Is a Retained Executive Search Right for Your Business?
As an executive search consultant who specializes in C-level retained executive search I enjoy speaking with business owners and their advisors about the “when” and the “why.” These conversations can start from a variety of vantage points, but most often will start with the question of a retained v. a contingency-based search process.
As the conversation proceeds it becomes important to understand the “why” of the question, so let me explain. I don’t assume business owners or other professionals clearly understand the distinctions.
A financial advisor has their own lexicon of terms, each meaning something a bit different. It’s important for me to understand “fee-based” and “fee-only” advisors. Trust me, I did not understand, and it is helpful to have the distinction explained. Similarly, attorneys can assess a contingency fee, an hourly fee, or a flat fee. Again, it’s helpful to have these distinctions explained.
The Simple Difference
Simply put, a contingency-based executive search usually does not require a deposit upfront to conduct the search, nor does it require periodic payments as the search progresses. A retained search requires a deposit upfront to commence the search and has periodic “performance” payments that accompany future payments.
Contingency searches usually enable a business owner to solicit search activity from several search companies. From the owner’s perspective, it tends to distribute their risk. If one search company can’t develop a strong candidate pool, then the other companies should be able to (or so the thinking goes).
Spreading The Risk
Here’s the risk, however. Well-defined C-level searches will end up looking for the same set of candidates, at the same time. The candidate effect is one of confusion. Trust me, it has happened. Prior to my company performing retained searches we conducted contingency searches. Clients not only engaged other search firms, but the client also conducted its own search for the same position, the thought being that the client could avoid paying a search firm a fee.
Here’s the practical effect – candidates contacted me and asked if the client was serious about the search, as well as asking why the client was asking several search firms to also conduct the search. The results most often were that candidates withdrew – not only from our search process but from the other search processes as well. One candidate advised that if the client did not trust our firm’s capability, they had less than a positive impression of the client!
Yes, trust was an issue. While this was not always the case it did happen with some level of frequency – hence, we changed to a retained search basis. Perhaps the client had negative experiences with other search consultants (recruiters) and wanted to mitigate their risk.
Why Consider a Retained Executive Search?
A retained executive search provides a business owner the search professional’s undivided attention and commitment to ensure the search process is successful. As with a financial advisor and an attorney, preparing for a search requires due diligence including, but not limited to the following –
- an assessment of the position fit within the company,
- an assessment of the company’ growth strategy and plan, and how the position complements that strategy and plan,
- an assessment of compensation and benefits in the company and the marketplace for a similarly situated position, and
- a review of the competitive marketplace to identify recently filled C-level positions.
After the search start, there are usually interim steps including the candidate search, thorough preliminary interviewing, developing screening panels, talent assessments, background checks, reference checks, candidate recommendations, final candidate interviewing, and terms and conditions negotiations. One size will not fit all, as each step is tailored specific to the client’ requirements.
So, if you are a business owner or an owner’s professional advisor and want to understand the benefit of a retained executive search, let me know. As with most advisors, the first few calls are free!