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22 April 2024

Retainer Models as a Strategic Anchor in HR and People Consultancy Businesses

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Posted by: HRi

Retainer models can be pivotal to running a successful HR and People Consultancy business.

Retainer models entails an agreement between a client and the consultancy business, whereby the client pays the consultancy a recurring fee, typically monthly, for access to their services over a period of time. This model differs from project-based, day rate or hourly billing models. It provides a more stable thus predictable financial arrangement for both the consultancy business and the client. It can serve as a strategic anchor for the HR consultancy business. For the client, it provides access to ongoing HR support, specialist knowledge and tailored services. It’s just like having an in-house HR team but without the overhead.


What are the benefits of Retainer Model to the HR Consultancy Business and the Client

Consistent Partnership: The ongoing service arrangement facilitates a consistent partnership and close relationship between the HR consultancy business and the client. This allows the HR consultant to deeply understand the organisation’s culture, dynamics, and objectives. This in turn enables swift and effective resolutions of HR challenges and opportunities.

Budget Predictability: For HR consultancies, retainers mean steady revenue, enabling better resource planning and investment in tools or training. For clients, it translates to predictable HR expenditures, simplifying financial planning.

Strategic Alignment: Through ongoing engagements, HR consultants can align their services more closely with the strategic goals of the client. Consequently, this leads to more impactful HR initiatives and improvements.

Availability and Accessibility: Clients often retain services to ensure that they have access to a service provider’s expertise when needed. This can be crucial for services requiring rapid response times or for projects that need continuous maintenance or support.

Flexibility: Retainer agreements often offer varying specifics, allowing for adjustments in the type and amount of work performed. Thus, making it easier to adapt to the client’s changing needs.

Scope and Limits: A retainer agreement typically specifies the scope of work covered by the retainer fee including any limitations on hours or types of services. If the work exceeds these bounds, additional fees may be negotiated.


How Retainer Model compares to other Models

Retainer vs. Project-Based

Project-based engagements, while effective for one-time initiatives (like setting up an HRIS system), lack the ongoing support essential for adaptive HR strategies. Retainers offer the continuity needed for developing leadership, enhancing culture, and improving employee engagement over time. The HR consultant is more likely to have a vested interest in the client’s business due to the ongoing nature of the relationship.


Retainer vs. Hourly

Hourly billing offers flexibility but can lead to unpredictability in support and costs. HR challenges often require swift, assured responses—something a retainer model guarantees. Moreover, retainers can shift the focus from transactional tasks to strategic outcomes, aligning HR consultancy efforts with long-term organisational success.


Retainer Pricing Strategies

There are several pricing strategies for retainer models, each with its own advantages and considerations, designed to meet varying client needs and the HR consultancy business’ capabilities. The choice of pricing strategy can significantly impact the success of the retainer agreement for both parties. Here are some common retainer pricing strategies:

Flat Fee Retainer

Flat fee retainer is a fixed monthly fee that clients pay for access to services over a specified period. The fee doesn’t change based on the amount of work done, providing predictability for both the client and the service provider. It works well when the scope of work is relatively consistent from month to month.

Hourly Retainer

Clients pre-purchase a block of hours at a reduced rate compared to the standard hourly rate. Any unused hours may either roll over to the next period or expire, depending on the agreement. This model is suitable when work volume varies but the client still wants a degree of cost predictability.

Value-Based Model

Pricing is based on the value or results that the HR consultancy service delivers rather than the time spent or specific tasks completed. This can be more profitable for the HR consultancy business if they can achieve results efficiently but requires clear understanding and agreement on what constitutes value for the client.

Project-Based Model

This model is designed around delivering specific projects or outcomes within a certain period. The retainer fee may vary based on the projects’ scope. It’s suitable for clients who need specific deliverables but also want the continuity and familiarity of a retainer relationship.

Tiered Retainer Model

Offers different levels or “tiers” of service, each with a set price and corresponding set of services or hours. Clients can choose the tier that best fits their needs and budget, providing flexibility and scalability.

Performance-Based Retainer

Performance-based retainer fee is partly fixed and partly variable, depending on the achievement of predefined performance targets or goals. This model aligns the service provider’s incentives with the client’s goals, but it requires clear, measurable objectives to be set in advance.


Clients buy credits that can be exchanged for various services, with different services costing different amounts of credits. This model offers clients flexibility in how they use services and allows the HR consultancy business to price services according to their value or complexity.

The Big HR Independents Fee Report 2022 reported an average monthly retainer fee a HR consultant charged was £573.


Implementing a Successful Retainer Model in HR Consultancy

For retainer models to work, the HR consultancy business need to follow the following steps:

Clearly Define Services and Scope: Clearly articulate the range of services covered by the retainer, from compliance audits to leadership training, ensuring both parties have aligned expectations. Moreover, you must be very clear on what is not included in the scope of the retainer. This will help manage expectations and to avoid operation project creep. Additionally, you may want to give an indication of how much services outside the retainer agreement may cost.

Flexibility to Scale: The retainer agreement should allow for adjustments as the organisation grows and evolves, ensuring HR services remain relevant and responsive to changing needs.

Quantify Value: Demonstrate the tangible benefits of retainer engagements with metrics like improved employee retention rates, faster recruitment cycles, or enhanced employee satisfaction scores. Demonstrating values to your clients will strengthen the relationship between you and increase trust levels.

Build and Maintain Trust: Consistent communication and delivering on promises are crucial. Regular updates and strategic reviews help reinforce the value of the retainer model to clients.


Overcoming Challenges with Retainer Models

Managing Scope Creep: Establish regular check-ins to review and adjust the scope of services. Hence, this helps to ensure the retainer remains aligned with the client’s needs and expectations.

Maximising Engagement: Proactively identify opportunities to utilise untapped areas of the retainer agreement, ensuring clients receive full value from their investment. Additionally, it may be beneficial for you to keep a record of the time spent and activities undertaken as part of the retainer. Consequently, this will help the client to understand how they are utilising your services and where you are adding value.

Innovation and Improvement: Stay abreast of HR trends and technologies, and continually seek feedback to refine and enhance your service offering. Also, develop and maintain a deep understanding of your client’s business and industry to be able to support them with their HR needs and challenges.


Navigating Towards Success with Retainers

For HR and People consultancy businesses, the retainer model signifies a commitment to building lasting, impactful relationships with clients. It’s about becoming an integral part of their success by offering consistent, strategic HR support tailored to their unique challenges and goals. It helps with better financial planning and management. Retainers is a trusted model that underscores value, partnership, strategic alignment, lasting success and client satisfaction.

It is imperative that HR consultancy businesses evaluate the model that is most suitable to them and their clients. Making sure the business adopts the billing model that works best for them and is the right for their business.

Author: Mary Asante | HRi

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