Contingency firms are paid only if and when they fill a position, while retained search firms are paid regardless of the search's outcome. The distinction is not always clear-cut. Some retainer firms will occasionally accept contingency assignments, and contingency firms sometimes receive retainers. Contingency firms tend to work more quickly, while retainer firms are accustomed to gradually assembling a small slate of candidates. There is also a growing number of search firms that operate on a partial retained basis, thereby offering the best of both worlds.
Fees are comparable between contingency and retained search firms.
Your immediate goal is to identify a search firm and, more importantly, an individual recruiter you feel comfortable with and who can best represent your company to the marketplace. It's best to target recruiters who have recently filled similar positions at comparable companies. Check with colleagues or contacts in the industry to get referrals. The search business has become very specialized over the years, so find a firm with functional expertise in the appropriate industry. The most common approach to fees is to charge a percentage of the new executive's first year compensation.