Not all retained search firms are created equal. Without the right firm, an already long process can be delayed significantly. But ultimately, the biggest risk of partnering with the wrong firm is that your search will fail outright.
The truth is choosing the wrong firm for a key hire is a huge contributor to the fact that our Executive Search Performance Benchmark Report shows roughly 30% of retained searches fail. And despite how it appears on the surface, failed searches result in deeper and more significant costs than many realize.
A failed search costs your company in three primary ways.
1) Lost search fees
If you choose the wrong firm and the project fails, you’ll lose the fees already paid at the beginning of the search. Because search fees typically run around 33% of the first year’s salary, this loss can be substantial. And this cost is what one typically thinks of, but there’s much more to consider.
2) Lost time
On average in the retained search industry, it takes 123 days—roughly 4 months—to successfully place a candidate. As I mentioned before, an average of almost 30%—or 3 out of every 10 searches—fail to end in a successful placement. Most often, these failed projects linger on for weeks or months beyond that 4-month average before a decision is made to terminate the search—at which point you need to start a new 4+ month search process all over again with another firm to fill your role.
As this illustration shows, if you choose the wrong firm and that search project ultimately ends in a failed placement, you’re risking adding many more months to the process. And if 30% of all searches end in failure, there’s nearly a 1 in 10 chance the search also fails the second time through the process!
All in all, it can easily result in your company being without a key role for up to a year or more. As you likely already know, having an important role open for so long is bad for your company.
3) Lost opportunity
Key hires are ‘key’ because they represent a big investment in your company’s future. In a highly competitive business environment, any amount of delay in filling key roles can make it harder to reach your business goals and stay on the leading edge of your business space. In reality, any added time taken to fill these roles can significantly affect your company’s ultimate trajectory and success.
We all know the quicker the best candidate is found and placed, the quicker they are doing their job, and the sooner they will be making an important impact on your business. Therefore, the most significant loss you face by choosing the wrong firm is a huge opportunity cost for your company.
If 30% of retained searches end in failure, why use a retained search firm in the first place?
While many companies hesitate to partner with retained search firms due to the sticker shock of a non-refundable upfront cost, I’ve previously explained why you can’t afford to not hire a retained search firm for a key hire. There’s no alternative (contingency or in-house) that’s more efficient or effective than a successful retained search. The best candidates for the type of roles that help steer your company's success are usually already gainfully employed and not actively looking on job boards (which are heavily relied on in contingent search). Because of this reality, you need a retained recruiter who understands what your opportunity offers and can communicate it to executives who are already happy and successful in their current job.
So, to clarify, partnering with the right retained search firm for your mission-critical, key role is hands-down your best option for the future success of your company.
Characteristics of the right—and wrong—firms.
There are two primary characteristics of quality retained firms that you need to look for when determining who to work with.
The first is that your firm should specialize in searching for the specific sort of candidate you need. If you’re an AI company in the market for a CTO, for example, the recruiter you partner with should be the smartest and most informed person in the room when it comes to Chief Technology Officers operating in the artificial intelligence industry. As is true for any industry, the more you specialize, the more effective you are at that specialization.
Unfortunately, with the advent of platforms like LinkedIn, it allowed more and more retained firms to try to operate as generalists—with recruiters claiming they can find and place engineers just as effectively as they can find and place marketers. While technically possible, most firms can’t actually live up to that claim. Every type of search is fundamentally different, just as each industry, location, and level of seniority is different. From the example above, the right firm to find you the best available CTO in the AI space requires a unique understanding, expertise, and proven track record of successfully performing that type of search.
The second characteristic you need to look for when hiring a retained search firm is that they have a set, proven search process. This process should be an established blueprint that informs how they approach and execute every search they perform. If they lack an established process, they’re more likely to approach the work with a haphazard trial-and-error approach, which is a fundamentally riskier means of engaging in a search. Firms that operate in this way are a large part of why an average 3 out of every 10 retained searches are canceled or terminated.
When hiring for a key role, ask yourself: how do we set ourselves up for success as quickly as possible?
The answer, ultimately, is vetting for those two fundamental characteristics when selecting the right retained search firm as soon as the need is identified. The easiest, quickest, and most reliable way is to use the Clockwork Network. It’s a free resource for companies that analyzes the performance data of firms operating in your specific type of search.
The analysis will identify which firms are outperforming others for your specific search criteria. Once you choose which firm you want to work with, the introduction is made in less than 24 hours. There’s no commitment required or hidden fees; it’s as simple and straightforward as that.
So instead of waiting 2 years for a key hire to bring value to your company, you can get started today. All it takes is the right retained search firm to get you there.