How Are Executive Search Firms Paid?
Executive Search Firms Paid
The best way to get the most out of your executive search firm is to understand how they are paid. Some firms charge a fixed fee while others take a percentage of the fee contingent on placement. Either way, you should know what you’re getting into before hiring a search firm. Let’s look at how a retained search firm is compensated. A retained search firm receives a monthly retainer, while a contingency model receives a fixed fee for its time.
Retained firms typically charge a higher rate because they are more thorough and are more likely to find leaders who are proven. This means that they are more likely to find leaders who have the skills and experience to get a job done. Retained firms are also more responsive, working closely with clients to develop realistic action plans and timing. In short, they are true management consultants. The cost of hiring a search firm will depend on whether it’s retained or not.
Retained search firms like Egon Zehnder are paid by the hiring company. This fee is typically one third of the candidate’s first-year compensation. The recruiter’s role is not to help you find a new job, but to help you find it. Once the recruiter has added your resume to their database, they can start contacting you and asking for recommendations. The firm will record every contact they make with you, which helps them get to know you.
How Are Executive Search Firms Paid?
Retained search firms charge a flat fee or percentage of the total fees that the company pays them for their services. Retained search firms, such as Egon Zehnder, have an objective pricing structure to help you negotiate with them without conflict of interest. Most retained search firms charge a fixed fee, which means that you will have no nasty surprises when your searches end up costing more than you expected. However, these fees can be relatively low, and you should consider this carefully before hiring an executive search firms.
Retained search firms charge a fixed fee to help find executives. A contingent search firm usually charges between 25 and 33 percent of the total annual compensation of the candidate, including bonuses and commissions. They are paid only when the job is done. In contrast, a non-contingent search firm will not charge you a fee unless the search ends in a successful hire. In other words, a fixed fee is a flat rate that the company has to pay.
The fees of retained search firms can be high, but it’s still important to understand that they aren’t actually working for you. Instead, they will add your resume to a database and contact you based on referrals. In some cases, they even ask your friends and family for references to help you land a job. When you hire a retained search firm, you’re building a relationship with them.
