26 Jan How Are Executive Search Firms Compensated?
Decision-makers responsible for sourcing external executive search assistance have a duty to their organization to make an informed and measured decision.
Gaining a well-rounded understanding of common executive search firms’ compensation structures is a great starting point for individuals interested in securing the best possible partner for their company’s executive search process.
In this blog, we’ll break down everything you need to know, including the basics of executive search firms’ operations, average fee ranges and compensation structures, and why working with an executive search partner over a standard recruiter can pay dividends.
What Are Executive Search Firms?
Executive search firms are organizations that exclusively partner with brands and businesses experiencing C-level vacancies.
These talent acquisition specialists invest significant amounts of time and resources into developing networks of talented, diverse, and impactful executives and specialists working in various industries.
These networks are the currency of executive search firms because they allow their search specialists to connect with candidates that can’t be accessed using traditional job search methods like digital job boards or social media platforms. This unique positioning and remarkable access to executive candidates provide a significant advantage over in-house and general recruiters that spend the bulk of their working time chasing placements at entry, intermediate, and sometimes mid-management levels.
How Are Executive Search Firms Paid?
Many organizations balk at contracting an executive search partner due to misconceptions about how they’ll be charged for the service.
Despite common misunderstandings, executive search firms use a more-or-less standardized compensation process that aligns closely with general recruiting firms.
Most executive search firms charge between 25-35% of a role’s first-year compensation for generating a successful placement. For example, assuming an executive salary of $175,000, organizations can expect to invest $40- $60k in the search, selection, and evaluation process.
Your executive search payment process can vary depending on your organization’s choice between contingent and retained search firms. Contingency-based search firms only bill their clients after successfully placing candidates for their partners.
The lack of upfront investment makes contingency-based firms attractive to many organizations at first glance. Still, the inherent uncertainty of partnering with contingent firms (coupled with a massive bill at the end of the contract) leads many seasoned companies to partner with a retained search firm.
Retained search firms maintain smaller, more exclusive rosters of partners, which allows them to provide a level of service that goes well beyond the industry standard in terms of attentiveness, customized search strategies, and client experiences. Unlike contingency-based firms, retained search firms bill for their services on a monthly basis, much like a retained attorney, accountant, or business consultant.
To sum it up, if outsourcing your executive hiring represents the totality of your goals for executive search, a contingency-based firm isn’t a bad option.
But if your organization is seeking a true partner for their executive search that combines world-class talent acquisition with next-level refinement and custom strategies to generate one-in-a-million placements? In that case, a retained search firm is the only option to meet (and perhaps even exceed) your expectations.
Why Do Executive Search Firms Cost More Than Recruiters?
Many organizations balk at the price difference between standard recruiting agencies and executive search firms. And while it is true that most executive search firms tend to charge 10-15% more than typical recruiters, it’s for a good reason.
Unlike general recruiting and staffing agencies, executive search firms fill an extremely competitive, high-stakes niche. Rather than competing for candidates for basic roles, executive search firms devote their efforts and resources to accessing, engaging, and onboarding world-class executive and specialist talent from around the globe.
Executive search firms also tend to employ a higher caliber of recruiter compared to standard agencies. For example, each of Medallion Partners’ talent acquisition specialists transitioned into executive search after long and successful careers as executives in various industries. This direct, hands-on experience navigating the corporate ladder provides invaluable insights into the minds of our executive candidates, allowing us to nurture and convert promising executives and specialists.
Executive search firms also leverage highly advanced search, screening, evaluation, and selection tools that position their specialists to minimize time-to-hire and eliminate subjective hiring.
How Medallion Partners Finds The Right Candidate Every Time
Medallion Partners has been placing world-class executives in exciting C-suite roles for more than 15 years.
Our tried-and-true executive search process, proprietary candidate selection tools, and our team of dedicated, motivated, and highly experienced talent acquisition specialists combine to create an invaluable asset for organizations experiencing costly, prolonged, or disruptive gaps in their executive team. Contact us today to discuss your vacancy and learn more about how Medallion Partners is revolutionizing the executive search world.