Searching for the Best? How Executive Search Firms Work?
Companies can live or die based on the performance of their executive officers. When seeking to fill a company with the best executive talent, it is in that business’ best interest to avoid cutting corners and to invest heavily in seeking out the optimal candidates to fill positions at the top.
The search for executive level talent can be daunting. As a general rule, a bad hire costs a company three times the salary of the filled position to fix their mistake. Putting out an ad and choosing the best candidate that applies is simply not enough for finding employees at the highest levels of business where it is crucial to hire the best person you can. Finding that candidate requires a more aggressive form of recruitment by executive search firms which specialize in actively pursuing candidates that best fit the needs of a company.
Executive search firms select from a large pool of highly qualified potential hires expanding their search to include candidates who are not actively seeking new employment, but who might consider filling a different position once it is brought to their attention. There are two different types of search firms: retained and contingency, each have their appropriate applications.
Contingency firms work for a fee that is paid only when a job candidate is placed in a position. Such firms focus on filling vacancies in which there are a large number of qualified candidates in the market, and are usually positions that pay salaries of less than $100,000. Organizations that hire contingency firms are mainly interested in a service that screens and interviews candidates on behalf of their company.
For positions at the senior management level where salaries are in excess of $100,000, and the position needed to be filled requires selection from a highly specialized pool of candidates, retained firms are more appropriate. Retained firms are paid before an actual hire takes place, at a typical rate of one third of the first year’s salary for the position they are seeking to fill. Retained firms are more proactive is seeking out talent than contingency firms, as a retained firm will often pursue executives already employed at other organizations and attempt to persuade them to fill the positions of their clients.
Retained firms vary from being generalized to highly specialized. Generalized firms will provide services across many industries, while specialized firms like The Executive Headhunter Group will focus on providing services in a specific industry where insider knowledge is beneficial in placing the right candidate.
The size of an executive search firm should also be a consideration for businesses seeking to use one. Large firms may have greater resources than smaller boutique firms, but will usually demand much higher rates from their clients for successful placement. Big firms can have a large number of companies from which they have agreed to consider employees off limits. Since firms will often agree not to pursue the talent from their client companies, the field of candidates available to firms with numerous clients can sometimes be severely limited.
