Executive search firms specialize in the recruitment of c-suite roles and other senior leadership positions. Executive services have skyrocketed over the past few years as many companies seek to retain the best talent in their industry, generating billions in revenue.
According to Verified Market Research, Executive Search (Headhunting) Market size was worth USD 17, 303.35 Million in 2021 and is projected to reach USD 30, 318.35 Million by 2030 growing at a Compounded annual growth rate (CAGR) of 6.4%from 2022 to 2030.
The report indicates increasing demand for efficient recruitment with shorter timelines from the end-use industry as a major factor for the growth estimate.
Why are executive search firms growing in popularity? Who offers such services, and what other benefits do organizations stand to gain? In this article, we have put together everything you need to know about executive search, headhunting, retained search, and contingent search services.
What is Executive Search?
Executive search refers to a specialized form of recruitment designed to look for highly qualified and talented candidates for executive or senior-level jobs across the public and private sectors. The executive search process is done by third-party organizations that come up with a shortlist of the most qualified and suitable candidates who match the clients’ requirements.
Having found the ideal candidate, the executive search firm may also act as an intermediary to facilitate a smooth onboarding process. Search firms may also help with the initial screening of the candidates, contract, salary, and remuneration negotiations.
What is the Difference Between Recruitment and Executive Search?
Recruitment involves searching and hiring professionals in a wide variety of positions, including entry-level, mid-level, and senior executive positions. On the other hand, executive search specializes in looking for highly qualified candidates for senior-level and executive jobs.
How Does Executive Search Work?
Executive search involves engaging a third-party organization to help recruit a senior executive. To start off, a client company will approach the search firm with a set of instructions and requirements regarding their ideal candidate. A search firm will then use its connections, networks, and databases to find the most suitable candidates who are later presented to the client company in a shortlist.
Search firms also offer consulting services depending on the initial agreement with the client company. Other services offered by executive search companies include screening of candidates, salary negotiations, preparing the employment contract, and discussing employee benefits.
It is common for executive search companies to maintain a healthy working relationship with the client company. However, this depends on the candidate’s success, confidentiality and overall professionalism of the search firm.
What is a Retained Search?
A retainer is a fee placed beforehand to secure the services of a professional. In this case, a retained search refers to an upfront fee paid to executive search firms to secure a senior executive. Retained searches are done by high-end experienced search firms by companies looking to fill the topmost management positions that pay huge salaries.
The retained search fee is usually 33.3% of the yearly salary of the newly hired senior executive. It would be better to think of these fees like money paid for swift searches backed by a lot of skill and experience. It’s also worth noting that retained search firms typically offer new search campaigns if the hired candidate leaves before agreed milestones.
What is a Contingent Search?
Contingent searches involve searching and recruiting senior executives, only the fees are paid after the candidate agrees to join the client company. The pay rates might vary, but they are generally lower than retained searches. You should consider working with contingent search companies as they are best suited for mid-level executives.
What is the Executive Search Process?
Different companies have different senior positions, all of which come with different job descriptions. As a result, the search processes might take different turns. Nonetheless, here are the essential steps in any executive search process.
The client company starts by determining the key skills, competencies, abilities and qualifications needed for the position. Afterward, the client company will schedule an exploratory meeting with the search firm, where they will present the candidate specifications.
The search company will devise a strategy that will yield the most suitable candidate based on the specifications and job description. The strategy considers the office location, corporate culture, and company ranking.
The search team will contact prospective candidates to evaluate whether they meet the primary requirements. The evaluation process also peeks into the candidates’ career history. Interviews are usually done in person or through video calls.
After the thorough search process, the search firm creates candidate profiles which are then presented to the client companies to choose their preferred candidate. The search firm might help with interviewing the clients. This process involves thorough background checks to dive deeper into the candidates’ achievements and previous track records.
After identifying the suitable candidate, the client company will work closely with the search firm to make a job offer. Depending on the agreement, the search firm might help negotiate terms involving salaries and benefits. The search campaign ends with a successful onboarding process.
What are the Benefits of Executive Search?
