What is Retained Executive Search
Retained Executive Search takes a consultative approach like management consulting in hiring senior executives, typically Board positions, C-Suite, and other critical leadership positions. The search methodology systematically identifies all relevant candidates including passive and hard-to-reach ones.
They harness the power of their closely guarded network in reaching high-quality candidates otherwise not accessible to normal recruiters. This form of search is ideal when you need the most qualified person and not just a qualified person.
The foundation of retained search is built on confidentiality and trust. The success relies on effectively determining Whom to approach, Where to find them and How to reach them.
Retained search firms work with full exclusivity and would be with you as a partner from the start till a year after the executive joins to ensure success for all stakeholders. They are committed to the highest levels of confidentiality and protects both clients and candidates.
When you hire a retained search firm, you pay for time and expertise. Consultants within these firms are subject matter experts in their industry and have a deep-rooted network of clients and candidates.
Identifying, approaching, and engaging passive candidates is important because they are not active on the job market and won’t apply to job listings. They are busy building successful teams, businesses, and products. It would take someone to proactively reach them and tell a compelling story to get them interested.
Exclusivity is key to getting senior executives interested as approaches from multiple recruitment agencies will make them feel less confident to apply for the job, for fear of confidentiality breaches and upsetting relationship with existing employer.
Retained Search is expensive and usually costs between 28% - 40% of annual compensation and are mostly used for positions with $250,000 and above annual compensation. At least one-third of the expected fees is paid upfront.
Organizations commit to the high fees and upfront retainer model as an investment to attract the best possible candidate.
Because of an upfront payment and guarantees in case of cancellations, these firms deploy dedicated resources to identify and evaluate an ocean of candidates, obviously with full confidentiality.
On each Search, client partners or consultants evaluate hundreds of candidates and present the top 3-5 candidates. The source of candidates are not listings on the internet. Rather through a fully capable research team performing market mapping as well as the consultant’s network.
Public limited companies, Universities and other organizations that face public scrutiny, engages retained search firms to ensure compliance and unbiased recruiting. Even internal candidates are evaluated together with external potentials to get the best outcome for the organization.
Retained Search takes time. Typically, a search takes anywhere between 10-18 weeks depending upon the position and location.
- Weeks 1-5 would be spent on understanding the client, requirement, market mapping, and engaging in initial conversations.
- Weeks 5-10 would be spent on in-depth interviews, industry checks, benchmarking, and assessment.
- Weeks 10-18 would be spent on client interviews, offer negotiation, background checks and reference checks.
Retained Search firms most certainly does not work for anything less than a director level. They are not equipped to handle relatively sub-management level conversations and the sheer volume.
Engaging a high-end executive search takes the pressure off you from managing a large candidate pipeline. By the time, candidates reaches you, they would have been coached well by the consultants and will have a good understanding about the role and knows what to expect.
Here are some of the scenarios when search firms are used:
- Hire a Board member or C-Suite executive
- Confidentially replace an incumbent senior executive
- Hire hard-to-fill positions and in hardship locations
- When extensive market mapping is required
- When the Board needs to ensure a fair and unbiased recruiting process
- When the best available candidate needs to be hired from a pool of several hundreds
- If your in-house recruitment team or contingent recruitment companies cannot get you the right caliber of candidates
There are disadvantages in using Retained Search firms. If they have off-limits agreement with certain clients, then they wouldn’t be able to approach candidates from those companies.
Let’s say, you are Kellogg’s and is looking for a Chief Operating Officer. Some of your potential candidates could come from competitors such as General Mills or Hershey’s. But if the Search firm you are hiring already has these two firms as their clients, then you wouldn’t see any candidates from these two companies.
Specialist firms such as Korn Ferry, Russell Reynolds and Spencer Stuart has retained search as their core business and often compliments with candidate assessment tools.
Be watchful of contingent executive recruiting companies that say, ‘We can also do a retained search’.
They could take your money and not deliver. They could blow up the confidentiality. They could flick few resumes from their database or job postings, saying they are the ‘best available candidates’ and pressurize you to hire one of them.
Retained Search in its true essence is much more than collecting an upfront fee. It’s about creating value to the clients in hiring the right candidate through an extensive process.