Chat with us, powered by LiveChat

How Much Do Executive Search Firms Charge?

Table of Contents

Finding the ideal candidate for an executive-level role isn’t usually easy. That's why many businesses hiring for C-level and other senior-level positions choose to simplify and streamline their search with recruitment process outsourcing.

When working with an executive search firm, it's important to understand that pricing can vary greatly based on the firm’s level of expertise, the services provided, the length of time you partner with them, the positions being filled, and other factors.

Keep reading to learn about the different types of executive search, how their respective fee structures work, and how you can streamline your executive hiring process.

Types of Executive Search

There are four common strategies businesses use when carrying out an executive search process, including:

  • In-House Recruitment: This involves relying on your own HR team to fill executive roles rather than hiring a third-party agency.
  • Contingency Search Firms: This refers to an outside agency that works on a contingency basis, meaning you only pay them if and when you hire one of the candidates they've presented to you.
  • Retained Executive Search Firms: This type of firm is paid on retainer (usually on a monthly basis) and utilizes a dedicated search consultant team to work on your behalf and secure top quality candidates.
  • Flat Fee Search Firms: This type of search firm charges a fixed price for executive search services.

All of these executive search methods vary in terms of how recruitment is handled and how fees are charged. Because in-house recruitment doesn’t present any additional costs beyond those already being paid for HR team salaries, we’ll focus on the remaining three agency fee structures.

Executive Search Firm Services & Fee Structures Explained

With so many potential ways to handle your next recruitment process, how can you decide which option is right for your business? With a better understanding of how different types of executive search firm fees work and the types of services each executive recruiting firm provides, you can hit the ground running with your next C-suite hiring process.

Contingency Search Firm Fee Structures

Typical Fee Structure: A contingency search firm can charge up to one-third of the candidate's first year salary.

Typical Contract Duration: There is generally no contract or commitment with a contingency search firm, as you only pay for the agency's services if you end up hiring from the shortlist they provide.

Typical Positions Searched: Contingency search firms tend to have more experience with entry-level and mid-level recruitment, with common positions searched including:

  • Administrative staff
  • Junior staff members
  • Department or team supervisors
  • Managers and directors

Typical Services Provided:

  • Recruiting and screening potential candidates
  • Conducting talent assessments to make recommendations for your company

Overall, contingency search firms tend to be better for recruiting low-to-mid-level talent rather than executive talent. Because these agencies are only paid a percentage of the candidate's base salary once they're hired, their search consultants tend to be more focused on filling positions as quickly as possible to maximize revenue. When comparing contingency vs retained executive recruiters, the latter is more likely to provide the dedicated expertise your company needs to fill critical executive positions. This is especially true when you consider that a retained recruiter tends to have greater experience and expertise with senior-level hiring processes.

Retained Executive Search Fee Structures

Typical Fee Structure: These firms charge an upfront, monthly fee that varies based on the level of involvement and exact services provided.

Typical Contract Duration: Businesses work with retained search firms on an ongoing basis, both when actively recruiting as well as when no roles are currently being filled.

Typical Positions Searched: 

Retained search firms provide recruiting services on an exclusive basis—and they're experts in filling top executive roles. Common positions handled by a retained executive search firm include:

  • CEO/CFO and similar senior executive roles
  • President
  • Vice President
  • Managing Director

Typical Services Provided:

  • Recruiting for executive-level positions, including passive recruiting.
  • Presenting opportunities to candidates who hadn’t been searching for a new role.
  • Conducting qualification interviews.
  • Maintaining a database of candidates being considered for your reference.
  • Coordinating final interviews.
  • Annual salary/total compensation negotiation and offer acceptance coordination.
  • Onboarding assistance.
  • Post-onboarding check-ins to ensure a smooth transition.

For most companies, retained executive recruitment is the ideal choice when it comes to finding the best quality candidates for executive roles and other critical positions. These firms have decades of experience in establishing connections with senior executives, and they understand the challenges and nuances that go into recruiting for these positions. Meanwhile, working with a retained search partner ensures that your search consultants get to know your company's unique needs inside and out, representing your company as if they were employed by you themselves.

