13 Jan How to Find the Right Executive Search Firm
Whether organizations want to accept it or not, the war for talent won’t be ending any time soon. In fact, competition for high-performing, innovative, and experienced executives will likely intensify over the coming years.
As average time-to-fill lengthens, and the number of vacancies in business-critical roles grows, more and more companies are turning to executive search firms to help with executive hiring.
But what are executive search firms? How are they different from your in-house HR department? Which industries benefit most from working with executive search firms? How can you pick the right executive search firm for your company?
Read on to discover the answers to these questions and more in this executive search firm breakdown.
What Are Executive Search Firms?
The first executive search firm opened its doors in 1906 after business management consultant and executive search pioneer Thorndike Deland Sr. recognized the universal challenges organizations face when hiring new executives. The industry has boomed to become an essential partner to companies ever since.
Executive search specialists have a narrower realm of expertise than general recruiters and in-house HR specialists. They are highly specialized talent acquisition experts. They leverage global market research, diverse networks of candidates, specialized technology, and refined search, selection, and signing strategies that position them to make transformative, successful placements.
Executive search firms are often staffed by former executives from various industries, boosting their access to professional networks. Hands-on executive experience also provides these search specialists with a degree of sophistication that world-class candidates expect when being approached with a new opportunity.
Executive search firms also provide confidential privacy for highly sensitive projects.
Executive Search vs. In-House Recruitment
Executive search firms don’t aim to replace your in-house recruiting teams, in fact the best firms are valued partners to in-house talent teams. Instead, they fill the highly competitive and difficult-to-find niche specialists and executives.
While your in-house talent acquisition teams likely use tools like job boards, social media platforms, and internal referrals to successfully fill entry, intermediate, and some mid-management roles, these methods are less useful when seeking talent for executive and highly niche positions.
Executive search firms employ customized talent acquisition strategies that:
- Are built using data-backed market analysis.
- Take advantage of their extensive networks of high-performing professionals.
- Leverage their access to niche professional groups, clubs, and associations to connect with passive talent.
- Have a proven track record of generating successful executive placements.
- Put an emphasis on DEI initiatives, helping to place diverse candidates into higher level roles.
Understanding the Importance of Passive Talent
Passive talent refers to currently employed executives and specialists that represent the ideal fit for your company’s role, culture, and goals.
Passive candidates are not actively seeking employment. They are busy with their currently successful role. Executive search firms tap into these candidate pools with the tact, discretion, and respect necessary to reliably generate interest from top executive and specialist talents who aren’t officially available on the market.
Executive Search Firms and Diversity, Equity, and Inclusivity
Executive search firms can also be valuable strategic partners when organizations hope to use their leadership vacancies to improve the diversity and inclusivity within their organization.
The best executive search firms invest heavily in evaluations and candidate assessments that reduce potential bias. These practices allow executive search firms to make strategic placements that improve diversity, equity, and inclusivity while representing strong retention odds, promotion potential, and cultural alignment.
Most executive search firms target a 40% diversity placement retention rate, roughly double the national average. But executive search firms with DEI expertise can generate diverse executive placement retention rates of 65% and higher.
Which Industries Can Benefit From Partnering with Executive Search Firms?
A common (and harmful) misconception is that executive search firms only work in singular industries or job functions.
While executive search is historically more common in business management, it has evolved to serve companies in almost every functional niche.
Executive search firms’ broad networks and deep professional connections are to thank for this evolution. This potent combination positions these firms to engage with wide pools of talent across numerous industries.
Medallion Partners has made successful placements in various industries, including:
- Medical Devices
- Consumer Goods
- Financial Services
- Private Equity
- And more.
If your industry isn’t on the list above, don’t worry. The connections and networks that executive search firms have create opportunities to engage with executives and specialists in new industries and markets as needed.
Choosing an Executive Search Firm
Choosing an executive search firm can be overwhelming. Without any prior experience, selecting executive search firms can lead to subjective decisions and suboptimal outcomes.
With your company’s reputation on the line, you can’t risk making the wrong call when choosing your executive search partner.
