When to Use an Executive Search Firm
Generally, employers use an executive search firm when a search is important enough to warrant the investment. I use the word “investment” for a reason. A retained executive search will likely cost you a minimum of $50,000 and averages $100,000 or more — typically one-third of a candidate’s first-year total cash compensation. Typically, these are senior-executive roles with salaries averaging $300-thousand or more.
First, it needs to be worth the investment
If an executive search has to be worth the investment, how do you do the math? The importance of a senior executive role can be measured financially. How much money might this executive make for your company? If you don’t find the right person, how much money might this person lose? If the cost of not filling the role with the right candidate is significantly higher than the cost of the search, then you may be ready to consider investing in the services of a retained executive search firm.
Retained search firm is not right for every search every time. There are some roles that are not worth making that kind of investment. I often brainstorm with senior executives about ways they can build their teams without incurring the expense of an executive search firm. You can get a lot of lift with employee referrals, job postings, and LinkedIn. But you have to have the time and bandwidth to do the recruiting yourself. Recruiting top performing executives is labor-intensive, complex, and requires a rare set of skills and expertise. That is why retained search firms exist. In fact, they are in such demand that, despite the economic downturn, their average fee for an engagement has increased.
Companies and hiring executives retain executive search firms for any one of the following reasons:
1. Good just is not good enough. You require a senior executive candidate who is truly great.
If hiring top performing talent available is important to your company, a search firm can help you do the rigorous work required for game changing hires.
2. The search is incredibly important at the senior executive level.
Searches for C-level positions that report into the Chief Executive Officer usually are too important not to go out to a retained search firm. Executives at that level can make or break a company. A retained search firm can mitigate the risk.
3. You are seeking a candidate with a rare mix of skills.
If you have an important search in which you are seeking the proverbial needle in the haystack, a search firm can help you get it done. Better executive search firms will deliver a slate of candidates with the right mix of knowledge, skills, and abilities along with the requisite cultural fit.
4. You have a search for a senior executive position that you just created.
When an executive search falls outside your area of expertise, an executive search firm can plug the knowledge gap with their domain know-how.
5. You have to replace an under-performing executive while he is still in the role.
For companies that need to line up a replacement while the senior executive is still in the role, search firms offer a much-needed veil of secrecy.
6. You have to recruit for target company with which your company has good relationships.
If you need to recruit top executive talent from partner firms with which your company does business, the confidentiality that search firms offer helps avoid ruffling feathers.
7. Your senior leadership team lacks diversity.
Because women, Black and Latino candidates are not well-represented at the senior executive levels, search firms can help level the playing field by conducting original research to ensure equal opportunity for all candidates.
8. Your lack internal bench strength and have few successors to your senior executives.
If you sense a key executive might be on the verge of leaving or that you could benefit from top-grading, a succession bench help you tee up executive hires in advance of need.
9. You do not have the time or resources to take on an executive search.
If you already have too much to do and too little time, taking on an important executive search can quickly become its own full time job. That is what search firms do.
10. You have tapped out your personal and company networks for candidate referrals.
If you have exhausted your network of connections for possible referrals, it is time to access another network. Executive search consultants are among the most well-networked people in the business.
11. You have an important executive search that is taking too long.
Whenever a search takes to long, it is time to call in reinforcements to speed time-to-hire for challenging searches and those with compressed timelines.
12. You want to give your company a strategic advantage through better hires.
Retained search firms are in the business of delivering top performers — the 20% that are so effective they are responsible 80% of the results. Any time you have a senior executive search, it is an opportunity to trade up to a top performer and to drive results.
The Good Search is a retained executive search firm in the Greater New York City area that specializes in media and technology. We are here to answer any questions you may have when you are ready to move forward with a search engagement.