When to Use an Executive Search Firm
You have a C-level executive opening. Your gut tells you a VP-level search will be incredibly hard to fill. Your startup has hit the hockey-stick inflection point in its growth and needs more experienced leadership to scale. Those are all good reasons to turn to a trusted retained executive search firm. But how do you know if you’re really ready?
The Search Must be Important Enough . . .
Retained executive search is all about value. Employers use an executive search firm when a search is important enough to warrant the investment. That is the right time to use an executive search firm.
Because Retained Search is an Investment
I use the word “investment” for a reason. A retained executive search will likely cost you a minimum of $50,000 and usually exceeds $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.
Recruiting top-performing executives 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 been on the rise.
Total Cash Compensation x 33% = Search Fee
But if an executive search has to be worth the investment, then how do you do the math?Typically, retained search firms charge a retainer based on a percentage of total first-year cash compensation. (We charge a flat fee based on the amount of work involved and the difficulty of the search.) While investment is substantial, so too is the impact a senior executive has on a company’s bottom line.
Yet Retained Search Can Deliver Quantum ROI
The right hire can help a company make a quantum leap in the market. Moreover, at the senior executive level, not making the right hire or failing to fill the opening in a timely fashion can really hurt a company. When you stop to think about it, a retained search with a great strategy search partner is one of the best investments a company can make.
Yet It is Not Right for Every Search Every Time
Of course, retained search is not right for every search every time. There are some roles that are simply not important enough for that kind of investment. In those cases, you do not need a retained executive search firm. So you try something else — employee referrals, job postings, and in-house executive search.
Yet internal executive search teams are often busy with too many searches and too little time. When your company lacks the internal capacity, expertise, or time to conduct the executive search, executive search research firms may be just what you need.
A Research Firm is a Retained Search Alternative
Usually, recruitment research firms focus on the front end of the executive search process, developing a robust list of potential candidates with biographies and contact information. They can even qualify the candidates for you. But the in-house recruiting team must ultimately have the time and bandwidth to manage the search through to hire.
Reasons to Retain a Search Firm
What follows are the common reasons companies decide to use a search firm.
1. You Require a Game-Changing Senior Executive
You require a senior executive 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 Executive Search is Incredibly Important
Searches for C-level positions that report to 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 Require a Rare Candidate
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 Created a New Leadership Position
If you are seeking a senior executive for a role you just created, it may be time to retain an executive search firm. When an executive search falls outside your area of expertise, an executive search firm can plug the knowledge gap with its domain know-how.
5. You Must Replace a Senior Executive
If you have a senior-level executive who is underperforming, a retained search firm can conduct a confidential search while the leader is still with the company. Search firms offer a much-needed veil of secrecy for companies that need to line up a replacement while the senior executive is still in the role.
6. Your Target Company is a Partner
If you need to recruit top executive talent from a partner corporation with which your company does business, the confidentiality that search firms offer helps avoid ruffling feathers.
7. Your Company Lacks Senior Executive Diversity
Because women, Black, and Latinx candidates are not well-represented at the senior executive levels, search firms that offer diversity recruiting help level the playing field to ensure equal opportunity for all candidates.
8. You Need a Leadership Succession Bench
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 Can’t Do the Search Yourself
If you already have too much to do and too little time, taking on an important executive search can quickly become a full-time job. That is what search firms do.
10. You Have Run Out of Candidates
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. A Search is Taking Too Long
Whenever a search takes too long, it is time to call in reinforcements to speed time-to-hire for challenging searches and those with compressed timelines.
12. You Need Stronger Executives
Retained search firms are in the business of delivering top performers — the 20% who are so effective that they are responsible for 80% of the results. Anytime you have a senior executive search, it is an opportunity to trade up to a top performer and 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.