Let’s break down the process of choosing an executive search firm.
Contingency vs. Retainer Executive Search Firms
There are essentially two executive search business models in the market: contingency and retainer. Let’s examine both to determine which is best for your company.
Contingency Executive Search Firms
Contingency executive search firms work to fill a job opening without requiring an upfront payment until after a successful placement. Contingency firms bear all the expenses of the search and are willing to compete on non-exclusive recruiting contracts. This model encourages their recruiters to prioritize jobs that are easier to fill using active candidates, initial bursts of volume, with lower relational focus.
While this ethos may be suitable for gathering quick lists of potentially qualified candidates for beginning and mid-level leadership roles, it’s less efficient when seeking top-performing talent for positions requiring niche knowledge, unique experience, and specialized skillsets.
Contingency search firms’ business models can also lead to your vacancy being deprioritized in favor of projects that are less time-intensive and challenging. Additionally, the candidate you are talking to could potentially be introduced to other companies by the firm due to a lack of exclusivity. Contingency executive search firm fees average 20-30% of the role’s first-year total compensation.
Retained Executive Search Firms
Executive search firms that use a retainer business model operate more like strategic management and operations consultants than standard service providers. They often require an upfront fee that provides an exclusive relationship and commitment to deliver a successful placement even with the most time-intensive and challenging circumstances.
They invest significant resources into analyzing and understanding a client’s unique business challenges, company culture, and overall strategic objective. This gives the insight necessary to generate multiple executive placements that strengthen an organization and accelerate its growth.
Retained executive search firms typically charge 25-35% of the role’s first-year compensation from start to finish.
Top 5 Questions to Ask Executive Search Firms
If you’re considering working with an executive search firm, ask them these five questions to ensure you make an informed decision that fits your company’s needs.
- How Busy Are You?
Some executive search firms juggle workloads for dozens of clients. Other firms devote the entirety of their efforts to a boutique list of long-term partners.
Asking a potential executive search firm if they have the time, staff, and resources to provide the level of attention and detail your company requires is a good place to start.
- Do You Evaluate Leadership and Soft Skills?
Finding the right executive isn’t just about skills tests and performance analysis.
Leadership and soft skills, like communication, conflict resolution, team-building, creativity, and adaptability, are vital aspects of an effective executive. Ask executive search firms how they evaluate and score soft skills during their search and selection process.
- Do You Understand the Importance of Discretion?
As we mentioned above, an understanding of the importance of discretion in executive recruitment is vital to accessing candidates at the peaks of their industries.
Passive candidates, candidates at publicly traded companies, and executives in the public eye will often balk at an upfront proposal from a competing organization. Fortunately, they’re typically far more receptive to executive search specialists, who know how to approach them.
- How Far is Your Reach?
An executive search firm’s reach indicates its professionalism, dedication, and prior success. Small-scale, industry specific access can be valuable in some markets but often fails to generate results when seeking high-value executives with unique skill sets.
This elite tier of candidates requires a more comprehensive search that isn’t limited by industry connections or political borders. So, if your company’s vacancy requires a unique skill set or experience level, make sure your executive search partner’s reach extends further than your HR department’s.
- What Is Your Executive Placement Success Rate?
Asking for proof of your potential executive search partner’s ability to create executive placements that lead to longer-than-average tenures, outstanding promotion potential, and genuine organizational change is vital for making the right call.
Executive search firms should be able to provide hard data demonstrating their ability to reliably place candidates who stay in their roles. For the best odds of success, only partner with executive search firms with proven executive placement success rates higher than 95%.
How Medallion Partners Can Help You Find the Perfect Candidate
Medallion Partners is a top-tier executive search firm with a proven track record of finding the right candidates for your most critical positions. Over 98% of our placements are still in their roles two years later with a 65% diversity placement rate. This is because we don’t just focus on resumes. We make sure that potential candidates fit the company’s culture and values. We also make sure our placed candidates have everything necessary to acclimate to their new roles and living situations with post hire services that guarantee their success. Contact us today to learn more about our process and how it could help your company.