Retained Executive Search vs Non-Retained Executive Search
Any firm that hires senior executives could call themselves an executive search firm but within the broader executive search industry, there is a sub-category of companies that identify themselves as Retained Executive Search firms.
Popular belief is that upfront payment is the only differentiating factor in the case of retained search firm but there are considerable differences in the way the search is conducted and the value that brings to the hiring process.
Retained search firms are dedicated to your search, backed with extensive market intelligence and market mapping data to justify any senior hire. What differentiates them is the network they have, the kind of people they can access, dedicated research team and commitment to confidentiality.
Non-retained search from a client’s perspective it’s not exhaustive, and sometimes non-justifiable to the Board and investors. It often comes with disregard for confidentiality. From a search firm perspective, there is no serious commitment from the client in terms of financials and could divert resources to searches with higher probability of quicker payment.
Retained search firms usually has a better candidate response rate due to the brand name while non-retained ones will have a subdued response.
Non-retained search firms may not have a methodology to map the market, reach out to all relevant candidates and tell a story. They typically also don’t have a dedicated research team because they simply cannot afford to have one considering the payment is on success.
Even if they have a team, the economics makes it impossible to deliver the same talent mapping results as a retained search firm. If the client changes mind, then they end up with nothing.
The kind of executives that could be reached and how many could be reached draws a line between these two types of firms.
The high-level differences are most visible across these seven parameter:
- Approach to search
- Approach to market
- Approach to clients
- Type of positions
- Exclusivity & commitment to Search
- Trust and confidentiality
- Fee structure
1) Approach to Search
Retained search firms approaches the search in a consultative manner. They systematically identify active and passive candidates to engage in conversations and get them interested. They tell a story and sell an opportunity. Most senior executives know the top retained executive search firms in the market, and they know whose call to take.
Retained search firms has a dedicated team of highly paid qualified researchers who are good in market mapping and navigating even the toughest of gatekeepers. Extensive network of the consultants and the firm are leveraged to get to the right candidates.
Retained search firms would never post jobs online. Typically, a search is managed by a team of consultant, dedicated researcher, and a coordinator
Non retained search firms do not always have the resources to fully dedicate a consultant, researcher and coordinator and would rely on cheaper sources like job portals or posts jobs to get some quick wins. Detailed candidate assessment reports, or market intelligence would not be available.
2) Approach to Market
Retained search firms never posts jobs online about the search they are working on. They confidentially approach every possible candidate suited for the job while a non-retained search firm would post jobs and asks, ‘why not get quicker results?’.
Retained search firms approach market with utmost confidentiality for both the client and the candidate. It is usually used for roles that require absolute confidentiality.
Non-retained firms may or may not take confidentiality aspect seriously. They are comfortable revealing client name and might not take candidate confidentiality with respect. Jobs could be posted on the company website, job boards, LinkedIn, or public domain.
‘A major enterprise SAAS company in Atlanta’ in a job description is easy to pin down for a savvy executive.
3) Approach to clients
Retained search firms becomes a true partner and advisor to the client and stays closer at least until the probation period is over. They provide extensive market intelligence and market mapping data to enable data-backed decision-making process. It also usually comes with detailed candidate assessment report.
Non-retained search firms offer no market mapping data or market intelligence. Usually it comes with no value-add and sends just plain resume to the clients.
4) Type of positions
Retained search firms almost exclusively focus on Board positions, CEO, CFO, COO, CIO, CMO, SVPs, Heads, Directors and hard to fill jobs.
Non-retained search firms get very rarely used for C-Suite or Board positions.
It’s a rarity that any sensible executive, Board, or company would enlist a non-retained search firm to find a critical hire.
5) Exclusivity and commitment to search
Retained search firms always work on an exclusive basis and they are committed to stick on until the entire process is completed.
Non-retained searches could be worked on by multiple recruitment agencies at the same time and emphasis is to get few resumes than finding the best candidate for the job.
6) Trust and confidentiality
Retained firms are the go-to professional firms in the case of a confidential replacement.
Non-retained search firms could never do a 100% confidential search due to their methodology. Information could spill to public domain and hence very rarely used in the case of confidential replacement.
7) Fee structure
Retained search firms charge upfront Retainer typically 1/3rd of the total fees, followed by another 1/3rd when the Shortlist is accepted and the balance upon candidate signing the contract.
Non-retained search firms get paid only on success, usually when the candidate starts the job.