What Is An Executive Search Firm? Do You Need One?

Simply put, executive search firms provide a recruitment service to assist with hiring senior-level roles. It is however a specialised type of recruiting that among other things requires a greater degree of rigour and goes far beyond what you would typically expect when “filling” a role vacancy.

While there are fewer roles at the executive level and a small pool of job opportunities at any given time, in today’s highly competitive and global candidate market, the executive search and recruitment process is lengthy and complex.

From finding the right talent through to making the right hiring decision, executive search is a sophisticated and highly consultative recruitment service that is estimated as a $12 billion global industry.

While the terms are often used interchangeably, an executive search agency is a specialist recruitment firm focused on senior level roles. This requires greater commitment and focus and is very much relationship-driven with both the client and the search agency’s interactions with their candidate communities.

‘Executive’ is a specific subset of an organisation’s hierarchy or structure that refers to strategically important roles, this includes board roles (non-executive director, executive director and chair) as well as senior management or c-suite roles (for example Chief Executive Officer, Chief Financial Officer, Chief Operating Officer etc).

Traditional recruitment agencies, sometimes referred to as contingency recruiters, provide a broad range of recruitment services to assist companies with filling all types of roles.

Executive search firms are specialised recruitment providers that uncover top-level candidates for senior, executive, or other highly specialised positions for their clients. Because of the criticality of the role, in terms of its impact on wider organisational performance, companies often utilise the services of an external recruitment partner.

Executive search agencies provide an end-to-end recruitment service from uncovering top talent through to the successful appointment of a candidate. This includes search expertise and access to networks and connections; research, attraction and advertising strategies; selection and assessment tools and techniques; talent advisory services; as well as general administrative support.

Today’s global talent market has become increasingly candidate-driven, with very low levels of unemployment; talented executives are highly sought after. This is where enlisting the services of an executive search firm contributes to better outcomes, through:

• Access to broad and deep connections and networks, delivering a wider pool of qualified candidates;
• Benefiting from their professional expertise and knowledge;
• Bringing objectivity, fresh perspectives and diversity of thinking to the recruitment and selection process;
• Value-add services that they contribute to delivering a robust recruitment process;
• Freeing up your time (and your teams) with focused results.

In the long run, using an executive search agency can be a cost-effective recruitment solution. Executive roles are often long-tenure so recruitment can be infrequent which means organisations often underestimate the rigour and time required to recruit the very best leadership talent. While it is critical to allocate time and prioritise a senior leader search, a key benefit of utilising the services of an executive recruiter is that it frees up your time and that of your team, which typically means faster results.

There are a number of important factors to consider when choosing an executive search firm. Here’s our take on the top ten considerations:

1. Balance of specialist search and recruitment knowledge.
2. Evidence of deep national and international search networks.
3. Demonstratable relevant experience (industry/role etc).
4. A well-defined executive search strategy.
5. Understanding of the role and competencies required.
6. Proven commitment to diversity, equity and inclusion.
7. Ability to grow with your business and continue to support you in other ways.
8. Alignment in regard to the recruitment process and expectations of all parties.
9. Commitment to the partnership and finding the right candidate, for example a guarantee period and/or assigning a director for oversight on the recruitment project.
10. Overall reputation and the connection you make with both the executive search firm and the executive search consultant.

Ultimately, recruitment is a people business. You need to have confidence that the interactions you have with an executive recruiter reflect your organisation’s values and culture because they will be representing your business to the market and potential candidates.

Achieving the best outcome in executive recruitment requires an open and honest partnership with your provider. Transparency is a two-way street. That means being honest about your organisation and the type of candidate who would succeed in a role. And trusting that your search partner will openly and candidly share information at each stage of the process. It’s a relationship built on trust and communication first and foremost.

External recruitment providers broadly fall into one of two categories: retained executive search or contingent recruiting.

Retained executive search firms specialise in sourcing senior level talent, their expertise goes beyond what you would expect from a typical recruitment consultancy. They work closely with clients to understand both the organisation and its culture, contributing knowledge and expertise of talent markets and assessment approaches, to ensure hiring decisions are based on the right person who is the right fit for the right role.

Given the time and commitment to the assignment, retained firms tend to limit the number of clients and work on an exclusive basis for a particular role vacancy. This is also reflected in their fee – both in terms of its structure with payments typically made in instalments, and the investment which reflects the thoroughness of the process and the resources required to deliver it.

Conversely, contingency firms are only paid once a placement has been made. Because their recruitment process is transactional and placement-oriented, they typically narrow their focus to active candidates. And because of volume, they work with primarily non-executive positions or roles, where there are a large number of qualified candidates.

The fees charged by executive recruitment firms vary widely. The majority operate on a retainer business model which means the fee is paid in advance or in instalments upon reaching agreed milestones.

The actual cost may be based on a flat fee or a percentage (anywhere from 15% – 35%) of the annual remuneration package for the role. There may be additional costs to consider, for example psychometric and behavioural assessments, advertising costs, travel and disbursements related to the process, and external probity checks.

Decipher Group are industry experts in the recruitment of executive, c-suite level professionals, and governance leaders for New Zealand and Australian businesses. We’ve been connecting talented people to exciting opportunities for 15 years.

Find out more about our executive recruitment expertise. Or, reach out to one of our team today; let’s work together.

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A short Q&A with our team on related questions that people commonly search for on Google.

The term headhunter is an out-of-date descriptor used to identify recruitment consultants who actively seek out passive candidates – people who are employed and not currently in the job market. Executive search firms specialise in sourcing top talent which includes both passive and active candidates so technically the terms headhunter and executive search are the same thing.

While both have a similar objective of finding and hiring candidates, there is a significant difference in the approach and process used by recruitment and executive search firms. One of the main differences lies in the seniority level of roles, with executive recruiters targeting highly specialist senior level management or governance roles.

Given the narrower talent pools this influences the type of candidate and search approach, with executive recruiters focused on both active and passive candidates to uncover the best possible talent. Executive search firms are also likely to operate nationally or internationally, given their respective talent pools.

The obvious place to start is by connecting with recruitment consultancies you have used in the past. However, if they are not executive search specialists or you believe they are not the right fit for the assignment, then start by asking your networks for referrals.

Searching online will likely produce an extensive list of providers which you can distil by reviewing their website and other sources like a recruiter’s LinkedIn and/or company pages which give you insights into the types of roles they have recruited and their overall presence in the market.

The executive search and recruitment process will typically take 60 to 90 days depending on the exact requirements of the client. In addition, if the appointed candidate is in an existing role, you may also need to consider their notice period which for a senior role will likely be 3-months. This can be significantly longer for larger companies.

By understanding the exact needs of the client, an executive search firm utilises a number of tools and techniques to uncover talent. This includes their existing connections and networks, market knowledge particularly talent mobility, access to digital search tools and platforms, online connection sites and global links, and through the expertise and tenacity of executive search consultants.

No. Any company can utilise the services of an executive search firm to recruitment senior level roles.