Retained Search: What To Know Before Engaging With An Executive Recruiter

Finding the right talent is not easy, especially when recruiting for executive roles requiring exceptional expertise. While hiring a recruitment service can be most helpful, there are different models available, some of which may not work for your company.

If you are a hiring manager looking to fill out an executive role with an unusual skill set or a niche vacancy requiring specific qualifications and a unique perspective, a retained search is your best option. But what is a retained executive search firm? How do executive search firms find candidates?

What Is A Retained Search?

Retained search, also called executive search or retained recruiting, is a highly personalized, high-touch recruitment process often used by companies and organizations looking to source and hire for executive-level or niche roles. The term originates from “retainer,” which is paid to the executive search firm upfront to retain it for the entire duration of the hiring process.

In a retained search, the firm works closely with its clients to determine what they are looking for in terms of skills, location, and salary in the right candidate. Additionally, recruiting firms also look at the organization’s workplace culture and the goals it is aiming to achieve to find the most qualified candidates for the position.

How Is Retained Search Different From Contingent Search?

Contingency recruitment—also called the contingent search model—is a hiring process where the recruiting firm will only receive the agreed-upon search fees after the company hires a candidate.

Unlike retained search firms, contingent firms often juggle multiple clients at a time. Because their pay is dependent on their performance, contingent search firms often try to work quickly to produce potential candidates for their clients, even if they aren’t necessarily the right talent for the role.

With this type of recruitment process, companies can save costs as there are no upfront expenses. Companies are also not required to work with the firm on an exclusive basis, which means hiring multiple recruiters simultaneously for talent acquisition services is possible.

That being said, contingent search firms often focus on quantity than quality. A contingent recruiter may also present the same set of candidates to a variety of clients.

How Do Retained Search Firms Work?

• In the retained search model, the client will negotiate the fees with the firm firsthand. Once the fees have been agreed upon, the company will pay a portion of it upfront and sign a retained search agreement.
• The portion of the fee that constitutes the initial payment varies depending on the agreement of the firm and the client. Retained firms usually charge about 25% of the starting salary of the position they are recruiting for and might later include bonuses and commissions. Some retained firms also charge 33.33% of the annual compensation of the recruited candidate. [1]
• In some cases, the amount is paid in three separate stages: 25% to 50% upon contract signing, 30% once an offer has been made, and the remaining balance when the candidate joins the organization.
• The recruiter regularly provides clients with information like prospect lists, referral conversion, and more.
• Retained search contracts do not replace any current contingency agreements. Candidates produced by a retained search firm are also covered under separate contracts.
• Retained search firms commonly take a minimum of four (4) weeks before they present a slate of prospects to their client. During this period, top retained executive search firms often delve deep into their networks, researching prospects that fit the client’s unique requirements.
• Retained search firms guarantee to redo a search if the recruited executive leaves before a certain milestone (typically between one to three years). However, this is only possible if there has not been any material change in the position requirements or management team. [2]
• Retained firms are employed to conduct the entire search and recruitment effort from the startup until the executive starts working. [3]

Stages Of Retained Executive Search

The process of finding the right candidate varies little between different executive search firms. In fact, the basic steps in the retained search model are described by the Association of Executive Search Consultants (AESC).

There are 14 basic stages that most retained executive search firms go through while actively seeking the right candidate to fill an open role.

1. Engaging A Retained Executive Search Firm

To start off the process, a hiring manager must contact a retained firm and hire them to search for quality candidates for a certain position. The firm is also paid a part of its retained search fees, which are usually divided into thirds.

In addition to settling the initial payment, the hiring manager must also agree to sign a contract with the executive search firm. The contracts used by most retained recruitment agencies stipulate that the firm will serve as the exclusive representative of the search of both external and internal candidates for the agreed-upon job postings. The contract will also define engagement timing, off-limits agreements, and other issues related to the assignment.

2. Meeting With Stakeholders

Once the payment and contract have been settled, retained firms meet with the hiring executives and stakeholders to discuss what is required for a particular role. Relevant stakeholders often include members of the company board, senior executive team members, peers, and subordinates.

The meeting is incredibly important in ensuring that the company is getting the best possible candidates for the position. During the meeting, the retained search firm will gather information about the requirements of the role. It will also witness firsthand the management style and work culture, both of which are essential to understanding what makes someone successful at the particular company.

3. Creating Position and Candidate Specification

The retained search firm will draft a description of the open position. The job description should include the reporting relationships and responsibilities of the position. The firm will also create a candidate specification document detailing core competencies, preferred experience, and soft skills.

The documents will serve as the firm’s basis when looking for the top candidates. The documents can also be used as marketing materials on job boards.

4. Setting A Research Strategy

The search firm develops a strategy for targeting companies most likely to yield successful candidates for the position. The strategy will consider the level and scope of comparable roles. It will also include other key data points, such as the location of the office and the work culture.

While planning the approach to take, the search firm will also delineate companies that should not be included in the search, possibly due to sensitive client relationships or client blockage.

5. Conducting Original Research On Candidates

Using the strategy as the blueprint, the search firm conducts original research with the aim of identifying and profiling ideal candidates.

Traditionally, search firms do most of the research online through candidate databases and proprietary information services to yield potential candidates for the open position. In some cases, search firms also make a query across social platforms.

6. Querying Sources

After conducting online research, retained executive recruiters will then turn to their network of sources such as journalists and professional associations for any candidate referrals. Any prospects who meet the requirements of the role are added to the list of potential candidates.

7. Contacting Potential Candidates

The search team contacts prospective candidates on the list to determine whether they meet the requirements of the role. If they meet the primary requirements, the search firm would then gather details on the candidate’s motivation, including what it would take for them to move to another company.

