Recruiting can be a difficult but worthwhile challenge. Hiring someone at the senior level can add a layer of complexity to an already challenging process.
Why? Simply because there’s usually an ‘air of mystery’ associated with executive recruitment conjuring up images of secret meetings in lobbies of 5-star hotels; search processes akin to private investigators working for the CIA; and of course the massive fees that accompany a typical search process – often as high as 35% of the candidate’s salary or flat fees in excess.
Executive search, sometimes referred to as ‘headhunting,’ is a specialized recruitment service used to source candidates for senior, executive or other highly specialized positions within an organization.
Depending on who you ask, the minimum base salary of a candidate to be sourced by a true executive recruiter will usually be $150,000, although some headhunters will take on briefs for lower salaries if the role is in a niche profession they’re interested in.
However, you don’t necessarily need to engage an executive recruiter for a senior hire, especially if the position isn’t within a Fortune 500 company. Executive recruiters will usually insist on charging a ‘retainer’ to engage their services. This means you could end up having to pay one-third of the estimated non-refundable placement fee when you engage the search consultant; another one-third of the estimated non-refundable placement fee when the consultant presents you with a shortlist of four or five suitable candidates; and the final one-third of the placement fee charged when the position is filled or the candidate signs the contract. This installment would be subject to the search firm’s placement guarantee.
This means if you are looking to bring on a CTO and you engage with a true headhunter, you could end up having to part with an excess of $20,000 in non-refundable fees before you even interview any of the most suitable candidates.
Executive recruiters will tell you that the reason they are quoting you such high fees is that they are able to tap into the passive candidate market. This was certainly the case 10 years ago. But today you as the employer can source exactly the same candidates on your own via RecruitLoop.
If you don’t have the time or patience to run the recruitment process yourself, make sure you find a recruiter who will not charge you a retainer, or a 35% fee based on the candidate’s salary.
Engage a contingent recruiter who would charge closer to 15% to 20% of the candidate’s salary. While this amount may still seem pretty hefty, you will only pay a fee once you actually make the hire. You won’t be paying an engagement fee, or some installment at the shortlisting stage.
You could also engage an independent recruiter who might bill you hourly like an attorney or accountant. Even if they take 50 to 60 hours to find your CTO or chief marking officer and charge $100 per hour for their work, you could save a lot.
Rest assured. There are plenty of contingent and independent recruiters out there more than capable of tapping into the passive candidate market and running an executive search without you having to take out a second mortgage to pay a traditional search fee.