Executive Search

Executive search, also known more generally as “headhunting,” is a specialized branch of recruitment, wherein a third-party firm or agent is contracted to recruit a qualified candidate for a highly specialized role or executive position within a company. These third-parties seek to identify potential candidates, gauge their interest in the potential job movement, and in some cases may screen candidates and carry out negotiations with the candidate on behalf of their client.

Search Firms

Executive search firms generally specialize in recruiting candidates for the highest-level positions within an organization. Their success at doing so is often predicated on having a wide-ranging knowledge of the industry in question, and being able to access an extensive list of contacts. Executive search firms are often the primary point of contact for the candidate until their time of hire, as the search firm will often screen, interview, and evaluate candidates before presenting their client with the candidate who fulfils the required criteria and who appears to be the best fit within the client’s corporate culture. Using a third-party search firm allows an organization to access more potential candidates than passive or internal recruitment strategies, and may allow the organization to hire talent away from a competitor. Organizations often choose to use outside agencies when they may not have the networks or resources to conduct their own search.

Types

Depending on the contract, there are three main types of executive searches that an agency may undertake on behalf of a client. In a retained search, the search firm is engaged to fill a position for their client. The firm conducts the entire screening and hiring process on behalf of the client. The firm receives a retainer fee up front, a fee payment part-way through the search, and a final payment upon filling the position. These fees are usually split in thirds. Retained search firms often enter into “off-limits” agreements with their clients; essentially, they agree not to poach employees from their current clients in order to satisfy another client. In a delimited search, the firm receives a small retainer up front, but does not receive any subsequent payments until a suitable candidate has been hired, generally within a set period of time. If the search firm is unable to satisfy the terms of the contract, the retainer fee is generally refunded as well, putting the onus on the search firm to ensure satisfaction for the client. In a contingent search, the agency is not paid a fee until a successful candidate has been chosen and hired. Usually, the fee amounts to approximately 20-35% of the hire’s first-year renumeration, and may sometimes include not only their salary, but any expected bonus, as well. As with the other manners of search, the fee is paid by the client, not the candidate.

Pros & Cons

Depending on their needs, clients may choose to hire an executive recruiter to undertake any one of the various types of searches. A client will often hire a third-party to undertake a contingent search for mid-level positions, as opposed to high-level positions. Often clients will engage multiple firms to undertake contingent searches to maximize the number of potential candidates they receive resumes from. This approach also allows the client to transfer the search/hiring risk almost entirely to the search firm, as they do not get paid unless they find a candidate. For high-level positions, clients will often retain a firm to fill the position, and will often develop close relationships with a select group of search agents, or sometimes only one firm or agent, who have met or exceeded expectations in the past. When a client wishes to have a close-ended time frame for a search, a delimited search may be the best alternative. This allows them to reduce the search’s monetary risk, while the deadline acts to spur the recruiter to work hard to find a suitable candidate. This is often not a suitable type of search for an open-ended time frame.