Working with a retained search firm on an ongoing basis also helps companies stay on top of industry changes while making sure they have continuous access to the most qualified executive talent at all times. This way, hiring managers and HR teams can stay aware of passive candidates and other potential talent as they enter the job market and never miss an opportunity to connect with the right person.

Flat Fee Recruitment Fee Structures

Typical Fee Structure: Fixed fees range from several thousand dollars for a smaller search to tens of thousands of dollars for a larger recruitment process.

Typical Contract Duration: In a flat fee recruitment agreement, the firm provides its services until the right hire is identified.

Typical Positions Searched: 

Like contingency search firms, flat fee search firms tend to be more focused on efficiency rather than attracting the top talent for the job. With this in mind, they tend to be used for filling entry-level and mid-level roles, such as:

  • Administrative staff
  • Junior staff members
  • Department or team supervisors
  • Managers and directors

Typical Services Provided:

The placement fees that flat fee recruitment agencies charge include standard recruitment services like:

  • Conducting an initial needs assessment for your business.
  • Screening resumes and conducting interviews.
  • Making hiring recommendations directly to your business.

While flat fee recruitment agencies offer the advantage of transparent pricing and the convenience of a one-time payment, this type of recruitment service isn't always ideal for executive hiring processes. Because these firms are paid for their services up-front, they may not have the motivation to go above and beyond in their executive search process. While it may seem like your business might save money with a flat fee recruiter, you must also take into account the hidden costs of missing out on top talent or enduring a drawn-out recruitment process.

Risks of In-House Executive Recruitment

You may be wondering, "why can't I just handle this in-house?" After all, your existing human resources team could tackle your next executive hiring process. What you might not think about, however, are the hidden costs of in-house recruitment and how quickly they can add up.

HR Team Capacity & Cost

Not only is executive recruitment highly specialized—but it is also extremely time-consuming. Relying on your internal HR team to handle the complexities of an executive hiring process will likely take their focus away from other important aspects of their work, which could affect your bottom line. In fact, you may end up hiring more full-time HR personnel to handle executive search... and at that point, it’s probably more cost-effective to pay a low retainer for industry experts instead.

Lack of Expertise

In-house recruitment teams typically don't have access to the same extensive candidate pools that executive search firms do. They will make the most of the candidates they’re able to identify, but they’re just not searching in the same talent pool as experienced executive recruiters. Studies have found that making the wrong executive hire could cost a company as much as 213% of the worker's salary. Is this something your business can afford?

In addition to this, high-level executive candidates (including passive talent who aren’t actively job-hunting) are significantly less likely to engage with internal hiring managers than they are with reputable executive search consultants.

Confidentiality & Bias

When hiring for an executive role that has the potential to shape or shift your organization’s future, the search process must be intentional and carefully guided in every aspect. Executive hiring processes often require a high degree of confidentiality and discretion that an in-house recruitment team may not be able to maintain. In some cases, executive searches handled internally suffered due to HR managers who were affected or influenced by their own implicit biases, workplace politics, or other subjective factors.

While this isn't to say that in-house recruitment for executive roles never works, the reality is that there are so many risks and hidden costs involved. To streamline the process, optimize your hiring budget, and maximize your chances of finding the best talent for the job, working with a dedicated executive search firm may be your best bet.

Get a Quote for Retained Executive Recruitment

Don’t leave anything to chance when it comes to finding the most qualified candidates for your next executive role. While there are several options for executive search services, only retained search firms offer the most comprehensive process and provide the best-match, most highly qualified candidates.

The team at TDS Global Solutions understands that each business is unique and has specific needs, which is where our custom-built solutions come into play. For 30 years, we've been helping businesses like yours connect with the best executive talent. From our initial needs analysis and profile to the final job offer and onboarding management, we do it all. Get in touch with our team today to learn more or schedule a 15-minute Zoom consultation to get the ball rolling.

Featured Articles

Get in touch with us

Schedule an intro call