There is a lot riding on any search for a new executive. Whichever candidate you choose will have a substantial effect on your culture, engagement, and business goals. This particular hiring decision can lead to immense consequences — positive or negative.
For that reason, many organizations choose to hire outsourced executive search firms for assistance. However, simply hiring an executive search firm doesn’t guarantee a great outcome — you have to make sure you hire the right executive search firm for the right situation. Here are some questions every organization should ask before making any decisions about outsourced executive search:
1. What Are My In-House Executive Recruiting Resources and Options?
Almost every firm has some sort of internal recruiting function, but does yours have the bandwidth for an executive-level search?
When considering an outsourced executive search firm, weigh opportunity cost against the actual financial cost of the decision. An in-house search might feel like the most comfortable option, especially if your internal team manages all of your other recruiting efforts. By keeping the executive search in house, you maintain complete control of the process from start to finish. You don’t have to worry about small details (or red flags) that matter to you getting lost in the shuffle.
So, at what point should you consider outsourcing?
An executive search can be a months-long, strenuous process requiring plenty of special expertise. Do you know the specific traits a candidate will need to thrive in this role? Do you have a network of executives through which to source prospects? How many C-suite hires have you made in your career? Confidence, experience, and time are paramount in filling an executive-level role with the right candidate. If your day-to-day duties will compete with the search for your attention, or if you feel your expertise or network is lacking, it may be time to look to an outside expert.
If you feel particularly strongly about keeping the executive search in house, another option is to hire a full-time recruiter with experience making C-suite hires. Fully immersed in your company’s culture, your new in-house recruiter will have a better understanding of what your organization needs from a new executive. Of course, adding a brand new full-time employee to the payroll comes with its own costs and challenges, so consider the option carefully before making any final calls.
2. What Sets Executive Search Apart From ‘Regular’ Recruiting?
It typically takes more than a month to make a “regular” hire, but finding a new executive can take much longer — and it probably should. Rushing to fill a position for the sake of speed can be a costly mistake, especially in executive search. The resources you invest in an executive will far outweigh the cost of recruiting them to the firm, and their impact on overall organizational success will also be outsized.
Another issue is that executives are rarely looking for new jobs. Successful executives are highly valued top performers with their current companies, so getting them to consider a new offer can be incredibly difficult.
For these reasons, executive search is a whole different ball game from typical recruiting. Executive search firms establish their own proven processes for sourcing, attracting, and landing executive talent, and they often maintain their own networks of qualified executives from which they can draw. Executive search firms are uniquely qualified to locate and approach C-suite candidates, and they often have far more resources at their disposal than an internal hiring manager or standard recruiting firm would have.
3. What About Confidentiality?
If you want to keep your executive search confidential, that’s a sign you should hire an executive search firm — and confidentiality is often key to a successful executive search.
Generally, the executive you need will be someone who is already performing well in their current role. Most likely, they will be content with their situation. As a high-profile employee, an executive’s every move is often subject to scrutiny. Discretion is essential when connecting with these individuals so as to avoid disrupting their current work environment. Many upper-level executives will only work with recruiters they know they can trust — like those at established outsourced executive search firms.
On the other hand, you may want to keep information about your company’s open leadership roles confidential until a candidate has been vetted to a certain degree. Especially for large public companies, a change in executive leadership can have wide-ranging repercussions, from lowered stock prices to negative media attention and beyond.
Maintaining internal confidentiality can be difficult if you’re conducting your search in house. If you handle the search through a third party, specific details can be left out of the equation until the vetting process has progressed. You can trust the search will be private and remain out of the public eye — and out of the corporate gossip chain.
4. What Is My Budget?
Hiring an external firm to take over the search or augment your internal recruiting team will come with a price. Before hiring a firm, assess your budget and evaluate the fee structures of various firms. Typically, the price of the search is based on the salary of the position. The higher the salary, the more expensive the search.
That said, new technologies that give more people access to wider talent pools are changing the face of executive recruiting. The traditional model of paying a search firm an exorbitant fee is no longer the only option. Keep this in mind when comparing fee structures.
5. What Are the Different Types of Executive Search Firms?
No two executive search firms are the same, but there are two major categories: retained and contingent.
In a retained search, the fee is not contingent on the finding of a candidate. Instead, the client signs a contract for a specific amount of time and pays an upfront fee, typically on a monthly basis until the end of the contract period. The recruitment process itself typically follows the standard pattern: The recruiter sources qualified candidates, vets them within the search firm, and then presents the top contenders to the client.
Because the client has signed a retained contract, the recruiters are not incentivized to find candidates in a particular time frame. The client will continue paying the retainer fee, regardless of results, until the contract is up.
As the name implies, in a contingent search model, the search firm is paid once it has delivered a qualified candidate who is hired for the role. The contingent search firm will typically source a large candidate pool from its network as quickly as possible because the focus is on the hire itself rather than the process. For this reason, you may want to take extra steps to verify that the recruiter is thoroughly vetting candidates and not sacrificing screening for the sake of speed. Contingent firms tend to be very transactional, moving from one position to the next to earn a commission.
Each executive search — and each executive search firm — is unique. Rather than rushing into a partnership, take time to carefully analyze your situation before making any decisions. This will ensure you make the right choice for your organization’s future.
A version of this article originally appeared on the IQTalent Partners blog.
Chris Murdock is the cofounder and senior partner of IQTalent Partners.