expected bonus, and sometimes equity). Because of that difference, headline percentages aren't always apples-to-apples; the cleaner distinction is the payment structure.
| Contingency | Retained | |
|---|---|---|
| Typical fee | ~20–30% of first-year pay | ~25–35% of first-year comp |
| When you pay | Only on a successful hire | Staged, beginning upfront |
| Exclusivity | Usually non-exclusive | Exclusive mandate |
| Firm's focus | Many searches at once | Dedicated to your role |
| Best for | Volume, mid/junior roles | Senior, critical, hard-to-fill |
| Risk sits with | The firm | Shared |
Retained engagements are commonly billed on a "rule of thirds": one-third to begin the search, one-third when a qualified shortlist is presented, and one-third when the chosen candidate accepts. That cadence mirrors where the effort lands and keeps the firm accountable at each milestone rather than only at the finish line. Exact percentages and structures vary by firm, role, and market, so treat the ranges above as typical rather than fixed.
When contingency recruiting fits
Contingency is the right call when the role is well-defined, the candidate pool is reasonably deep, and you're comfortable paying only for results. It shifts risk onto the firm, which is genuinely attractive.
- Volume hiring — multiple similar openings where you want several firms generating candidates.
- Individual-contributor and mid-level roles — technicians, analysts, field staff, early-career professionals.
- Active markets — positions where qualified people are visibly looking and speed matters.
- Budget-sensitive searches — when a guaranteed upfront spend is hard to justify.
The trade-off: because contingency rewards whoever fills the seat first, depth of vetting and discretion can suffer. For a sensitive or hard-to-source role, "fastest" and "best" are rarely the same person.
When retained executive search fits
Retained search earns its upfront cost when a bad hire — or a slow one — is expensive. The exclusivity and the staged fee buy you a search that is thorough, confidential, and proactive rather than reactive.
- Senior leadership and C-suite roles where the impact of the hire is outsized.
- Critical or single-point-of-failure positions — the role that, left open, stalls a program or a P&L.
- Confidential searches, such as replacing an incumbent who's still in the seat.
- Hard-to-find profiles — niche skills, rare combinations of experience, or cleared talent that won't surface on a job board.
This is exactly where veteran and cleared-executive hiring lives. The candidates who matter most — those carrying an active security clearance and leadership track record — are usually employed, discreet, and not responding to ads. Reaching them takes a dedicated, relationship-driven search, which is what the retained model funds.
The middle ground: engaged (container) search
You don't always have to pick a pure model. Engaged search — sometimes called container search — is the hybrid most well-run firms now use for specialized roles. It pairs a modest upfront engagement fee with a placement fee due on hire, and the upfront amount is typically credited back against the final fee. You get retained-level commitment and exclusivity without paying the full retained percentage before anyone's been placed.
This is the model that fits most veteran and executive searches best: enough skin in the game to earn dedicated effort and confidentiality, without asking an employer to pay a large sum before seeing results.
How LockLeed applies these models to veteran hiring
LockLeed is a veteran-owned military staffing and executive-search agency, and our engagement structure reflects the engaged-search approach. We're always free for candidates — veterans and transitioning servicemembers never pay. Employers pay on a contingency-style basis, with a modest engagement fee that applies toward the placement fee on a successful hire. You commit enough to secure a focused, exclusive search; you pay the balance only when someone you choose accepts the offer.
That structure scales to the role:
- Direct-hire placement for individual-contributor and mid-level openings, where we run an efficient, vetted search across our military and veteran talent network.
- Executive search and leadership / critical-role search for senior hires, handled with the dedication and discretion a retained engagement demands.
- Cleared candidate pipeline for roles requiring an active clearance — Secret through Top Secret and TS/SCI — sourced from talent that won't appear through ordinary channels.
A quick note on clearances, since they drive cost and timeline. Federal classification runs Confidential, Secret, and Top Secret under Executive Order 13526, with most personnel background investigations conducted by the Defense Counterintelligence and Security Agency (DCSA). TS/SCI isn't a higher clearance so much as a separate access authorization granted on top of a Top Secret clearance, on a strict need-to-know basis. Hiring someone who already holds the right clearance can save months and significant cost — which is why a focused, exclusive search for cleared veterans pays for itself. You can see the industries we serve, including aerospace and defense, cybersecurity, energy, and manufacturing, and the bases we recruit from to understand where that talent comes from.
Whichever model fits your opening, the goal is the same: a vetted hire who stays. Learn more about hiring vetted veterans through LockLeed and how our placement process works from requisition to start date. When you're ready, talk to LockLeed about your next hire — tell us the role and we'll recommend the search model that fits it.