Executive search is a strategic approach for identifying and attracting top-performing executives. Executive search teams work for clients to secure long-term talent that will lead their organizations into the future.
Recent McKinsey & Company research notes that companies prioritizing people in their business strategies realize higher total shareholder returns than their competitors. This critical mindset starts at the C-suite level. With hiring trends and talent pool activity shifting faster than ever, swiftly matching exceptional leadership to your business is a must to maintain momentum.
This article explores the distinctions and advantages of retained executive search to help you evaluate whether this premium service aligns with your organization’s hiring goals.
What Is Retained Executive Search?
Retained executive search is a comprehensive and exclusive partnership between a specialized executive search firm and an organization. A client connects with the search firm to conduct a thorough and personalized executive recruitment process for leadership talent.
Executive Search Models Compared
| Retained Search | Contingency Search | Internal HR Department |
| A retained search is a personalized and exclusive process created expressly for the needs of a single client | Works with multiple clients simultaneously to fill one position, competing with others for placement | An approach that can work well when a candidate must have deep internal knowledge |
| Comprehensive partnership | Transactional relationship | In-house initiative |
| Dedicates significant time and resources to develop a holistic understanding of the client’s business needs, strategy, future goals, and company culture | Prioritizes speed of placement over deep organizational understanding | Must manage multiple priorities in an organization, which may detract from the focus of the search |
| Includes top-performing passive talent, as well as active job seekers | Focuses mainly on active job seekers | Typically, internal applicants and active job seekers |
| Widest talent poo | Moderate talent pool | Smallest talent pool |
The Retained Search Process
The retained executive search process begins by establishing a strong foundation between the search firm and the client organization. From there, it follows a structured approach that can be adapted to each client’s specific needs.
From initial engagement through post-placement support, each phase is designed to successfully identify and secure the ideal executive leadership while maintaining regular and clear communication between all parties.
Initial Consultation and Engagement
A client seeking a C-suite or executive-level leader meets with the executive search firm for an initial discussion. During this meeting:
- The client discusses their needs
- The firm explains its history, track record, network and process
- Discussion moves to contract and fees when ready to proceed
Fee Structure Agreement and Contract
Once the client agrees to retain the executive search firm, the two parties will discuss fee structure and payment terms. Fees typically include:
- Percentage of starting salary
- Potential bonuses and commissions
- Initial down payment with future installments at specific milestones
The contract includes provisions for exclusivity and confidentiality, fee structure and payment schedule, search scope and timeline, process and protocols, reporting requirements and performance guarantees, off-limits agreements and terms for modifying or terminating the search.
Client Meetings and Initial Research
The retained executive search firm engages in in-depth meetings to gain a comprehensive vision of:
- Role requirements
- Organization’s history, mission, vision
- Culture, values, challenges, and goals
The firm creates:
- Detailed description of the role
- Outline of specific professional skills, qualifications, and interpersonal competencies
- Ideal candidate profiles
Strategy Development
The executive search firm builds a full-process strategy encompassing:
- Search scope, goals, and timelines
- Detailed timeline for research and presentation
Market and Candidate Research
The retained search team begins by:
- Mapping the market to identify potential candidates
- Leveraging deep network
- Reaching out to industry connections
- Including high-performing passive candidates who are not actively seeking a new role but are stand-out leaders who fit the search criteria
Initial Candidate Outreach and Longlisting
The executive recruiting team contacts prospective candidates to gauge interest and motivation for making a move by:
- Acting as an ambassador for the client
- Promoting benefits of the company and role
- Evaluating each candidate’s overall fit
The process includes:
- Presenting a longlist of interested candidates to the client
- Providing a summary of each individual and their qualifications
- Reviewing with the client to determine shortlist candidates
Shortlisted Candidate Assessment
The retained recruiting team conducts a thorough assessment of each shortlisted candidate through:
- Interviews
- Behavioral and competency-based assessments
- Observations
- In-depth reports, including the firm’s observations and recommendations
Client Interviews and Selection
The search team arranges interviews for the top candidates, handling all aspects of the process:
- Selected candidates meet with key stakeholders
- Structured interview process
- Serving as a liaison between parties
- Candidate preparation
- Preparing feedback
Hiring and Negotiations
Once the top candidate is identified, the executive search firm handles:
- All aspects of due diligence
- Negotiations
- Final offer
- Position closure upon acceptance
Post-Placement Support and Guarantee
Even after the position closes, the retained firm stays in touch to ensure a successful long-term placement:
- Assistance with onboarding
- Transition and integration support
- Contract-specified support
- Placement guarantee per specifications
Benefits of Partnering With a Retained Executive Search Firm
Retaining an executive search firm gives a company distinct advantages when hiring executive leadership. A retained firm’s comprehensive approach delivers a return on investment throughout the executive hiring process and beyond.
A Dedicated Partnership
By partnering with a retained search firm, a company is assured of a partnership with experienced experts. In contrast to contingency recruitment, which is more short-term and project-based, a retained firm personalizes the search, is dedicated to one client at a time and develops an exclusive, long-term relationship. Compared to an internal HR team, the firm is independent of the client, serving as an impartial and confidential partner.
