The Two Types of Executive Search Firms & Fee Structures


      There are two types of executive search firms to consider when selecting a firm to fill a leadership position in your company — retained executive search firms and contingency search firms. The differences between contingency versus retained executive search firms lie in:


      • How they conduct their searches
      • The fee structure when conducting a search
      • The incentives behind what quality of candidates the search firm provides for you


      Here we have outlined the two types of executive search firms and corresponding fee structures.


      Contingency Search Firms


      Contingency search firms are only paid once you hire a candidate they have presented to you. Thus, their pay is contingent on selecting candidates to fill positions as quickly and efficiently as possible. They also tend to take on as many clients as they can to maximize revenue. Therefore, contingency search firms typically direct their efforts towards mid- to lower-level positions.


      Contingency Fee Structure


      These firms will charge roughly 20-30% of the candidate’s first year salary. But because they only get paid once the search is completed and the candidate is hired, companies must keep in constant contact with the search firm and express a strong desire to continue through the entire process.

      Retained Executive Search Firms


      Retained search firms work hands on with the company, developing a close relationship to conduct a focused search for a candidate over a specific period of time. Retained executive search firms usually:


      • Charge more than contingency or container firms
      • Specialize in placing upper-level management, C-suite positions, and roles with where deep, very specific qualifications (both professional and personality qualifications)
      • Invest valuable time into their client companies, making sure to align the company culture, values, and purpose with the best-fit candidate(s)


      Retained Executive Search Firm Fee Structure


      Generally, retained search firm fees are about 30 to 35% of the estimated first year salary for the candidate hired. With retained executive search firm fees, payments are typically made in three installments:
      1. The first payment, one-third (1/3) of the total fee is paid to begin the search.
      2. The second third is paid 60 days into the search.
      3. The final third is paid once the chosen candidate is hired.
      This retained search fee structure is typically optimal for both the client and the executive search firm because:
      1. Both are fully committed to the process.
      2. Both are in strong partnership to find the right leader for the company.
      The two types of executive search firms exist to provide companies with different needs for filling positions. Retained firms conduct higher quality searches to find proven leaders that exemplify the cultural alignment and proven track record the business needs to drive results.


      Take a Deeper Dive into Executive Search & Recruitment Topics



      You can also get answers and information right now from one of the nation’s top executive recruiters.


      Top 10 Reasons Why Retained Search Is the Most Effective Recruiting Method


      1. Executive search consultant (retained search professionals work with their clients on an exclusive basis).
      2. They are dedicated to following best practices and doing the job right. They work very closely with the client by developing a methodology, action steps, and timing that is realistic and that matches with the needs of the client.
      3. They are truly management consultants; you’re not alone.
      4. Remember that contingent recruiters are in a race to provide resumes as quickly as they can. It’s your job alone to evaluate the resumes and assess if they fit your position and company.
      5. The goal of the executive search consultant is to present four to five high-quality candidates with the skills, fit, salary, etc. desired by you, the client.
      6. Intelligence is provided through exhaustive research on the industry, competitors and ideal candidates.
      7. Candidates are screened and assessed using modern assessment tools and are pre-qualified to fit the position and your company culture.
      8. Cost-wise, executive search (retained search) fees range from 25% to 35%, and contingency recruiters try to charge the same amount but provide you with much less.
      9. The contingency executive recruiter model works on a “No-Win, No-Pay” basis. So, their dedication based upon their actions is very limited. They are not set-up to provide the same level of professional services as a retained executive search firm model provides.
      10. With a retained executive search consultant, you will receive full briefings on the search process, competitors, the market, and the talent pool.


      In conclusion, for best practices and the most effective executive search service, the retained search model for middle to senior-level positions is the choice of champions.


      Why Cowen Partners Is a Top Executive Recruiting Firm Across the U.S.



      Our hands-on executive recruiters have experience working with private, public, pre-IPO, and non-profit organizations. Clients are typically $50 million in revenue to Fortune 1000 companies or have assets between $500 million to $15 billion.


      Successful placements span the entire C-Suite – CEOChief Operating OfficerChief Financial Officer, CHRO, CMO, and include vice president, sales and marketing, general counsel, and other director-level leadership roles.


      Check out our industry-leading resources to see why Cowen Partners is a leader among the best executive search firms in St. Louis, Milwaukee, AnchorageNew York CityChicagoSeattle, Atlanta, Dallas, Los Angeles, and beyond:



      Cowen Partners is proud to provides the highest quality executive recruitment services to all major and minor industries, including (but not limited to):

      Accounting, Advertising, Aerospace & Defense, Biotechnology, Banking, Credit Unions, Board and CEO Services, Computer Hardware, Construction, Consulting, Consumer Products, Computer Software and Hardware, Education, Energy & Utilities, Entertainment & Sports, Finance, Financial Services, Food Products, Government, Human Resources, Health Care, Hospitality & Tourism, Insurance, Industrial, Internet & New Media, Legal, Tax, Crypto, Bitcoin, Private Equity, Journalism & Publishing, MarketingManufacturing, Medical Device, Non-Profit, Pharmaceutical, Private EquityReal Estate, Retail & Apparel, SalesTechnology, Telecommunications and Transportation.

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