Hiring great leaders is so important in today’s competitive business landscape. Senior leaders can have an immediate and lasting impact on your organization, employees, stakeholders, community, and the Kingdom for generations. The wrong leader can hamper growth, damage your organization’s reputation, and set you back for years.
Sometimes you can recruit a top leader on your own. If you have a strong human resources department with experience recruiting executive-level talent, and strong recruitment marketing, employer branding, and cutting-edge social media recruitment, this approach may make sense.
However, sometimes you need help. This is when you should consider using an executive search firm.
“Plans fail when there is no counsel, but with many advisers they succeed.” Proverbs 15:22
Considering an Executive Search Firm
An executive search firm can help you identify, attract, and recruit highly qualified candidates for senior, executive, or other highly specialized positions. They have access to a high-quality network of executive professionals, have a commitment to diversity and inclusion, and are better able to find more passive candidates, less active job seekers. You should consider using an executive search firms if you lack the internal resources or recruiting expertise to fill the role, you have a difficult or confidential role to fill, you lack bench strength and have few successors for the role, and/or you have tapped out your personal or organization’s referral network.
Executive search firms work on either a retained or contingent basis. Contingent recruiters are hired to present a pool of candidates to fit certain criteria. They generally work the front-end of the process, leaving the assessment and selection work up to the client. Contingent recruiters get paid upon the successful completion of a search. You do not pay until you hire their candidate. Fees are generally lower because of their limited scope of work.
Retained recruiters operate on an exclusive, organization-centered basis and work on a limited number of assignments at one time. They are engaged in all aspects of the search process, including defining the search, researching and vetting candidates, managing interviews, positioning offers, and helping close the selected candidate. Some retained search firms also offer testing and assessments prior to the candidate being hired and onboarding and coaching after the new leader has accepted and started with the organization.
Retained recruiters charge a fee usually between 25% and 35% of the estimated total of the candidate’s first-year compensation, including any potential commissions or bonuses. Most charge one-third at the beginning, one-third at the interview stage, and one-third when the candidate is hired and gets paid regardless of making the actual placement. They may also charge reasonable out-of-pocket expenses such as candidate travel which can add an additional 10-15% to the fee.
Retained search firms also typically guarantee their placements between six months and one year. The guarantee usually does not involve a refund of the fees, but a guarantee to find another acceptable candidate at no additional cost. The guarantee assumes that the company did not make any major changes that directly affected the candidate’s performance.
Finally, retained search firms pledge not to recruit from the hiring organization for a stated period following the engagement.
Choosing an Executive Search Firm
Choosing the right executive search firm partner is paramount to your success. Here are some questions that can help guide you through the process:
Expertise – Is the search firm a specialist or a generalist? Do they understand your position? Do they have a high-quality network of professionals like the position for which you are hiring?
Process – How does the search firm qualify the position? How will they understand the complete nature of the position and culture of the organization? How do they manage the search process? How will they identify, attract, and recruit the most qualified candidates for the position?
Recruiters – Who will be handling the search? Do they possess the skills and experience to recruit for the opening? Will you have direct access to the recruiters handling your search?
Metrics – What are the firm’s metrics and benchmarks for typical searches? What is their average time to complete a search? How long will it be before you begin interviewing the first candidates? What is the percentage of searches the firm completes? What is the search firm’s candidate retention rate?
Fees and Guarantee – Does the search firm offer a clear fee arrangement in writing? Which expenses will be billed separately? Is the guaranteed policy clearly spelled out?
Off Limits Policy – What is the firm’s “off-limits” policy which could keep them from freely sourcing the talent you are seeking from companies that make sense?
References – Ask the search firm to provide you strong professional references relevant to your search.
Asking the right questions upfront can help you chose the best executive search firm for your organization and your specific role.
Working with an Executive Search Firm
The two objections I hear most about working with an executive search firm are cost and lack of success on a prior search. To help improve search success, develop a culture of trust and transparency with your executive search firm from the start. View them as a true strategic business partner/advisor. They are experts in their field and can help you access hidden talent. Also, commit to consistent, timely and honest feedback with the search firm and the candidate. Nothing derails a search quicker than a lack of timely feedback. Finally, build a long-term relationship with the search firm. The longer you work with them, the more they will understand you and your organization. They will think of you first when they identify candidates that may be a great fit for your organization. This will yield positive results in the long-run.
“For which of you, wanting to build a tower, doesn’t first sit down and calculate the cost to see if he as enough to complete it.” Luke 14:28
While search fees of $30,000 to $300,000+ can seem like a large amount, consider the cost of not hiring a key executive on a timely basis. Think about what it will cost your organization for every week or month the key position goes unfilled? How much is it costing you in sales, profitability, or culture? Or consider the cost of a failed executive hire. It can be as much as 2.5 times salary, not to mention lost market share, lack of direction and lack of trust. Once these costs are calculated, they may far surpass the cost to outsource your executive job search.
All organizations need strategic leadership talent to execute their business strategy. The right executive search firm can help improve the odds of an effective search process which ultimately leads to a best-fit hire for your organization!
About the Author
Before becoming a Convene Chair, Bruce gained 25+ years of experience in Human Capital Management, Organizational Development, Leadership Development and Strategy and has an outstanding track record of maximizing revenue, profitability and performance. His expertise includes helping companies improve their organizational health and optimize their financial and operational performance by aligning their business and people strategies.
To learn more and connect with Bruce, view his profile or connect with him here.