Companies in highly competitive industries such as private equity, venture capital, investment banking, and technology rely on having great talent to move the needle for their organization. So it’s no wonder that there’s a massive demand for executive-level talent.
But how can you fill your company with the best of the best talent that may or may not be actively looking for new work?
Enter executive recruiters.
An executive recruiter will help you engage and secure those candidates; the candidates that could fill the mission critical C-level and senior positions and help your company increase market share, beat the competition, and elevate the organization to the top of its peer group.
This article will:
- Explain what an executive search firm is
- Define the differences between contingent and retained executive search
- Elaborate on the benefits of executive search vs. contingent recruitment
- And provide the details on when you should use an executive search firm
But first, let’s start with the basics. What is executive search, anyway?
What is executive recruiting?
An executive recruiter or, as you will sometimes hear, executive headhunter, is essentially a management consultant who focuses on finding, engaging with, analyzing, qualifying, and then selecting the best talent that could fill your senior level, C-suite, and executive positions.
Organizations can hire the executive recruiter to fill their talent needs when they don’t have the expertise, time, or resources to do it internally. Although it happens rarely, the executive recruiter can also be hired by individuals who are looking to find appropriate C-level open positions.
No matter the side hiring the executive recruiter, they will be precise and detail-oriented when it comes to vetting potential candidates. They will evaluate and assess the position that the organization needs to fill and they will verify the skillset of the individuals who want to apply for the position.
A great executive recruiter will be a link between the open C-suite or executive role in an organization and a skilled enough candidate who has the ability and potential to achieve fantastic business performance.
The current hiring and application processes for all parties involved are quite convoluted. As a skilled candidate, you will need to fill out endless applications and, due to the lack of transparency and communication in the process, not even know if anyone in the company has received your job application. As a company, you will have to strain your hiring managers to find the best possible candidates out of hundreds of applications. Executive recruiters aim to eliminate this dissonance by creating and executing search processes that are beneficial to both the company and the candidates involved.
Having an executive recruiter who will source and vet the candidate for you is a massive time (and money) saver for your organization. They will make the executive recruitment process easier for everyone.
With that in mind, let's dig deeper into what executive search is and how it differs from recruitment.
What is executive search?
Simply put, executive search is a highly specialized recruitment service designed to identify and recruit top performers and sought-after candidates for senior-level and executive jobs. Executive search can be offered by a third-party as an outsourced service, or conducted in-house by a specialized recruitment team.
Regardless of who conducts the executive search, a successful executive search depends on certain tasks the executive recruiter will have to do and the efficient and effective execution of a robust process based on industry best practices.
Executive recruiters need to find the most talented people in the market for senior management, director, and leadership roles for their client’s companies. And they need to do so in highly competitive industries.
As such, an executive recruiter's general job responsibilities include managing the organization's job openings, verifying candidates, engaging them, and courting them to join the organization.
What does an executive recruiter do?
Here’s what a good executive recruiter should do:
- Client (account) management. A good executive recruiter will assess what the client's most pressing talent needs are and commit to fulfilling those needs. They will engage with A-list candidates, verify their skills, and court them to join the organization.
- Resume verification and assessment. A great executive recruiter needs to proactively verify candidates using resumes, contacting candidates, and using candidate databases for research (such as Linkedin). An executive recruiter will also find the talent by researching and mapping out the market exhaustively. They will contact suitable candidates using an omnichannel approach to ensure that the (busy) candidates get their message. On top of that, they will court the candidates, figuring out their intrinsic motivators, understanding their career aspirations, and evaluating their core competencies to see if they would be a good fit for the organization.
- Interviewing. The executive recruiter will select the top candidates to bring forward. They will prescreen, qualify, and analyze their competencies against the set talent needs. They will do the vetting process for the organization by conducting interviews with candidates, sifting through the initial talent pool of candidates and saving time for their clients. On top of this, they will also learn what the strengths and weaknesses of the candidates are and that will make it easier for the executive recruiter to find a suitable company for their candidate.
- Candidate management. The executive recruiters will be the first line of communication between the company and the candidates. They will be the bringer of good, but also bad news. They’ll relay job offers to their candidates if they’re a match, but also being the ones to work with the candidate on the feedback they’ve received. A great executive recruiter will manage the interview process, collect feedback from both client and the candidate, manage expectations, and ensure clarity so that there are no misunderstandings.
Additional tasks under an executive recruiter’s purview include:
- Reference checks
- Contract negotiations
- Salary negotiations
Executive recruiters will often work as part of a larger executive search firm, which comes with some benefits and specific considerations when selecting a solutions partner.
What is an executive search firm?
