18 Jan What Are the Two Types of Executive Recruiters?
Executive search firms generally operate using one of two structures.
With a fundamental understanding of the differences between these structures, organizations with C-suite and other hard-to-fill vacancies can easily make informed, strategic, and profitable decisions when choosing an executive search partner.
Let’s take a look at each of these executive search firm models.
What Are The Two Types of Executive Search Firms?
If you’ve been considering partnering with an executive search firm to help fill a vital leadership role, you’ve probably noticed a divide in the industry.
There are two distinct categories of types of executive recruiters, and failing to know the difference could cost your organization a top-tier placement. These two categories are:
- Retained executive recruiters and firms.
- Contingency-based executive recruiters and firms.
Retained Executive Recruiters
What are retained executive recruiters? Retained executive recruiters operate similarly to retained attorneys, consultants, and other niche business specialists.
Retained executive search firms partner with an organization for a period of time (typically 60, 90, or 120 days) to take complete and exclusive ownership of their executive talent acquisition process. During this contracted period, retained executive search specialists devote their resources and efforts to creating and deploying a bespoke executive recruitment strategy.
While this boutique-style approach to executive search often fails to generate the high-volume activity contingency-based executive recruiters prioritize, retained search firms excel at building lean, competitive, and highly-qualified short lists of candidates that represent excellent performance, leadership, and cultural fits.
Retained executive search firms rely on demonstrating a consistent ability to make executive placements that help their partners revitalize, transform, and push their organizations to new heights. As such, they typically only engage with a few clients at any given time, allowing them to devote the necessary resources to each executive placement project.
Retained search firm fees align with executive search averages of around 25-35% of the role’s first-year salary.
Contingency-Based Executive Recruiters
Contingency-based executive recruiters operate similarly to commission-only sales groups. These firms require no upfront payment from their partners and compete against other contingency-based firms for non-exclusive contracts.
Due to the inherently competitive and fast-paced nature of contingency-based agreements, these firms excel at using “wide-net” strategies to generate large amounts of activity on vacancies. This can be helpful for organizations that want to fill their executive vacancy as quickly as possible but can lead to a less refined candidate roster that requires more hands-on involvement to narrow down.
Contingency-based executive search firms typically charge between 25-35% of the role’s first-year salary but only seek payment once their placement has been selected and onboarded.
The lack of upfront commitment makes contingent executive search agreements attractive to organizations that are new to using executive search. But the low risk doesn’t come without risks – contingency search firms may deprioritize your vacancy in favor of “faster wins” if your role proves to be too niche, rigorous, or demanding. And since you’re likely one out of a few dozen non-exclusive clients, you may not even be made aware of their decision to divert their attention and efforts. Additionally, while you may be presented with a higher volume of candidates, the overall quality of the candidates may be lower.
Which Type of Executive Search Firm Is Right for Your Company?
So, how can you know which type of executive search firm is right for your organization? The answer is that it depends.
If your organization is in need of a quick fix to reorient your leadership team, a contingency firm may be best. If your organization is looking for a one-in-a-million executive or specialist with the expertise, vision, and performance record to breathe new life into an aspect of your business, you may want to leverage a customized executive acquisition strategy created by a retained search partner.
Pro Tip: Compare your needs, desires, and preferences with the checklists below to see which camp your vacancy calls for: retained or contingency.
Retained
- The role requires niche knowledge, specialized skills, or unique backgrounds.
- You don’t want to review and/or interview dozens of candidates of varying quality and qualifications.
- Executives with your desired qualifications may be working in markets halfway around the globe or in a different industry.
- You want to access high-performing passive candidates that are making waves in your industry.
Contingency
- You want to work with multiple executive search partners without a contractual commitment.
- You want to generate large amounts of activity and review large rosters of candidates.
- You’re open to a less-than-perfect fit in exchange for speed.
- You want to leverage the active candidate market to find executives looking for new opportunities.
How Medallion Partners Can Help With Your Executive Search Process
If your vacancy calls for the attentive care, refined techniques, and track record of a retained search firm, contact Medallion Partners today. Our team of executives-turned-executive-recruiters is ready to deploy their hard-earned expertise to find the perfect candidate for your organization. With over 98% of our placements still in their roles two years later, our track record speaks for itself.