Once all listed prospects have been contacted, the search firm will decide whether more time is needed to find candidates or if it is time to begin a more in-depth interview process.

8. Interviewing Top Candidates

The search firm schedules an interview with the best candidates with the aim of understanding the prospect’s career history. Interviews are done in varying manners, such as in-depth, in-person, or video conferences.

In most cases, search firms also pre-reference candidates to verify their career history, past work performances, and soft skills. Those who do not fit the requirements for the open role are removed from the list of prospects.

9. Writing Candidate Profile

The search firm prepares a written Candidate Profile for each prospect they present to the client. The profile must include a candidate’s education, career history, awards, strengths, and weaknesses.

In addition to the details outlined above, the recruiter can also highlight a candidate’s key motivators and any deal-making information in the profile.

10. Presenting Potential Candidates

Once the profiles are done, the executive search firm presents the candidates to its client during regular progress meetings. After presenting all the candidates, the search firm will work with the client to refine the list down to three to six (3 to 6) strong contenders.

11. Scheduling Client Interviews

The search firm will schedule client interviews with the candidates to help winnow the selection down to two or three prospects.

12. Check Candidate’s References

The search firm will contact the references provided by the candidate and those given by other sources available to the firm. During these checks, the team makes sure to uphold discretion and confidentiality at all times.

The search firm may also employ third-party services to verify a candidate’s employment and academic credentials, though this is not always the case.

13. Extending the Offer

The search firm works closely with the client to position an offer and negotiate a package that is agreeable to both the company and the best candidate.

14. Closing The Best Talent

The contract with the search firm ends when the chosen candidate accepts the offer and joins the organization. In closing the engagement, the search firm should acknowledge the people involved in the process and thank the team for a successful outcome.

While it is not necessary to stay in touch after the engagement is done, a search firm may choose to check on a candidate once in a while to ensure they have a smooth transition into their new role.

Benefits Of Hiring A Retained Search Firm

There may be hesitations on paying an initial retainer to kick off an executive search, but there are plenty of key advantages to hiring a retained search firm to help the company find top-level talent to fill out executive positions and senior roles.

Personalized Experience

All staffing firms, even contingency search firms, offer clients some level of personalization. Retained search companies, however, offer the ultimate tailored experience.

Retained searches are more rigorous than other searching methods. As such, the firm takes on a more limited number of clients, allowing them to assign a dedicated team to focus on finding the perfect candidate for the job position and keeping the client informed of their progress.

Furthermore, the upfront fee acts as a high level of investment in the search, allowing both the firm and the client to operate in good faith that each side is putting their highest efforts into finding a good candidate for the role.

Close Collaboration

The most effective staffing processes are those in which the hiring firm acts as an extension of the company and put the organization’s interests and motivations first. Retained search firms do just that.

Over the course of their engagement with the client, recruiters from the search firm get a clearer picture of the company’s needs, objectives, culture, and values. Having a deep understanding of these factors can be leveraged during the search process and can be used in future staffing engagements where such context is relevant and valuable.

Operates Discreetly

In many cases, casting a broad net and announcing an open position is the best way to go. However, it isn’t always the case for high-stakes roles like executives, board members, and vice presidents.

For starters, many candidates at this level do not feel comfortable letting others know they are looking for new job opportunities. They also might not be willing to talk directly with other companies, especially if they are a competitor.

In such situations, search firms act as intermediaries and introduce the prospect to the client while subtly gauging their interest in the position.

Retained search firms ensure the company’s search remains private and minimizes the risk of sensitive company information leaking.

Make A Good First Impression

Candidates, especially top talents, are likely inundated with inquiries from recruiters, so much so that they tend to ignore cold emails and messages on LinkedIn. Retained search firms use more nuanced sourcing techniques to connect with potential candidates.

Hiring a firm to conduct a more personal search process demonstrates that the company is serious about hiring the best talent for a role and that their resume won’t just add to a pile of CVs for reviewing. This can make a good impression and earn the company top candidates they might not have been able to reach through traditional sourcing methods.

Get Access To Hard-To-Reach Talent

According to a LinkedIn Hiring Solutions report, at least 70% of the global workforce are passive candidates who aren’t actively looking for jobs. That being said, 80% of passive workers are open to new job opportunities with other firms and companies.

Working with an executive search firm helps companies connect with passive candidates who have yet to openly advertise they are looking for a job or who may not even have considered switching companies yet but are open to hearing it.

Exclusivity

When companies hire contingency firms, they are asked to pay only after one of their candidates gets hired for the job. In many cases, this type of agreement works well for entry-level and high-volume positions that need to be filled immediately.

However, contingent searches are likely not the best option for filling out executive positions. A contingency recruiter typically passes along as many resumes as possible, hoping one of their candidates gets picked.

Contingency recruitment does not come with an exclusivity contract. This allows some companies to contact and hire multiple contingency firms to search for candidates. That being said, it also means multiple contingency search firms may contact the same candidate for the same role. This can make your company look unprofessional in the eyes of top talent.

Unlike contingent search firms, retained firms come with exclusivity. This means the firm will be the only one working on the search. With retained searches, the client will not be presented duplicate contacts. Retained firms also ensure the candidate sees the company presented in the best possible light.

Specialized Expertise

When companies work with an executive-retained search firm, they are not only gaining access to their executive headhunting skills but also their recruiting expertise. The right recruiter will function almost as a company’s consultant, providing insights and feedback gained through years of experience.

Additionally, a good retained search firm will ask questions that prompt discussion about what the company is looking for in the perfect candidate in terms of necessary skills and characteristics. The search firm can also point out things the client may not have considered that will help them identify who might be the perfect fit.