What Are The Differences Between The Two Types Of Executive Recruiters?
If you’ve been researching executive recruiters, you’ve probably noticed a stark split in the industry.
Executive search recruiting firms adhere to one of two business models that inform their search styles, client services, and payment structures. Gaining a solid understanding of the pros and cons of each style of search firm will allow you to decide which type is right for your organization’s structure, goals, and desired experience.
What Are The Different Types Of Executive Recruiters?
The differences between them are often chalked up to different payment structures, but the truth is the delineation goes deeper than payment structures. Contingency-based and retained search firms rely on entirely different business models, leading to varying strategies, outlooks, and organizational goals.
Contingency-based executive recruiters compete for non-exclusive contracts with a large number of organizations. They emphasize speed and volume to grow their businesses and often specialize in a small cluster of industries to maximize the effectiveness of their network.
Contingency-based firms only bill their clients after making a successful placement, which can be attractive to organizations on the fence about investing in executive search. The non-exclusivity of contingent recruiting contracts also allows organizations to partner with multiple recruiting firms, granting access to a broader range of candidates.
This non-exclusivity can be a double-edged sword for organizations, however. Because contingency-based search firms bear 100% of recruiting costs until a placement is made, they prioritize contracts with the highest potential for a quick win. If your vacancy requires skills, experience, or personality traits that are hard to come by, weeks may pass with little to no valuable candidate activity.
Retained executive recruiters are more similar to consultants than standard external service providers. Retained executive recruiters partner with organizations for contracted periods to find qualified candidates with rare experience, innovative skill sets, and remarkable performance records. Retained recruiters are paid upfront based on a retainer agreement.
To accomplish this, retained executive recruiters enmesh themselves in their partners’ organizations to gain actionable insight into the issues, goals, and culture of each company. Then, they use this information to inform the creation of bespoke search processes hand-crafted to generate a one-in-a-million placement that checks all boxes.
Unlike their contingency-based competitors, retained search firms invoice their clients on a contractually-agreed basis, much like retained attorneys, accountants, and other specialists. Retained search firms tend to work with a small number of clients to maintain their ability to provide top-tier attentiveness. Rather than relying on speed and volume to generate business, retained search firms focus on building positive word-of-mouth that leads to recurring clientele.
How Do I Find An Executive Search Firm?
Finding the right executive search firm can make or break the success of your recruiting experience.
Unfortunately, it can be challenging for companies to separate top performers from middle-of-the-pack firms, especially during their first executive search firm partnership. That’s why Medallion Partners created a list of “must ask” questions organizations can use to guide their executive search firm interview process.
Read the complete guide here.
- What is your executive search process?
- Where do you source candidates?
- Do you have experience in my industry?
- How do you gain insight into my organization’s unique needs, challenges, and goals?
- How do you ensure cultural fit?
- Do you complete reference checks?
- Do you practice discretion when approaching candidates?
- How do you rank and present candidates to your partners?
- How do you communicate with non-finalists?
- Do you provide onboarding and/or assimilation support for your candidates post-placement?
What Is The Average Cost Of Hiring A Recruiter?
Like most recruiting firms, executive recruiters charge their partners a percentage of each placement’s first-year salary. Most firms charge between 25-35% of the first year’s salary, which equates to roughly 30-50k (assuming an average executive salary between 125-150,00.)
When reviewing potential executive search partners’ fee structures, it’s essential to read the fine print. Most firms base their fee on your vacancy’s salary. Still, some take the value of the entire compensation package, including benefits, bonuses, and other incentives, into consideration – leading to significantly higher costs.
How Medallion Partners Can Help Fill Tough Vacancies
Medallion Partners is a premier boutique executive recruiting firm with nearly two decades of experience matching world-class candidates with top-notch organizations. With over 98 percent of our placements still in their roles after two years, we have a demonstrated track record of success.
Businesses across industries have trusted our strategic search process to identify, engage, and onboard executives, researchers, and specialists with the perfect resumes, skill sets, and personalities to take their businesses to the next level. Our passionate search specialists are ready to leverage Medallion’s unmatched candidate network, hard-earned access, and advanced negotiation techniques for your benefit. Call us today to learn more about how we can help your company.
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