Understanding Executive Search Pricing
October 8, 2024 – Executive search pricing can vary widely based on several factors, including the complexity of the search, the level of the position being filled, and the specific services offered by the search firm, recruiters tell Hunt Scanlon Media. Generally, firms charge a retainer fee, which is a percentage of the estimated first-year compensation for the position. This fee typically ranges from 30 percent to 35 percent of the annual salary, reflecting the significant resources and time devoted to sourcing and vetting high-caliber candidates, according to a report from Cowen Partners. This model ensures that the search firm is incentivized to find the best talent for the client.
In addition to the retainer fee, some firms may also implement a success fee, which is payable upon the successful placement of a candidate. This fee can serve as an additional incentive for the search firm to deliver quality candidates quickly. Some firms might offer a flat fee structure or a tiered pricing model, where the cost varies based on the role’s seniority or the urgency of the search. It’s essential for companies to clearly understand the fee structure and what services are included, such as candidate assessments, market research, and ongoing support during the hiring process.
Another important consideration in executive search pricing is the potential for additional costs. These may include expenses for travel, candidate assessments, or advertising to attract a broader pool of candidates. Transparency regarding these potential extras is crucial for budgeting purposes. Many firms provide detailed proposals outlining all fees and anticipated costs upfront, which helps organizations make informed decisions. Ultimately, HR leaders say that investing in executive search can yield significant returns by ensuring that the right leadership talent is brought on board, enhancing organizational performance and strategic direction.
Hunt Scanlon Media recently sat down with Kyle Samuels, founder and CEO of executive search and HR advisory firm Creative Talent Endeavors executive search pricing, what is promised to clients when a fire is hired, and other important deliverable that search firms promise.
Mr. Samuels explains that specific deliverables or outcomes guaranteed when utilizing executive search services depend on the contract. “Deliverables could include X amount of candidates presented by Y date, denoting which party is responsible for conducting reference checks and so on,” he says. “But in general, if you are working with an executive search firm you should expect to have proactive updates on the search, and they should provide more than just candidates; they should be providing you with intel and strategy.”
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Creative Talent Endeavors measures the value its provides clients by looking at how long it takes us to introduce the client to the candidate they eventually hire. “That is a much better indicator than time to fill, which can be lengthened by scheduling constraints that the search firm cannot control,” said Mr. Samuels. “Over 50 percent of the time, we identify the client’s hire in 30 days or less. You come to a search firm to be introduced to top talent, quickly. So that is what we measure.”
Fairantee Algorithm
Hunt Scanlon Media also asked Mr. Samuels what ways does his firm’s pricing model reflect the unique value proposition offered compared to competitors. “Our Fairantee algorithm transforms executive search pricing with a value-based approach, using an AI-driven algorithm to determine a fixed fee based on the true complexity of each role,” he says. “Unlike traditional firms, you start the search engagement with a price that doesn’t change even if the candidate’s compensation increases. Fairantee ensures that clients only pay for the specific value and effort involved in their search. It’s a fairer, more transparent way to price executive searches, reflecting the real needs of each role.”
Creative Talent Endeavors Launches AI-Powered Algorithm For Transparency In Search Pricing
Creative Talent Endeavors recently launched Fairantee, an algorithm that uses AI and data to allow companies to understand how much they should be paying for an executive search before they sign a contract. “Traditional executive search firms charge the same price for a search without taking into account how difficult it is to fill the role, meaning you pay just as much for an easily sourced hire as for a more complex one,” said Kyle Samuels, founder and CEO. “That model has been used to boost the profit margins of search firms for too long and is, quite simply, highway robbery. With Fairantee, we will bring transparency to our industry for the first time and give companies actionable insight into the price of every unique hire.”
Mr. Samuels explains that the technology behind Fairantee will take into account the difficulty or ease of each search assignment by measuring how factors including total compensation, location, workplace environment, and title of the role impact how much effort will be required to fill the role, and for the first time in the search industry, that data will determine a fair price for the client. Fairantee allows companies to get a quote for their search upfront, and keep that quote for five days as they make the best decision for their company.
For example, Mr. Samuels notes that it is easier to fill remote roles, so a remote role will cost less than an in-office role, which is less popular. “The algorithm also looks at the competitiveness of the compensation of the role, as well as the degree of candidate attractiveness for the city if a role requires relocation,” he said.
Redoing the Search for Free
To ensure client satisfaction with the candidates placed, Mr. Samuels also explains that they check in with new placements on a regular basis during their first year to see how the candidate is doing, and they will redo the search for free if the candidate doesn’t work out.
Mr. Samuels also notes that his firm’s guarantee policy doesn’t affect overall pricing strategy. The algorithm takes care of that and it also provides clients with a sense of security knowing Creative Talent Endeavors stand behind the firm’s placements. In addition, the firm provides demos of Fairantee, client testimonials, placement stats, and examples of expertise in their area of need. “Executive search is expensive, but an open job can be even more expensive,” Mr. Samuels said.
Hunt Scanlon Media also asked Mr. Samuels how his firm handles situations where a placed candidate does not meet client expectations within the guarantee period. “First we talk to the client and the candidate separately to see if there is a mutual issue, and the candidate also feels it is not working,” he said. “Then we look at the issue; is it performance, are they unwilling to relocate after they said they would, did the scope and/or scale of the role change? Once the issue has been diagnosed, and it is a conversation with the client. Sometimes there is as better suited role for the candidate in the organization, and sometimes the hire is exited. In the former example, again we would redo the search at no cost.”
In 2017, Mr. Samuels founded Creative Talent Endeavors. Based in Charlotte, NC, the firm has helped find senior talent for Fortune 500 companies such as Lowes, Yum! Brands, Kroger, Anheuser-Busch, and Chipotle, as well as high-growth startups and technology companies such as Strava and Klaviyo. Creative Talent Endeavors has recorded an average annual growth rate of 181 percent over three years, ranking fourth among Charolotte Business Journal’s Fast 50. Mr. Samuels found his passion for improving organizations through talent after early career roles in tech, entertainment, and executive search. After earning his MBA, he joined GE’s rotational HR Leadership Program before moving to Yum! Brands where he held several leadership roles.
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Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
