Search Firm Fees | Definitive Guide to Search Firm Selection

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Search Firm Fees

Executive search firm fees are high on the research list of any executive search buyer. Executive recruiting fees are an important filter. When you have an important senior executive opening to fill, you must first determine whether you can afford the services of an executive search firm. You need to know what executive search actually costs.

What executive search costs isn’t only about the money.  It’s about so much more than that. So once you determine you are in the market for an executive search firm, the details you gather about executive search pricing will shed light on an executive search firm’s values, on its headhunting process, and on what it ultimately stands for as a search firm.

Percentage Fees

Most executive search firms charge a percentage fee. On average, retained executive search firms charge 33% of first year total cash compensation (base salary + bonus).  Retained firms pass on search-related expenses at cost (i.e. candidate travel). Some tack on another 3-5% for other office expenses. To determine what retained executive search firm fees you might pay, the math is pretty simple. Just multiply the total cash annual compensation for the executive you want to hire by .33 or by .38 if there are expenses involved.

The large retained executive search firms (Korn Ferry, Spencer Stuart, Heidrick & Struggles, Russell Reynolds) prefer searches with cash compensation in excess of $300 thousand. Their retained search fees are usually in excess of $100 thousand.  Because they have a global footprint their expenses are higher than boutique search firms that are usually more willing to take on executive searches with total compensation ranging between $200-$300 thousand dollars.

Flat Fee Pricing

Some search firms charge a simple flat fee.  That’s our pricing model.  And we are not alone.  One of the leading global retained search firms Egon Zehnder also charges a fixed fee for the same reason.  We believe our clients want a search firm they can trust. Percentage fees set up an inherent conflict-of-interest. Percentage fees reward any search firm that inflates the compensation of the candidates they place. The more a candidate makes: the more the search firm makes.  Egon Zehnder explains it thusly:

“Unlike the traditional model of search consulting, we charge a fixed fee for our assignments. That means our only incentive is to deliver what’s best for you. Our fixed-fee policy frees us to be diligent, thorough, and completely unbiased, able to assess internal and external candidates on an equal basis and facilitate hiring negotiations with no conflict of interest.”‘

 

photo of questions about search firm fees

Retained search is an investment.

As is the case with any investment, it helps to run the numbers. The Good Search charges a simple flat fee. Our retained search firm fees are not based on candidate compensation, but rather on the amount of actual work involved.

For details on the different search firm models (retained, contingency, and research), check our earlier blog post.

Pricing You Can Trust

The Good Search works by simple flat retainers for a reason: you should not have to wonder about your search firm’s loyalty. By decoupling our fees from candidate compensation we eliminate the conflict-of-interest of percentage-based fees. Percentage retainers set up an inherent conflict-of-interest by rewarding search firms that inflate the salaries of the candidates they place. Flat fee retainers not only take the moral high road, they are also easier on the budget.  For every retained search engagement, we draw up a proposal detailing our fee, based on the the requirements and difficulty of the search. Clients know exactly what a search will cost from the beginning. No surprises.

Doing the Math

For retained search to make sense from a budgetary perspective, executive or technology leadership positions have to be senior enough — and important enough — to warrant the investment in retained search. Our minimum retainer for retained executive search is $50,000. Our fees typically range between $50,000 – $100,000 per engagement. Board searches average $90,000. For some C-level roles, the retainer is higher. Most of the retained search positions we work on have total annual cash compensation in excess of $200,000. Though titles vary, most of the roles are at the vice president level and above.

(For searches that don’t warrant an investment in retained search, our research division Intellerati gives clients the opportunity to save.)

Some pricing to help you do the math

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We understand that The Good Search is not the right executive search firm for every search every time.  No retained firm is.  But we make it a practice to listen and to try to help, regardless.

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