h2 Recruit is a specialist Sales Recruitment agency based in London and New York.

The Hidden ROI of Retained Search – Why Your Best Hire Might Be Your Cheapest
By Mark Stephens – Researcher, Recruitment Strategist, and Recovering Retained Recruiter

Sponsored by H2 Recruit


Introduction from the Author – Mark Stephens
With over three decades of business ownership in and around the staffing sector, I’ve worn more hats than a Royal Ascot milliner. I’ve run contingency recruitment agencies, led retained executive search practices, built a recruitment marketing business, and even rolled my sleeves up in the recruitment technology world. In all those years, one thing has remained constant – the fascination (and occasional frustration) with how companies choose to hire for their most critical roles.

I’m an unapologetic evangelist for evidence-based decision-making. For over a decade, I’ve partnered with academics and universities to cut through the “we’ve always done it this way” fog and replace guesswork with hard facts. Behavioural science is my constant companion – because understanding why people (both clients and candidates) behave as they do is just as important as the numbers on a spreadsheet.

My own journey took me from the hurly-burly of contingency recruiting to the calmer, more deliberate waters of retained search. Why? Because after years of watching rushed hires crumble under pressure, I wanted to work in a way that put quality first – protecting clients from the six-figure costs of mis-hires and giving candidates the platform to thrive.

This article was inspired by the research that I was commissioned to do for the guys at H2 Recruit – Kindred spirits in the mission to drive evidence-based strategy and decision-making into recruitment. I loved working on this article as it springs from that long-standing interest in the Contingency vs Retained debate. It’s a conversation often led by opinion and emotion, but one that demands evidence, transparency, and yes, the occasional splash of humour to keep us all sane. I hope that you enjoy reading this and find the evidence-based insight fascinating and potentially mind-changing.

Thank you to Ian Harwood and Brian Hawkins at H2 Recruit, for entrusting me with this project.
 
You can access the full research paper here for free.
 
Let’s get stuck in…..

 
 
 
The Real Cost of a Bad Sales Hire

Let’s rip off the plaster. A bad hire in sales isn’t just a recruitment fee and a bit of awkwardness at the Christmas party. It’s a full-on revenue drain. Industry studies (and a few painful client P&Ls) show that replacing a salesperson can easily exceed £150,000 once you include direct hiring costs, onboarding, training, and – here’s the killer – the revenue they didn’t bring in while they were missing target.

For leadership roles like CRO or VP Sales, that figure skyrockets. Why? Because the ripple effect of poor leadership hits your whole team’s performance. You might not just be replacing one headcount – you’re repairing a broken pipeline, damaged client relationships, and lost market share.

What good looks like:

• Candidates who meet or exceed agreed competencies and cultural fit.
• Onboarding that ramps them to productivity in months, not years.
• Retention past the first 12 months (a surprisingly high hurdle in many firms).

What bad looks like:

• Hiring on gut feel without a structured assessment.
• Multiple restarts of the same search because “the last one didn’t work out”.
• Watching competitors snap up the clients and territories you were targeting.

Ask yourself: Do you know the real cost of your last mis-hire? And more importantly, do you have the data to prove it?



Retained vs Contingency vs DIY – Spot the Difference

Think of it like choosing a restaurant.

• Contingency is like a buffet – lots of choice, some decent dishes, but you’re fighting with everyone else for the best bits and the quality is… variable.
• DIY is cooking at home – can be great if you’ve got the right ingredients, tools, and time, but not ideal if you’re short on any of those.
• Retained search is a private chef – bespoke menu, tailored to your tastes, and dedicated to making sure every course is perfect.

Why it matters:

• Contingency hires have an average first-year failure rate north of 30% for sales roles. Retained? Less than 10% – and often as low as just 2% with top firms.
• Retained processes involve deep market mapping, cultural benchmarking, and proactive headhunting of passive talent. Contingency tends to rely on job ads, databases, and speed over depth.

 

What good looks like:

• Clear, exclusive engagement with a partner who commits to delivery milestones.
• Shortlists where every candidate could realistically do the job – and stay in it.

What bad looks like:

• Competing agencies spamming the same candidates.
• Your brand represented inconsistently (or not at all) in the market.

Ask yourself: Is your hiring model designed for speed, or for success? And which matters most to your business this year?


The ROI Model – Making the Business Case
Let’s get CFO-friendly.

The ROI of retained search comes from:

1. Faster ramp to productivity – if a retained hire starts hitting target 2 months earlier than a contingency hire, the revenue impact is significant.
2. Lower mis-hire probability – cutting failure rates from 30% to 5% protects ARR and avoids six-figure losses.
3. Longer tenure – every additional year of performance spreads the acquisition cost over more revenue.

Example: A CRO with a £3m quota, 70% gross margin, and a 6-month ramp. A retained process that shaves even one month off ramp time can add £175,000 in margin – more than covering any fee differential.

Ask yourself: When was the last time you calculated ROI on your hiring choices – not just cost-per-hire?
 
