What is retained executive search?
Retained executive search firms operate on a retainer-based fee structure, i.e. client companies compensate their preferred partner according to a mutually agree upon fee structure in which they are retained to fully execute a search. Retained searches are usually used for higher-level positions, often C-suite and board positions. Retained executive recruiters offer exclusivity – employers contract exclusively with the recruiter to find top level talent.
Retained executive search firms offer a thorough search for higher-end clients, so that hiring companies can review only final candidates. Retained executive search firms negotiate with the candidate, advocating on behalf of the client and emphasizing aspects of the position that will appeal to the candidate. These search firms offer C-level placement, with the corresponding salary and benefits, along with uncompromising confidentiality.
The main alternative model is contingent executive search, in which the search firm is paid only if the client chooses to hire one of its candidates. This is closer to the model used by general recruiters that focus on entry or mid-level positions.
Advantages of retained executive search vs. contingent executive search
One advantage of the retained executive search process is confidentiality. In a variety of situations (e.g. the replacement of a currently serving executive), it may be in the client’s interest to keep the search confidential until a final decision has been made. In these cases, retained search is strongly preferred because the retained executive search process allows for much more discretion.
Discretion is important during the selection process in order to maintain good public relations to prevent reputational damage. One way retained executive search firms maintain discretion is by focusing on qualities and skills to match the opportunity. Instead of divulging the company name, the search partner will provide details such as what industry the company is in and that the position will be at their level or higher.
Non-disclosure agreements are a critical component of the process when maintaining trust between the client and the search partner. Adam Dean, founder of Dean Executive Search, wrote in Harvard Business Review that NDAs need to be ironclad, preventing candidates from sharing any information that is shared with them, including the company name, the executive that is being replaced, and even things like compensation.
Dean adds that he eschews email entirely during the search process, to prevent any missteps that could lead to leaks. He does, however, send members of the committee password-protected competency reports about candidates.
Another advantage offered by the retained executive search process is specificity: when a role requires highly specific and/or rare skills and experience, retained search is more effective because the retainer model allows the firm to devote substantially more time and resources to the process. This also applies when DEI is an important factor in the search.
Retained executive search firms also offer re-do guarantees. While the search firm always collects its fee, most retained search agreements stipulate that if a candidate is chosen and then leaves within a predefined time window, the search firm will redo the search.
Another reason companies choose retained executive search is for network access. Retained executive search firms maintain large professional networks, which they leverage in order to identify suitable candidates. For example, having focused on DEI for decades, Ellig Group has grown an exceptional network of diverse candidates, which is a major contributor to their strong track record in the DEI space.
The personal touch aspect is another pro of retained executive searches. Retained executive search recruiters work more closely with the client. This allows the search firm to understand the client’s culture and needs much better. Retained firms often build long-term relationships with recurring clients, amplifying this benefit even further. Ellig Group exemplifies this – on average, 75% of their annual business is with returning clients who trust their understanding of their clients needs and culture.
For these reasons, retained executive search is generally the choice for higher level and higher compensation positions such as C-suite executives. When it comes to senior level roles, hiring companies want to go with a recruiter they have a relationship with, who have successfully demonstrated their ability to recruit talent; therefore, they more often than not work with a retained recruiter.
One thing that characterizes contingency executive searches, on the other hand, is non-exclusivity. Contingent firms generally do not require clients to sign exclusivity contracts, allowing the client to work with several firms simultaneously on a single search, paying only the firm whose candidate is selected. The flip side of this is that it involves much more people in the process, creating more potential for leaks and making confidentiality almost impossible.
Contingent search casts a wider net, providing a greater volume of candidates, but with less thorough assessments of each individual candidate. The client thus takes on more of the responsibility of evaluating candidates. For contingency recruiters, the search is a numbers game. This works better for immediate and short-term placements. For these reasons, contingency executive search is more common when recruiting for lower-level positions.
Partnering with a retained executive search firm on C-level searches
Fred Coon, chairman and CEO of Stewart, Cooper & Coon, wrote in Forbes that the two main things to remember when partnering with a retained executive search firm are patience and foresight. Patience, Coon writes, is essential because hiring companies should be looking for a long-term candidate who is a good fit, not for the quickest or easiest search. Therefore, hiring companies should view their relationship with the recruiting firm as a partnership.
Foresight is the other key component of the partnership, Coon writes, because it is essential to find a candidate whose values and character align with your company’s. For this reason, companies should think deeply about the role and position and how you can find the best match. This starts with crafting the perfect job description. The next step is to inform the consultant right away when an important position is available in your business, in order to have the best shot at finding high-quality candidates.
Because this is a partnership, you should place great importance on correspondence with the consultant. Respond to emails in a timely manner. Taking too long to respond could cost you a promising candidate. Have your interview process in order. Organize the interview process so that the interviewer is familiar with the candidate’s information and prepared to deliberate with the team following the interview.
It is important, post-interview, to provide your consultant with feedback. If the candidate is not the right fit, the recruiter can adapt their search and let the candidate know so that they too can move on.
Throughout the process, always present your organization in the best possible light. Often, the retained executive search firm can successfully negotiate with your chosen candidate. But if this proves difficult, you should work with your consultant as a team to close the candidate.
Executive recruiting firms are increasingly investing in technology to bounce back from a post-pandemic slump. Korn Ferry uses a psychometric assessment to determine whether a candidate will be a good fit. Robert Half has integrated AI technology to the recruitment process. With the help of AI, their clients’ requirements are matched up against candidates’ profiles, and candidates who are a good match are automatically invited to apply. M. Keith Waddell, Robert Half’s vice chairman, told Forbes, “It’s very effective – even in this tight labor market – in getting them to apply to our jobs.”
Always a game-changer, Ellig Group has proven that even boutique firms can leverage cutting-edge technology. Their partnerships with Equilar and CulturIntel allow them to enhance their fundamentally human-centered search process with data-driven insights, delivering their clients the best candidates they need.