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EXECUTIVE SEARCH
So you’re thinking about running an executive or a retained search? Then you have come to the right place.
In this article we will go over the pros and cons of choosing executive searches over contingent searches. We will also go over some of the pricing models that are often (and not so often) offered by recruitment or executive search firms.
Simply put, executive searches and retained searches are normally exclusive to one firm and can be used for any search at any level. However, executive searches are normally reserved for very niche, high touch, highly curated recruitment processes that will take significant time and energy from your internal recruitment team - not to mention sometimes it’s worth paying for the thoroughness, methods and network of a good agency recruiter or “headhunter”.
PROS
Pre-existing relationships
Executive recruiters have a deep network and pre-existing relationships with the candidates that you’re seeking
Retained = serious about search
By putting some skin ($$$) in the game shows the recruiter how serious you are about filling the vacancy
Experienced recruiters
Executive search firms are recruiters with proven success - it’s not a new grad on their first day in the workforce
Exclusivity = simplicity
Exclusivity simplifies your recruitment process to working solely with one agency instead of 5 contingent search agencies making the process more efficient
By engaging with one firm and syncing your objectives and your company vision, you get a partner that’s a true extension of your business acting on your behalf
Additionally, you don’t have to describe the opening 5 times and give feedback to 5 different recruiters
Free marketing
Executive search firms generate extra marketing for your company which is a great way to get your company’s name in the minds of top professionals in the industry
Confidentiality
Confidential searches are available if you want to quietly find someone (replacements, stealth mode startup, new project that’s confidential, etc.)
It's guaranteed
It’s an assumed guarantee that they will succeed
So look into their track record & references to validate this assumption
You are free to add verbiage to a contract regarding expectations and subsequent refunds based on certain metrics or milestones
CONS
Choose wisely!
You will have one firm (or recruiter) running the whole search - so choose wisely!
They are also representing your company to Top Talent in the industry, so you have to make sure they portray your company in the right light
Watch out for quotas
Sometimes recruiters will have a monthly quota and getting your retained business is an easy way for them to meet their quota with an upfront fee so be careful of an unknown recruiter calling on the 29th day of the month
Price
Executive searches are expensive. For example, we’ve seen placements for one candidate over $900,000. Albeit that is a rare fee size, the return on investment for someone of that caliber is usually much higher
Less resources
Exclusivity to one agency will limit your influx of potential candidates
But when there are a limited number of candidates at a certain level or in a specific space, this might make sense
RETAINER FEE STRUCTURES
Executive searches tend to get the most creative with their pricing structures when it comes to recruitment. It makes sense since it’s such a large sum of money and such a large undertaking. Here are some of the ways that they can be structured.
Fixed fee retainers: Oftentimes the agency will have a set fee depending on the level of the search. For example: “Flat $150K for a C-Level exec in the Engineering department for large-mid sized companies” or “200K for building out the entire C-Suite of a startup”. This is a set fee for engaging a search as you’re not paying for the candidate, you’re paying for the agency’s time. It’s safe to say clients would only do this on an exclusive basis.
Payment can flexible as well
E.g., a lump sum, 2 payments, weekly payment over 13 weeks, 4 monthly payments - you can get as creative as you like
Hybrid retainers: This is a multi-part payment that actually comprises making payments upon meeting certain milestones. Most people are familiar with a two part retainer, engagement/initiation fee & a final placement fee. But there are actually many more payment setups that clients/agencies can mix and match to create a mutually beneficial model depending on the need/project. Here are some common milestones:
Engagement & search initiation
When candidates are first received
When the first interviews happen
When second interviews happen
When the offer is made
When the offer is accepted
When the candidate starts working
When the candidate has been working for XX amount of time after accepting the offer
When the candidate hits a certain work milestone
Example: Candidate creates $1M in revenue, they create XX product, they finish construction on XX project etc.
Ask your agency if they would consider a different milestone than any of those listed above.
In all, I hope this helps you better understand how your recruitment partners function so you can make the most informed decision when it comes to picking an agency for your searches.
If you’re considering doing an executive search feel free to reach out to Josh Lopez to set up a time to speak further.
E-mail: Josh@top10talent.com Phone: 303-550-7588