 
 
  
📊 Case Studies: From In-House to Retained

1. US FinTech – EMEA Expansion

• Challenge: No EMEA presence, needed VP Sales + 3 AEs within 90 days. In-house recruiter team had failed to deliver quality shortlists.
• Solution: Retained search with cultural benchmarking and competitor talent mapping across 5 EU markets.
• Outcome:
  • All 4 hires delivered in 67 days.
  • £5.1m ARR in year one.
  • 100% retention at 12 months.
• Financial Impact: Competitors using contingency services were still hiring months later – lost time-to-revenue advantage estimated at several million.

 
UK Cybersecurity Scale-up – Strategic Leadership Upgrade

• Challenge: Previous contingency searches failed. Needed a confidential replacement for underperforming Sales Director.
• Solution: Exclusive retained engagement with psychometrics, leadership competency interviews, and cultural benchmarking.
• Outcome:
  • Sales Director EMEA appointed in 24 days.
  • £3.7m ARR uplift in first year.
  • Pipeline velocity increased by 38%.
  • 100% retention at 12 months.
• Financial Impact: Faster turnaround avoided further missed targets and competitive losses.
   

 
 
 
 
3. HRTech SaaS – Full GTM Team Buildout

• Challenge: Launching in Europe with aggressive timeline, needed full GTM build (VP Sales, Sales Managers, 6 BDRs). Previous contingency efforts couldn’t scale quality fast enough.
• Solution: Retained project-based agreement with pan-European mapping, skills benchmarking, and video profiling.
• Outcome:
  • 9 hires in 94 days.
  • £6.8m ARR in year one.
  • 92% retention at 12 months (1 voluntary departure).
• Financial Impact: Time-to-revenue shortened by 4 months, equating to millions in margin gained.
   

4. Strategic Recruitment Partnerships – Evidence of ROI

• Retained vs contingency:
  • Contingency first-year failure rate: ~25–30%.
  • Retained first-year failure rate: <10% (often as low as 2–5% with structured assessments).
  • Average cost of a failed sales hire: £120k–£200k when including lost revenue and ramp time.
• Impact of partnership approach: Strategic retained recruiters act as an extension of leadership, embedding cultural benchmarking, psychometrics, and ARR tracking into the process. Clients reported >95% retention rates and multimillion-pound ARR impact in year one.

 
 
 
 
 
Practical Playbook – When to Go Retained
 
You should be seriously considering retained search if:

• The hire will directly influence millions in ARR.
• The role is leadership, niche, or market-entry critical.
• You need access to competitors’ talent without public advertising.
• You can’t afford another mis-hire.

And if you do go retained:

• Define your KPIs (shortlist quality, diversity mix, retention).
• Align internal stakeholders with a RACI. (a RACI matrix is a tool used to clarify roles and responsibilities within the recruitment process)
• Expect (and demand) evidence at every stage.
  
   

10 Next Steps to Put This into Action

1. Audit your critical hires over the past 24 months.
2. Calculate the true cost of your mis-hires.
3. Categorise roles by strategic importance and scarcity.
4. Choose a retained partner using a capability scorecard.
5. Set clear SLAs and KPIs for delivery.
6. Embed cultural and competency benchmarking.
7. Implement talent mapping for future needs.
8. Align your leadership team with a defined process.
9. Track and review ROI from hires annually.
10. Make evidence, not instinct, the default decision driver.

 
If this has wet your taste buds for more, then you can access the full research paper here for free. Comes complete with data and research insight, methodologies, instructions and recommendations.
 
 
 
 
About H2 Recruit

H2 Recruit is an international retained search specialist focused exclusively on securing the top 1% of sales talent for high-growth technology companies in FinTech, HRTech, MarTech, and Cybersecurity. With offices in London and New York, and over 40 years of combined leadership experience in sales recruitment, the firm delivers director-led searches that combine deep market intelligence, rigorous cultural and competency benchmarking, and a global passive talent network.

From CRO and VP Sales appointments to complete GTM team buildouts, H2 Recruit partners with clients to reduce hiring risk, accelerate revenue impact, and achieve >95% first-year retention across critical hires. Every placement is measured not just on time-to-fill, but on lasting commercial performance.

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Ian Harwood, Co-Founder | ianh@h2recruit.co.uk
Brian Hawkins, Co-Founder | brianh@h2recruit.co.uk


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Resources Used in This Article
This article draws on multiple industry reports, academic research, and commercial data sources, including:

• Association of Executive Search and Leadership Consultants – industry best practice for retained search.
• DePaul University – sales hire cost and training data.
• Performio – sales hiring cost statistics.
• Harvard Business Review – sales turnover benchmarks.
• Forrester | SiriusDecisions – B2B sales attrition rates.
• Oxford Economics – UK employee replacement costs.
• Centre for American Progress – executive turnover costs.
• Ratliff & Taylor – retained search retention data.
• PwC, Deloitte, REC – hiring cost analysis and failure rate insights.