When hiring management and top professional roles, companies have a few options. They can promote from within, use internal recruiters to manage the process, or hire an executive search firm to find a candidate to fill the role. The first two are self-explanatory, but what is an executive search firm?
An executive search firm is a specialized recruitment service that finds highly qualified, top-level candidates for senior and executive roles. So, how does this work?
There are two types of executive search firms:
- Retained Search Firms
- Contingency Search Firms
But what’s the difference? When it comes down to it, the simple answer is that the different types of executive search firms are paid differently, but there are other differences throughout the executive search process that you should be aware of when choosing the type of firm to work with.
What is a Retained Search Firm?
Retained search firms work on a “retained basis,” meaning that the recruiter charges the client a fee up front in order to conduct the search. This type of executive search firm operates exclusively – which means the position will only be filled by the recruitment firm. Retainer firms go through a rigorous executive search process for each position, providing a short list of candidates (usually between three and ten) to the company before interviews begin.
Retained search is often referred to as “headhunting,” and seen as a proactive recruiting method. This means most candidates are already in similar positions and are not actively looking at job listings. This type of executive search is a partnership between the client and the consultant, often leading to the best and most qualified candidates.
Payment terms for a retained search firm are typically a third of the fee up front, with another third due at an agreed upon time, and the remaining amount due when a represented candidate accepts the position.
What is a Contingency Search Firm?
A contingency search firms typically works under a “No Win, No Fee” method. Meaning, the service is performed for free by the search firm until the day the proposed talent accepts the position with the client. Typically, there is competition between internal recruitment, advertising, and often even other recruitment firms.
Contingency search firms are typically working with many open positions at once, using a database of known candidates. The candidates’ resumes are then collected and given to the client to conduct interviews. Typically, this is used for more junior roles, however, it is a method that can be used for executive search as well.
It is important to understand the terms your executive search firm works upon when searching for the perfect candidate to fill your open role, and to make sure these terms fit your needs.