A company that wants to hire an employee for a management role has two options. They can promote an employee internally by having their internal recruiters manage the entire process, they can use internal resources like referrals, networking, and the HR department, to find a new hire, or they can use an executive search company to find a suitable candidate for the role.
An executive search company works best when an organization is trying to recruit a senior hire, fill a mission-critical position, trying to hire a candidate with a niche skill set, or when the organization wants to do a confidential hire. The executive search company is usually an intermediary when it comes to:
- Screening and interviewing candidates,
- Verifying skills from the resume,
- Establishing contact between the candidate and the organization and,
- Helping with contract and salary negotiations.
Executive search is a highly specialized service and skill set that differs in many key ways from standard recruitment.
Executive search vs. contingent recruitment
A company that wants to hire new employees or a series of employees, but lacks internal resources to do so, will seek outside help. The outside help can come in the form of a recruitment agency or an executive search firm. They will choose one or the other depending on the person they want to hire and the following criteria:
- Skill set of the employee. If the organization is looking to hire a candidate for an entry-level job, junior positions, lower-management positions, and even non-managerial experienced positions (such as accountants) then it’s safe to go with a recruitment agency. But if the company needs to find a high-end manager or a candidate that would fill a C-suite role in the company, then they would have to hire an executive search company. They specialize in finding candidates for integral positions. So if you want to hire a top-performing leader, look for executive search companies that are specialized in your industry (or business function).
- Recruitment method. Contingent recruiters usually target people who are already on the job market— the active job seekers. They do so via online job boards and social media. But the active job seekers make up only one-third of the talent pool. On the other hand, executive search companies use proactive search methods to find the best of the best— the most suitable candidates who are top performers in their respective industries. According to Gallup, almost half of the U.S. workforce is keeping their eye on the job market even though they already have a job. So an executive search company will find candidates that aren’t actively searching for a new job, but are on the lookout for good opportunities.
- Specialty. Recruitment agencies tend to work in multiple industries and for multiple functions, reaching a large number of candidates, but not having a specialty in any recruitment area. An executive search company focuses on a business niche (industry), business function (role), or both. A business niche (industry) would mean that the executive search company only hires C-level candidates in their target industries. For example, banking or finance sectors. While a business function would be that the executive search company only hires candidates for a specific business function like a Chief Information Officer or Chief Technology Officer. A lot of the time executive search firms specialize in both industry and function such as searches for Technology professionals in the Private Equity industry.
In addition to the niche industry and roles, it’s also important to note that there are two main types of executive search firms that you may encounter.
Types of executive search
Generally speaking, executive search will be either:
- Contingent search, or
- Retained search
What’s the difference?
The simple answer is that the contingent search focuses on the easily accessible, available talent while retained search focuses on finding the A-players that would move the needle in your company. The detailed answer is in the following sections. You should carefully read them and understand the difference before choosing the type of company (and executive search model) you’ll be working with.
What is retained executive search?
A retained executive search company works on a retained basis. That means that the recruiter or the executive search company charges a fee up-front in order to conduct a successful search.
This type of search is an exclusive engagement. That means that the position will only be filled by that specific executive search firm. An executive search company will then find candidates in (their) talent pool, verify and vet them through an interview and screening process, and only then present the company with a shortlist of candidates who are highly suitable to the requirements the client has already confirmed.
This will usually be anywhere from three to ten candidates. The retained search model is often called “headhunting” as well, and it’s one of the proactive recruiting methods we spoke about earlier. It can happen that the candidate already has a job and they’re not actively searching for a position (“passive” candidate). That’s when the firm conducting the retained search will offer these candidates the opportunity to change their jobs and start working for their clients.
The payment model is usually divided into three rates:
- A third up-front
- A third when the executive search firm presents the shortlisted candidates to their client
- And the last third when the candidate from their search accepts the position for the executive search’s company client.
This payment model ensures that the retained executive search firm is incentivized to put their best effort forward, and complete the job to client’s expectations. That’s because the executive search firm's success metrics are aligned with what the company is looking for— the right candidate placed in the essential role in the organization.
What is contingent search?
A contingent executive search differs from the retainer model. It’s a “no win, no fee” model, where the executive search company will only be paid if the candidate is successfully placed in the open role for their client.
The reason the process is strenuous is that without the retained payment upfront, and the lack of exclusivity/commitment between the search company and client, it is difficult for the search company to allocate the necessary resources to deliver on a hard-to-fill search.
Also, this type of recruitment isn’t exclusive— the executive search company is usually competing with other recruitment firms and even with internal recruitment teams.
How this works is that the executive search company doing the contingent search is typically working to fill many open positions at the same time. They already have a database of potential candidates and they work with it to match the candidates with the open roles.