There are many benefits of outsourcing the senior executive recruitment process. For instance, client companies are able to choose from a massive pool of qualified candidates. This reduces the risk of making a bad hire which can be costly for an organization.
Besides, senior executives are monumental in driving the business forward. An executive search firm almost ensures that you’ll find the right candidate to steer your business in the right direction. Here are other benefits of executive search services.
Perhaps one of the most relevant advantages of executive search companies is that they offer a wide selection of highly qualified senior executive candidates. As a result, this significantly eradicates the risk of making a bad hire as you only get to engage the best candidates.
Unfortunately, senior executives do not browse online job boards looking for employment opportunities; rather they leverage their connections and professional networks. This means that in-house recruiting techniques might not be sufficient when looking for the best talent for leadership positions. But executive search companies have databases and professional connections that could help you identify the best candidate for your leadership positions.
Some positions are considered ‘difficult’ because of the technical skills and knowledge required to complete tasks. C-suite roles are often considered difficult as they require a rare blend of leadership skills, experience and technical know-how.
Filling such positions may take a lot of time, not to mention the resources invested as finding individuals who possess such skills might be challenging. Fortunately, executive search firms have the resources and the connections that are best suited to find professionals who can fill difficult roles.
Sometimes, companies opt to replace their executives while they are still in their roles. But for such processes to be deemed successful, there should be a large degree of confidentiality for several reasons. For instance, publicly replacing a sitting executive might have a negative impact on employee morale and shareholder confidence. Fortunately, executive search companies guarantee a discrete and confidential search process.
Executive search does not only apply to large organizations as many developing businesses could profit from talented leaders. However, small firms might not have the experience to address considerations such as compensation structures and contract negotiations effectively. In such a scenario, executive search firms may offer expert guidance
What are the Disadvantages of Executive Search?
Although executive search services have become recent in modern times, these services have a few disadvantages that client companies should consider beforehand. For instance, retained search services tend to be expensive compared to other third-party recruitment services. With that in mind, here are a few disadvantages of executive search firms.
One of the biggest disadvantages of executive search is that they are designed for top companies. Retained search services involve a retainer fee paid to the search firm, which guarantees the best client in a short time frame. Most firms will find these fees expensive as they can cost about 15% to 30% of the individual’s first-year salary.
However, the real cost of hiring the wrong executive for your business today can significantly derail your growth or financially bring down your business. The benefits of investing in a strong executive search firm cannot be overemphasized
Remember it might take a while before you develop a working relationship with an executive search company, as they need to understand your organization’s culture and job description. But after this happens, companies tend to build long and fruitful relationships, making it easier for the search firm to find the most suitable candidates.
What Makes a Good Executive Search Company?
Any executive search company can help fill an empty role. But finding the best person for the job takes effort and great commitment. If you are looking to bolster your C-suite, there are certain considerations you must make to help you engage the best executive search companies.
Perhaps this goes without saying; you need an executive search company with expert knowledge in your field of operation. This includes knowledge of leadership positions, the responsibilities, and the attributes that define these positions. The best consultants are experts in their relevant fields, allowing them to make expert insights and recommendations.
An executive search company’s success lies in its ability to leverage its connections and professional networks to find talented seniors. This means that a great search company will have the connections and resources necessary to ensure a successful and swift search campaign.
Every successful search requires a well-defined strategy. Additionally, top-tier executive search firms do not keep secrets about the search process; rather, they openly share information at every stage of the process.
Executive search is a special type of recruitment designed to find and recruit talented senior executives. This type of service offered by search firms focuses on recruitment for leadership positions. In recent years, more and more firms have turned to executive search firms to help them find the most qualified candidates for managerial positions.
There are many benefits to working with an executive search firm, none more important than saving on time and resources when looking for senior executives. Retained search services are best suited for top companies looking to fill extremely difficult roles discretely. Contingent search services are designed for medium-sized organizations looking to fill mid-level positions.
Are You Looking for Executive Search Services?
At Flexi Personnel, our executive search team is made up of highly qualified and recruitment professionals who are well versed in executive search strategies and practices. Our experience and industry knowledge has led us to work with large and medium-sized organizations on different assignments.