What are Executive Search Firms and How Do They Work?
Executive Search Firms are retained to find senior leaders from vice presidents to CEOs to board members. They can do anything from taking the full executive search process off of your plate, to simply sourcing qualified candidates and handing them off to your team to take on the rest.
The Early Days of Executive Search:
Rewind 15 years ago: major corporations like Google and Apple were just a few of the progressive companies that began setting up strong in-house recruiting teams. This adjustment in recruitment was due to budget constraints and a desire to control the process.
Internal executive search teams still hadn’t gained much traction by 2013. Executive search teams lacked the technological support they needed to truly maximize their capabilities at the time. Lists created by executive search firms did not exceed 150 people. Overall, the process was handled with very little detail and personalization. If a company wanted access to a network of top tier executives, they almost exclusively engaged an executive search firm to gain access to the right top-tier candidates.
Where Executive Search Stands Today — The Rise of In-House Teams:
Thanks to technological advancements, in-house executive recruiters have more power to source upper-level talent than ever imagined. Technology makes it easier to find and engage executive talent; thus, we’ve seen an influx in the number of companies that invest in their internal executive recruiting.
With the development of executive sourcing and recruiting capabilities, more recruiters are able to engage with the executive-level candidates. Traditionally, search firms charge a flat fee based on a monthly contract. This fee does not change as hiring needs fluctuate. Often, the fee is associated with a commission based on the executive’s salary. Today, some firms offer the opportunity to augment your recruiting following an on-demand model with hourly billing. In lieu of a flat fee, the client will only pay for the services they need when they need them.
Organizations find balance with an on-demand search model to bridge the gap between an in-house team and external expertise. The future of executive search is an on-demand executive recruiting partnership where value is high, expenses are low, and the results are exceptional.
What are the Different Types of Executive Search Firms?
Retained Search Firms
This model typically has an up-front fee with continual invoices throughout the search. The client will sign a contract for a specific time period and pay monthly until the contract’s end date. With this model, recruiters are not under pressure to find the right candidate quickly, so while that ensures the time to uncover every qualified executive, it may result in a longer process.
Contingent Search Firms
When using a contingent firm, you will pay their team after your company hires a qualified candidate. This motivates the firm to source a large candidate pool from their network as fast as possible and fill the role with a qualified fit. This model is commission-based.
Professional services, such as attorneys and accountants, follow an hourly pricing model: no matter which of their services you are using, you pay for their services by the hour. This sort of on-demand model works for executive search as well. An on-demand recruiting partner can provide your team with support only when it’s needed — no paying for additional services or time when it’s not necessary. You control the time (and budget) you spend outsourcing your executive recruiting and the tasks that come with it.
Questions to Ask Yourself Before Hiring an Executive Search Firm
There are plenty of questions you should be asking yourself before landing at your final decision. Here are the most important ones to discuss with your team:
What are my in-house executive recruiting resources and options?
Most firms have some degree of internal recruiting. However, does yours have the bandwidth to search for executive-level candidates? After all, these employees are primary stakeholders and will make a drastic impact on your company as a whole. The biggest benefit of keeping your executive recruiting in-house is having total quality control over all operations throughout the process.
Take a moment to think about what made you search for this article. What has been causing you to grind your teeth in terms of your recruiting process? Suppose you tend to feel overburdened with your daily tasks relating to executive search. In that case, it’s a sign indicating it’s time to outsource at least part of your executive recruiting process.
What sets executive search apart from “regular” recruiting?
Firms specializing in executive search come with proven processes for finding outstanding top-tiered talent that perfectly fits what you’re looking for. They work hard to fully understand your company’s ins and outs and your executive hiring needs. These recruiters are highly trained to locate executives with outstanding track records in their current roles and know exactly how to reach out to them and get a response back.
‘Regular’ recruiting is a more generalized process with an average time-to-hire of approximately 42 days. The process of recruiting executive leaders, on the other hand, can be significantly longer. After all, these are the most influential employees within your company. Every step of the process must be handled with precision! Making a mistake regarding who to hire for such a powerful role is extremely costly — not just in terms of the dollar amount but also in all that is at stake for your entire company. Will leadership work well with your current team? How will their decisions impact a day-in-the-life at your office, as well as your company’s brand and mission?
Hiring a professional recruiting firm specializing in executive search will take these heavy risks and concerns off your plate and bring in exceptionally qualified executives to your team.
What about confidentiality?
If you’re worried about confidentiality, then you should probably outsource your executive search. If you’re looking for someone to take your company to the next level, you will want to hire someone that has done outstanding work elsewhere and can do it for you next. The person you’re searching for is most likely performing exceptionally well in their current role. That being said, they’re probably comfortable at their current job. Discretion is crucial when connecting with these individuals in order not to disrupt his or her current work.
Contrarily, you may not want to leak too much information about your company’s leadership roles — keeping it confidential until you are confident that the candidate is genuinely interested in the opportunity. In large public corporations, hiring a new executive leader can cause stock prices to change. With in-house recruiting, it can be tricky to maintain internal confidentiality. By using a third-party firm, exclusive company information isn’t part of the picture until the vetting process has progressed. The search will remain private and will not be a part of trending corporate gossip amongst other executives.
What level of executives am I looking to source and hire?
Upper-level executives such as the Chief Operating Officer or Chief Marketing Officer require different hiring strategies and skills than those of emerging leaders. Emerging leaders within your organization are ones that demonstrate the capabilities and competencies needed to be a successful executive down the road.
Our team at IQTalent specializes in sourcing and researching these emerging leaders. Maybe your team needs a new, innovative Vice President of Marketing to work alongside your CMO. Perhaps your CFO is thinking of succession planning and wants to hire a new Director of Finance to learn the role and enhance their skills. Whatever your hiring needs, from emerging leaders or the need for a complete, white-glove executive search experience, IQTalent or the team of experienced partners at Caldwell can manage your search and ensure your executive talent pool is highly skilled and qualified.
Still unsure of what to do? Check out our extended list of questions you should ask yourself, along with the pros and cons.
Case Study: Executive Search
See how a global organization used IQTalent's executive recruiting to build out its engineering leadership and to find a visionary to manage its worldwide talent acquisition needs.
Because we augment our client’s team, we form a genuine partnership and are dedicated to their success. If that means we must make a hundred changes to the search, that’s what we’ll do.IQTalent Partners Executive Recruiter & Engagement Leader
The Future of Executive Search
Many large corporations have been using the same ‘brand name’ traditional search firms for years. With the rise of AI and automation, a decrease in unemployment rates, and stricter corporate budgets being enacted, many professionals are contemplating what the future will hold for executive search firms. The great news? Executive search firms are only going to get better and more efficient. As long as they adapt to the changing recruiting landscape and offer more flexibility to their clients' needs, the executive recruiter’s job will only continue to grow.
Feeling more confident about your decision to outsource executive recruiting? Chat with one of our professional recruiting leaders today to let us know what you’re looking for in your executives and what aspect of the process you’d like to outsource today.