How you hire executive-level talent for your company is a critical decision that can impact your whole business. It’s estimated that onboarding a new employee can cost roughly $240,000, and that’s just for a senior manager position. This number covers hiring costs, compensation, and the price associated with maintaining an employee. If you make a poor hiring decision, you’re not only losing the monetary investment you’ve made in the candidate, but you also lose employee morale. Leadership roles are crucial for motivating, directing, and leading teams. A bad leader can have the opposite effect on the company by creating confusion and even producing job dissatisfaction.
The Undercover Recruiter reports bad hires can cost $240,000 in expenses. Those are broken down into costs related to position, hiring, pay and retention.
When it comes to hiring c-suite and other executive positions, companies have a few options. Some businesses rely on in-house hiring services or reach out to their network for recommendations. Others invest in retained executive search firms or contingent recruiters. In most cases, better results can be found using outside help because you’ll get a larger pool of candidates from experienced recruiters. Your best option, however, is really to go with a retained executive search firm. The benefits of this type of service can be found below, as well as why it tends to be better than relying on contingent recruiters.
The benefits of a retained executive search firm
First off, let’s define retained executive search firms as well as contingent recruiters:
Retained Executive Search Firms – Exclusive consultants who work with companies to locate, evaluate, and select top-tier candidates. Search firms are exceedingly client-centered and have a set client limit so they can fully focus on individual client needs.
Contingent recruiters – Recruiters hired on a case-by-case basis to present a list of potential job candidates. These recruiters are paid through a placement fee, which encourages them to get as many candidates placed in the shortest time possible.
Essentially, a retained executive search firm does a lot more in-depth research and assessment to find viable candidates for your executive search needs. That being said, there’s a reason why retained executive search firm services can be more thorough – they charge an upfront fee. Alternative recruiting services are usually paid when they place a candidate, but retained services are paid upfront to start their search. It can take up to 90 days to place a serious candidate and during this time executive search recruiters are doing extensive research to find appropriate candidates. It should also be noted that most retained executive search firms have a placement guarantee, so if a candidate doesn’t work out, they’ll find an alternative option at no extra cost.
According to CareerBuilder, 74% of employers say they hired the wrong person for the job.
Aside from the substantial candidate research an executive search firm undertakes, the other main benefit of this service is that they seek out passive as well as active candidates. Other services, such as contingent recruiters, only focus on active candidates. Active candidates are people currently seeking a new job or position. Passive candidates are not searching for a new position but may be open to switching firms if approached with a persuasive offer. Many leading executives fall into this passive category, which is why an executive search firm is so beneficial. Your company will receive a wider pool of candidates who have been extensively vetted to match the qualities, background, and skill sets you’ve specified.
When to utilize a retained executive search firm
Companies don’t utilize retained search firm services for all hiring needs. The advanced expertise of these recruiters is mainly utilized for c-suite and board-level placements. These leadership positions within your company are paramount to business success. The in-depth research and extensive industry knowledge of an executive search firm make finding a winning candidate the first time around more likely. Utilizing a professional executive search firm is well-worth the investment if it means avoiding a bad hire and uncovering an exceptional candidate to lead your company.
According to a report by Censuswide, 83 percent of executive leaders agreed that they would prefer to use an executive search firm over their in-house recruitment when it comes to hiring senior level positions.
Some companies believe retained executive search firms and contingent recruiters offer the same services. This is simply not true and mistaking these services as the same can be detrimental to the growth and success of your business. Don’t underestimate the importance of executive talent within your company and instead give these roles the attention and investment they deserve. Other company positions can be handled by in-house recruiters, networking events, or even contingent recruiter services, but all of your executive-level roles should be managed at a higher level. If you want to retain the best talent, you have to utilize the most effective and thorough hiring services.
Cowen Partners is the nation’s retained executive search firm, enabling companies to harness the power of human capital to fuel their success. Cowen Partners gives our clients access to the top 1% of human capital to create opportunities that accelerate their growth and market share. With Cowen Partners, clients can grow at scale, create value, and drive results with world-class talent.
With our proven processes and guaranteed results, we have successfully placed hundreds of candidates in industries including technology, healthcare, manufacturing, retail, financial services, and private equity.