The Misconception Of Uptick In Retained Search
There’s a common fear among buyers of recruiting services of something called “uptick.” Uptick is the idea that the hired search firm will try to find the most expensive candidate possible to get a bigger payout.
As it turns out, this fear doesn’t originate from the retained search model. Rather, it stems from contingency firms who send the full bill at the end of the search.
Unlike contingency firms, retained search firms collect payment incrementally. And while the retainer paid at the beginning of the project is typically a standard fee, the cost of the final payment may vary depending on the project, the placement, and––more importantly––the first-year cash compensation of the executive that you hire. While this last payment might be variable, it’s relatively small compared to the lump sum with a contingency firm.
As we’ll see, the retained search firm is actually motivated to place the best candidate and ‘uptick’ isn’t a concern.
Why The Cost Might Be Higher
There are many reasons why you might end up hiring a more expensive candidate than you originally planned for.
Sometimes, your needs change after a search is already underway. For example, you may realize that you need the skills of someone more expensive after a firm presents a list of candidates with differing salary requirements.
Alternatively, if a search ends up costing a bit more than you initially thought it would, then that’s a result of hiring a more expensive candidate after the recruiter finds out what the market will bear––not of uptick or other trickery on the recruiter’s part.
What Really Drives A Retained Search Firm
The job of the retained search firm is to help their client––through their consultative expertise––to hire the best candidate possible.
That mission is what motivates retained search firms. Compensation is merely a byproduct of that.
More explicitly, when reviewing potential hires during a search, executive recruiters are thinking about one thing: how the candidate in question matches up against the requirements that you and the firm establish together.
Executive recruiters, in other words, are only motivated to find candidates that best meet your needs.
The reason is simple: the success of the search firm’s future is on the line with every project they take on.
This is because executive recruiters conduct a low volume of searches per year. So recruiters are incentivized above all to do a good job and to maintain a quality relationship with every client they work with.
Coercing a client to hire the wrong candidate would tarnish their reputation. This result, in turn, could hurt their future compensation and damage their relationship with prospective clients in the long run. An extra $5,000 or $10,000 is not worth burnt bridges.
This reality is important because recruiters are motivated, again, not only by placement rate or the quality of placement but by how quickly they help their clients fill empty roles. That’s part of what firms build reputations around.
It’s not in the search firm’s best interest to push a candidate the client is unlikely to hire. At the least, a firm runs the risk of extending the search and upsetting the client. At worst, it could increase the risk of a failed search, which is the last thing that both parties want.
What To Expect When Working With A Retained Search Firm
At the end of the day, you hire a retained search firm knowing they're experts in their field and that they'll find you the best candidate as efficiently and effectively as possible.
And if you wish to secure the best results, there needs to be a two-way road built upon trust.
Establishing clear expectations and goals is key when undergoing a new search project. These expectations should include compensation tied to the eventual first-year salary of the new hire. If criteria are followed and expectations are met, then the outcome will end favorably for both you and the firm.
Moreover, when a firm completes that job successfully, they deserve to be compensated.
Think about it: they’ve just helped you hire a qualified executive who’ll bring value to your company. That’s what executive firms seek to deliver, and it’s what they expect and strive––above all––to be compensated for.