Access to Passive Candidates and an Extensive Talent Pool
A retained executive search firm invests time and resources in building and maintaining relationships with executive-level professionals. Because the search team is dedicated to C-suite and executive-level hiring, it has the foundation and networks to access top-performing passive candidates and those actively seeking a new role.
Complete Management of the Executive Hiring Process
By retaining an executive search firm, a company can focus on business operations while the firm does what it does best: developing an executive search strategy and identifying the candidates best suited to the job.
Competitive Advantage
The executive search team has specialized knowledge and a deep understanding of the executive hiring process, giving the client a significant competitive edge in attracting the right talent. This expertise, combined with access to high-performing passive candidates, deep industry knowledge, and industry connections, gives the client a strategic advantage when hiring exceptional executive leadership.
Efficiency and Confidentiality
Leadership vacancies can significantly impact an organization, including lost productivity, an increased burden on staff, and the time and money spent on recruitment efforts. A retained executive search firm relieves this burden by streamlining the process through its expertise and networks. In addition, as a third party, the retained firm is impartial and objective and guarantees confidentiality.
Market Intelligence
Part of what makes retained executive search firms efficient is their deep market intelligence and awareness. With crucial insight into current market trends, competitive hiring practices, and the overall talent landscape, an executive recruiter can identify the most qualified leadership candidates and understand how to attract them.
Consistent Candidate Vetting and Care
A retained search firm ensures a consistent, fair and positive process for candidates from start to finish. A business is assured that every candidate is assessed equally and consistently through a smooth and consistent process.
Legal Compliance and Risk Mitigation
The executive recruiting firm minimizes a client’s legal exposure by ensuring regulatory compliance and an expert understanding of federal, state, and local laws and industry-specific requirements. In addition, a search firm’s transparent and consistent process and objectivity in the executive hiring process eliminate conscious and unconscious bias.
Brand Protection
Because a retained executive search firm is dedicated to knowing a client’s business inside and out, the recruiters are well-positioned to find candidates who align with the client’s brand and pursue the executive search with the confidence to protect it.
Higher Retention Rates
Senior executives placed by retained search firms tend to stay longer — and it’s not by coincidence. By taking time to understand an organization and its culture, developing a personalized search strategy, and supporting clients and prospects throughout the process, retained firms set new leaders up for lasting success.
Onboarding Support and Long-Term Partnership
A retained search firm’s support extends well beyond filling the position. Through support and mentorship, the firm helps new executives transition smoothly into their roles, often becoming a trusted long-term advisor for future leadership needs and succession planning.
Hiring Success Guarantees
Professional executive search firms know what a commitment the executive hiring process is and how much their clients have at stake. If a hired candidate does not remain with the company after a specified time, an executive search firm typically starts the search over at no additional cost.
The Retained Search Fee Structure
The financial agreement in executive search typically involves compensation-based fees and performance guarantees. The measurable return on investment is often a top consideration when securing these premium services.
Percentage of First-Year Total Compensation
The retained search firm receives an agreed-upon percentage of the new hire’s first-year total compensation package, which typically includes base salary and guaranteed bonuses. The specific compensation components and fee percentages are discussed during initial negotiations and formalized in the retained search agreement.
The percentage a retained search firm charges a client depends on multiple factors, including the seniority level of the position, industry specialization, search difficulty, geographic scope, and market competition. These considerations, as well as the payment schedule, are discussed in advance between the client and firm, as a reputable and well-established firm knows that flexibility is key to creating a payment structure that works well for both parties.
Guarantee Periods and Terms
In acknowledgment of a client’s investment in retained executive search and as a statement of confidence and trust in the firm’s success, most firms typically offer placement guarantees of three months to one year. If the new executive leaves the organization during that time, the firm conducts a replacement search at no cost or for a pre-specified fee spelled out in the contract.
The ROI of Retained Executive Search
A well-placed senior executive is an investment. In addition to the compensation level, senior leadership has the potential to drive significant change and positively impact every aspect of an organization. On the other hand, a poor hire has a similarly broad reach, damaging strategic direction, productivity and morale. Investing in the thorough and professional hiring process of a retained executive search team helps ensure the selection of a strategic, long-term match.
Comparing Executive Search Methods
The search for executive leadership is a critical undertaking for any business. Different situations require different recruitment approaches, depending on an organization’s needs, resources, and goals. Three primary executive search methods include retained search, contingency search, and internal HR recruitment — their characteristics vary and impact the recruitment process, delivery, and outcome.
