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How much Do Executive Recruiters Charge?

Executive Search Charges | Executive Recruitment Charges

When it comes to charging customers, Executive Recruiters use a variety of methods.

You need to remember that you get what you pay for when it comes to hiring recruiters. So it does not always pay to go cheap, although the temptation is always there.

The following charging models are used by Executive Recruiters

  • Contingent Search
  • Retained Executive Search
  • Hybrid-Retained Executive Search

Contingent Search

Contingent search has become very popular these days. That is because you only pay when you hire the person. Fees range from 10% to 20% of the annual total cost to company salary package.

These days many companies put pressure on recruiters to pay from 12.5% to 15%.

Their reasoning being that the recruiters do nothing. They just look up a bunch of CVs in a recruitment database and send them to us.

In many cases that is true. So then even 12.5% is too high.

However not all recruitment agencies are the same. Although extremely rare, you do get agencies like Dawning Truth who actually put in a lot of work. So in our case we do large scale marketing of the roles (CV databases are so overused that they only provide poor quality disloyal candidates.)

We then screen hundreds of CVs to find you the top 2% of candidates. Screening is not limited to just looking at CVs. We also perform competency based assessments.

We then personally interview the candidates to determine if they are suitable for the role. And send you the top 3 CVs.

Not bad for 15%-20%. So yes we do charge a bit more than the norm, but at least you know you are getting the benefit of a professional recruiter. Others may charge less, but they also do less.

Our contingent services are for lower and middle tier roles such as Engineers, Sales People and Accountants.

Retained Executive Search

Retained search is typically used by Executive Recruiters. The idea is to offer recruitment as a service. So you pay them a considerable fee, sometimes as much as R300 000 just to get started. They then make big promises and sometimes deliver on them. They usually don’t guarantee a result, which can be problematic if they fail. And, they do fail. Nobody gets it right all the time.

The total fee of a hire is around 30% of the total cost to company package. You may be able to negotiate, but you will most likely be told how they are the best, and the best don’t negotiate.

Further payments are made in stages. They work something like this:

  • 25% of the fee upon initiation of the assignment
  • 50% upon presentation of the CVs
  • 25% upon hire

Retained search has been around for a long time. However it is dying as companies are concerned about the lack of assurances that they will actually get a hire.

Dawning Truth does not do retained search.

Hybrid-Retained Executive Search

A new model is emerging in the world of Executive Recruitment. The idea is to combine the strengths of Contingent Search with the focus of Retained Search.

It is called Hybrid-Retained Executive Search.

The problem with contingent search is that because a recruiter only gets paid upon success, they run a massive risk in every job they take on. Also, they have a lot of competition from other recruiters. This means they have to be speed orientated and not quality orientated (Dawning Truth is the exception here, although we do get pressure when there are too many competitors. However, we never compromise our process.)

So contingent recruiters tend to just submit a bunch of CVs that they find on some recruitment portal or that they happen to have on their database. Most times they don’t even interview the candidates. Sometimes candidate CVs are submitted when they aren’t even on the job market. Further, these candidates tend to be phoned by every agency out there. So they are picky and disloyal as they have so many options. We are still amazed at how many companies tolerate this unprofessional behaviour. Perhaps it is because there are so few good agencies out there that do it right.

This CV spamming causes many problems for companies. Hence the reason they don’t like using contingent recruiters for their executive roles.

On the other hand retained search is not much better. Often-times the roles are not well understood. Candidates are provided, but they may not be the best on the market. They are usually selected from a small pool of personal relationships. Which may not suit your company, culture, or industry. Always remember, it does not mean that because you made a hire, that you were successful in your search. You are only successful when you made the best hire possible within your salary range.

So, the Hybrid-Retained Executive Search model is designed to address the challenges with contingent and retained search.

It works as follows:

Recruitment fees are slightly more moderate than executive search. Around 20% of total cost to company. This is great if you are the one paying.

1. Retainer Deposit

The recruiter is paid a small deposit for effort and time involved to perform advisory, setup the role, market the role, and do the interviewing (sometimes a small amount is asked for newspaper advertising). The deposit is around 25% of the eventual recruitment fee (So if the fee is say 20% of R600K salary, the deposit would be R30K.)

This is key.

By at least making some money for their work, the recruiter is relieved from the intense pressure of perform or starve. They therefore have enough time to actually focus on your role and put in the effort.

2. Limited Exclusivity

The recruiter is given exclusivity on the role for 4-6 weeks. This means that they alone are working on the role. Sometimes, they may have dual-exclusivity where one other agency is also working on the role. That at least reduces the risk of failure, should the recruiter be unsuccessful. This reduces the intense pressure of competing against CV spammers only to lose due to some fluke, with that person’s CV being sent first.

3. Advisory Services

The recruiter is also expected to provide advisory services on the role itself. So they actually sit with the customer and help them define the role. This is quite a sophisticated process that takes 60 to 90 min. The recruiter then uses copywriting skills to craft a role description which will appeal to the right person and not appeal to the wrong person. This description is used in their marketing and head hunting activities to attract the right candidate.

4. Role Marketing

The recruiter them performs role marketing. This is usually a combination of advertising and head hunting.

The decision to head hunt is first discussed with the customer as you may not realise that head hunting is not always the best option for all executive roles. It can be very expensive, and get word out into the market, that you are looking for a new hire. Often there are cheaper and equally effective alternatives.

5. Candidate Screening and Assessment

The recruiter then uses a combination of competency based interviews, behavioural assessments, screening psychometrics and case studies to determine if the candidate will be suitable for the role. This process is very involved and can take up to 4 hours per candidate. This ensures that the recruiter is sending the right person.

A shortlist of the top 2% of candidates is compiled, which usually works out to 2-3 CVs. These CVs are sent to you with the details on the assessments. You could almost make a hiring decision just on these details.

6. Hiring Manager Interviews

You then interview the candidates and hire the suitable candidate. If you are unhappy, you ask the recruiter to continue with the search.

7. Hiring

When you are happy with the candidate, you complete your own internal hiring procedures and hire the candidate.

When the candidate is hired you pay the remaining 75% of the recruitment fee.

No wonder, hybrid recruitment is becoming so popular.

It forces performance while shielding you from incompetent and downright dangerous recruitment activities, such as CV spamming.

Dawning Truth’s Hybrid-Retained Executive Search Solution

Dawning Truth provides a Hybrid-Retained Executive Search solution which includes all the above steps.

Hiring a new executive can make or break your business. That’s why you need to get it right first time.

Dawning Truth has the best Executive Recruitment and Search process in the industry. Contact us today for a free consultation on your next executive role.