Retained executive search often seems to scare business owners - or perhaps it just confuses them. They wonder: if other recruiters only charge me if/when I hire one of their candidates, why would I ever pay a recruiting firm a retainer fee?
This is a great question. Let me answer it by making an analogy.The Analogy
Picture this: you have just purchased your dream home along the ocean with a beautiful view and a perfect beach right outside your back door. Obviously, when it comes to furnishing this new home, not just any old junk will do. You will need some unique pieces. Upon visiting the local furniture store, you see many sofa styles on the show floor that would be workable for the signature room in the house. Some of these floor models are so-so, but you want more. You ask for the special order catalog.
Ultimately, you spot the most amazing, luxurious, buttery soft leather you’ve ever seen. It will fit your dream home just perfectly.
“I want this one,” you say.
“Excellent choice,” the salesperson responds. “You should know this leather is more expensive than the ones on the show floor.”
“That’s fine, it is a once-in-a-lifetime buy.”
“And since it’s a special order, you will have to wait six weeks for it to be made.”
“No problem, I expected as much,” you reply.
“And lastly, it’s a very rarely ordered leather so we’ll need you to make a down payment, with 50% of that being non-refundable.”
“I figured as much,” you retort. “Let’s do it.”
It makes sense. The factory will be taking extra time/effort to build the perfect sofa. If you back out it’s not likely they can just sell it to someone else, at least not without a huge discount. And then you fade off, dreaming of sitting on your new sofa enjoying the waves and the sunset out of your picture window.
And How Does This Relate to Retained Search?
Retained executive search is like that perfect custom sofa. Especially for a small to mid-sized company. In smaller, privately-held companies, an outstanding executive leader is a rare find. They need to wear multiple hats, have a wide set of competencies and leadership abilities and fit your culture. These people are not just sitting on the show floor waiting for you to walk in. They’re hidden in another company, where they are making a huge impact.
An experienced retained executive search firm will take the time to understand your needs (which may include helping you configure your needs), conduct extensive original research and complete a thorough search for your perfect sofa. The retainer is required because the firm is dedicating time and resources specifically for you. And since your perfect executive looks nothing like the one down the street, if you back out, their time and effort are sunk. The retainer is there to ensure that both parties have equal skin in the game.
Conversely, when you hire a contingency firm for an executive role it is a lot like buying off the retail floor. The candidates they send are most likely people they have already recruited for something else and are sitting in their database. They may also recruit a few new candidates, but because the model is built on speed, once they’ve secured a few acceptable candidates for you, they’ll stop searching.
The upside is you can take the sofa home today, and it is a little bit cheaper than the custom order. Unfortunately, the big downside is you will likely never know who else was in the catalog. The perfect fit may have been available, but harder to find. You need a firm who will look all the way through the catalog and find that perfect fit.