In recent years, there have been numerous combinations of the model springing up, where the companies take an upfront retainer fee, but with the final payment only happening if their candidate takes the position.
Which type of executive search is better?
Both the retained and contingent search types have their differences. The following is a list of 8 stages where the contingent and retained search differ:
- Cost structure. The firm doing a contingent search gets paid only when the candidate is placed in the organization while the retained company is paid on retainer.
- Payment terms. A contingent search firm is paid in a lump sum when the candidate is placed. A retained search firm is usually paid at three rates— at the start of the search, when the firm delivers a shortlist of candidates, and when the candidate is placed.
- Motivation. Since the contingent search firm only gets paid when they place the candidate, they’re motivated to find, verify, and place a candidate as soon as possible. A retained search firm implements best practices to ensure they find the best possible candidate for the organization.
- Active vs. passive candidates. A contingent search firm will focus on active candidates, those who are actively seeking new employment (around 30% of the talent pool). A retained search firm will proactively recruit passive candidates (the remaining 70% of the talent pool), those who are performing at the top of their game, don't have time to do a thorough job search, but welcome the opportunity to explore career prospects that align with their goals and aspirations.
- Company culture. For the contingent search firm, the company culture is less important while for a retained search company, it’s essential to properly represent the client.
- Exclusivity. A contingent search firm is competing with other companies to place the candidate in the organization. A retained search firm has exclusivity when it comes to placing the best candidate, working with the company to ensure that they get the top candidates.
- Specialization. A contingent search firm often doesn’t have in-depth experience and expertise and focuses on spreading their network as wide as possible, becoming generalists in the process. A retained search company specializes in specific business functions or industries such as technology, private equity, and investment banking.
- Seniority level. A contingent search firm is often hired when the company needs to fill lower seniority roles. A retained search firm deals with confidential hiring, critical hires, and senior hires.
Why use an executive search firm?
There are multiple reasons why you should use an executive search firm to find top talent for mission-critical roles in your organization.
Benefits of executive search
There are four main benefits of using an executive search company to find the right candidate:
- Impartial screening. When you have an external executive search company doing recruiting, they will be impartial in the process. This will ensure that there’s no bias during the hiring process.
- An exhaustive recruitment process that guarantees the right fit. An executive search firm has a detailed recruitment process, working with “passive candidates” to ensure that you find the right candidate for your open role.
- DEI commitment. When you hire an executive search company and state that one of your goals is diversity and inclusion, they will make sure to find a candidate that fits all of your needs.
This feeds into what to look for when choosing an executive search firm to partner with.
What to look for in an executive search firm
There are three key factors to look for in an executive search firm:
- Industry expertise. To find the best candidate, you will need an executive search company that has your industry-specific experience. The company should have in-depth knowledge of how the entire industry operates and have an extensive network of candidates that are in key leadership positions. They should be experts in leadership recruitment, with a deep talent pool of active and passive candidates.
- Credibility. To find the right candidate, you need to hire an executive search company that has the right connections and credibility in your industry. Hiring executives means that the executive search company needs to have enough credibility (and connections) to engage suitable candidates and establish a trusting relationship with them.
- Transparent talent sourcing process. When hiring an executive search company, you should ask questions that will give you insight into their talent sourcing process. You want to work with an executive search company that has a transparent approach to recruiting the best talent and keeps you in the loop during the process. The firm usually reports its findings during a weekly steering meeting with the client. At the meetings, you can ask questions to see how they measure candidate engagement during the hiring process such as:
- The average number of days from outreach to closing
- The average number of screened candidates per search
Lastly, you should also know when the best time is to engage an executive search firm.
When to use an executive search firm
There are three main benefits of using an executive search company instead of relying on internal resources:
- Expertise. The executive search company has the necessary expertise and experience to find a suitable C-level candidate. When you rely on an internal HR team, you might not get the necessary expertise needed to find the best candidate for the role. On top of that, the executive search company has expertise when it comes to up-to-date market intelligence and access to candidate networks.
- Time to fill. An executive search company has only one task— to secure the right candidate for your open role. The internal HR team has many other tasks and they’re doing multiple other things besides trying to find the right executive to fill the role. So if you rely on the internal team, that will prolong the time needed to fill the role.
- Additional resources. An executive search firm has the experience, expertise, credibility, and connections specific to the talent you’re looking for. On top of that, they have built their networks throughout the years so they have additional resources that help them find the right candidate fast.
When you want to find the right candidate to fill your C-suite open role, you should start working with an executive search company. Their executive recruiters have extensive networks of top-quality “passive candidates” that they can source to find the right professional to fit your needs.
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