Retained executive search can be expensive with companies charging as much as 33% of total salary as their fee. However, it should be remembered that the cost of a bad hire equates to 2.5 of salary so it is important to appoint the right person. For example, an individual earning £100,000 per annum could cost the company £250,000 if the appointment fails.
Retained executive search firms vary in size, whilst there are large global search firms, there are also many smaller, niche firms dealing in particular specialisms. Regardless of the size, all these firms operate in the same way, they work for the client, not the candidate.
Hiring at a senior level is difficult and using executive search can improve the odds of a hiring a successful individual.
At senior level the cost of a bad hire is multiple:
CEOs and Senior Directors are paid to make big decisions and set the strategic plan of the company. With poor leadership much damage can be done in just 6 months.
A Retained Executive Search firm is ‘retained’ exclusively to seek and attract the best candidate for a specific role for a specific client. The service entails extensive search generated to identify all potential candidates for the role and to approach and ultimately appoint the best person for the job.
There are generalist and specialist executive search firms and it is important to understand the benefits of both.
The main difference between contingent and retained executive search firms is the payment model.
A contingent agency operates on a ‘no placement, no fee’ basis whereas a retained executive search firm is paid regardless of the success of the search
A retained assignment is a lengthy process (typically 6 weeks to shortlist) and the consultancy requires the guarantee of payment in order to carry out a thorough search of the market and this is the best method for a senior or hard to fill role. It is important to acknowledge that a retained search company will guarantee a successful outcome, even if it means undertaking the whole search again if the original search is not successful.
The main difference between contingent and retained executive search is the type of candidates generated. With the retained model a broader pool of candidates is generated and passive candidates are uncovered, those candidates not seeking a new role.
Most recruitment methods focus on job-seekers – candidates who are actively seeking a new role and although there is nothing wrong with that, by limiting your search to only ‘Active Candidates’, you are excluding many potential candidates and that might include the ‘best’ candidate for the role.
Even if you have loads of candidates in your search, you need to ensure that the quality is there. An Executive search firm will work with a client to identify and understand their problems and needs and help the client identify the skills and behaviours required.