Strategic Advantages in Executive Search Methods
| Strategic Factor | Retained Search | Contingency Search | Internal HR Department |
| Competitive Advantage | Access to top talent and market intelligence | Based on network | Limited by internal resources |
| Market Intelligence | Comprehensive market insights and industry trends | Basic market information | Limited to publicly available information |
| Talent Pool Access | Extensive, including passive candidates and executives at competitor firms | Primarily active job seekers and existing network | Limited to active job seekers and an internal network |
| Passive Candidate Reach | Expert ability to engage executives not actively seeking roles | Limited focus on active candidates | Very limited, mainly through employee referrals |
| Industry Connections | Deep industry networks and relationships | Considerable industry connections | Limited to the company’s existing relationships |
| External Perspective | Independent, objective market viewpoint | Limited external perspective | Internal viewpoint only |
| Brand Protection and Discretion | Optimum market discretion and brand management | Multiple firms may know of a search | Internal knowledge of search |
| Long-term Partnership | Ongoing strategic advisor for future talent needs | Transaction-based relationship | Part of ongoing internal function |
| Retention Rates | Strongest long-term retention outcomes | Moderate to variable retention success | Variable depending on the process |
Service-Related Differences in Executive Search Methods
| Service Factor | Retained Search | Contingency Search | Internal HR Department |
| Cost | Percentage of total compensation, paid in installments | Percentage of salary paid only upon placement | Low cost, overhead expenses only |
| Client Focus and Communication | Exclusive dedication with regular, structured updates throughout process | Multiple clients with updates primarily during candidate presentation | Multiple priorities with internal communication channels |
| Candidate Experience | White-glove service throughout the entire process | Professional but transaction-focused | Variable depending on resources |
| Process Efficiency | Highly structured, proven methodology | Variable depending on the firm | Can be slowed by competing priorities |
| Legal Compliance and Risk | Expert guidance on employment law and hiring regulations | Basic compliance knowledge | Internal legal team consultation is needed |
| Onboarding Support | Comprehensive transition support and integration | Limited to placement | Internal onboarding process |
| Guarantees | Comprehensive guarantees | Limited or no guarantees | No formal guarantees |
Is Retained Search Right for Your Company?
Companies seeking top-tier executive recruitment can benefit from retained search. Here are some key scenarios to consider:
C-Suite and Senior Leadership Roles
High-tier executive roles are often publicly visible and impact company valuation. Hiring for these positions requires extensive due diligence, confidentiality and access to highly qualified talent networks. A retained firm’s customized search, deep resources, and proven processes allow businesses to access the best talent.
Confidential Replacements
Sometimes, companies want to keep the executive hiring process confidential. When a high-profile leader is leaving or a company is expanding or merging, the discretion and careful expertise of a retained search are appropriate.
Highly Specialized, Complex, or Niche Positions
When an open executive role requires a specialized background and skillset, a retained firm’s customized search, industry expertise and market intelligence comprise a more effective search than contingency or internal HR recruitment.
Long-Term Partnership and Succession Planning
Continuity is key when developing a succession plan or long-term strategy for leadership. Rather than fill positions individually as they come up, ongoing partnership with a firm creates continued support and planning for future growth.
Global Searches
When searching international markets or wishing to find talent beyond boundaries, the partnership and expertise of a retained search firm are extremely valuable. The right firm will possess a global network and knowledge of diverse business cultures, environments, and regulations.
Choosing the Right Retained Search Firm
Executive hiring is a critical decision that impacts a business from top to bottom and requires a significant investment of time and resources. Before retaining an executive search firm, a company must conduct due diligence to find the right fit. This starts with asking the right questions.
Questions to Ask
Dig into an executive search firm’s fit for your company by questioning their experience and expertise:
1. Years in executive recruiting: “How long has your firm been in business?”
2. Extent of industry knowledge: “What experience do you have in our industry?”
3. Resources in and insight into the market: “What’s your current assessment of the talent pool in our industry?”
4. Proven track record and testimonials from the industry: “Can you share examples of successful placements in similar roles?”
5. Workload: “How many clients do you work with at one time?”
6. Experience of firm recruiters: “Who will handle our search, and what is their background?”
7. Communication process: “How often will we receive updates?”
8. Toolkit for evaluation: “What assessment methods do you use?”
9. Success rate: “What percentage of your placements are in their roles beyond two years?”
10. Guarantees offered: “What are the terms of your replacement guarantee?”
11. Follow-up and post-placement support: “How do you support onboarding and transition?”
A company should address other concerns or questions related to its needs, culture, and goals. The right retained search firm will have a transparent process and welcome questions as an opportunity to learn more about a prospective client.
Final Thoughts
Retained executive search delivers comprehensive, strategic, and personalized services that extend far beyond traditional recruitment and exceed the reach of internal HR departments. Through extensive networks and established partnerships, deep industry knowledge, and expertise in executive hiring, a retained search firm offers a significant return on investment by securing transformative long-term leadership.
FAQs
What is the difference between retained search and contingency search?
Retained search and contingency search differ in their approach, depth of personalization, and commitment level. In retained search, the firm works exclusively with a client and receives payment on a contractual basis for highly customized research and executive search. Contingency firms often compete with other firms to fill the same role and are paid only if they successfully place a candidate.
Can a retained search guarantee a successful hire?
Due to their deep dive into their client’s organization, industry, networks, and market intelligence, a retained executive search firm pursues only the most qualified candidates for a position and strives for a holistic fit. This approach, combined with regular communication, extensive vetting, and careful attention to candidate experience, significantly increases the potential for a successful long-term outcome. If an executive hiring is unsuccessful, the retained firm stands behind its work through a placement guarantee.
