08/11/2022

6 Critical Success Factors for Choosing an Executive Search Firm

6 Critical Success Factors for Choosing an Executive Search Firm

With nearly 300 UK executive search firms to choose from, it can be overwhelming to try and determine which firm is most suitable to recognise your business needs and help you appoint your next senior leader. Within this blog, we will provide a breakdown of everything you need to consider when shortlisting executive search firms, questions you should ask during the initial consultation stage, and a few warning signs to look out for.

 

Contents

 

Why Use Executive Search Firms?

Sourcing Candidates is Time Demanding

We know better than anybody that executive recruitment is a full-time job and, if you don’t hire regularly enough to justify having a dedicated talent acquisition role internally, it can be very difficult for someone in your company to accommodate the hiring process in addition to their regular responsibilities, especially if they’re currently handling tasks that the vacant position would take over. As Theresa Adams, Senior Knowledge Advisor at the Society for Human Management Resource, puts:

A speech bubble with text inside: Managers typically have their own job, and when they have an open position, technically may have two jobs. Underneath the speech bubble is the text: Theresa Adams, Senior Knowledge Advisor at the Society for Human Management Resource.

From market mapping to candidate research, the process is timely, so partnering with an executive search firm can help alleviate most of the search process so that you only have to get involved with interviewing beyond the first screening stage.

 

Recruitment Tools are Expensive

Investing in recruitment tools is only worthwhile if you hire regularly, otherwise, they’re not cost-effective. The very basic LinkedIn recruiter license alone costs £1,200 per annum, which has lots of restrictions on contacting potential candidates and a limited search function. Working with an executive search firm allows you to vicariously have access to professional-standard tools to ensure that you attract the very best talent for your vacant position.

 

A phone screen showing the LinkedIn app.

 

Executive Search Firms are Impartial

Promoting internally can boost company morale and motivate staff. However, companies can also be blind-sighted by loyal employees, encouraging them into leadership roles before they’re ready and, unfortunately, sometimes it quickly becomes apparent that they just couldn’t meet the demands of the role at that time. Even if you have a very strong candidate internally, it’s highly recommended that you reach out to an executive search firm to compare their competency against a broad range of external candidates. This will either offer you the reassurance that your internal candidate is perfect for the job, or you might realise that they’re not quite ready and find a more suitable external candidate.

 

Candidates sat waiting to go into an interview.

 

It’s also common to see companies become close-minded to considering candidates who haven’t got leadership experience in the same field. This creates a small pool of talent with limited perspectives and experiences, and who share the same strategic thinking as your competitors. Due to this, most executive search firms will recommend that you consider leaders with adjacent industry experience as well, as this can inject innovative ideas and original insight into your business, giving you a competitive advantage.

 

6 Factors to Consider When Choosing an Executive Search Firm

1. How Long the Firm Has Been Operating

If it’s not stated on the website, always ask any executive search firm that you’re in talks with when they were established. A firm that’s operated for more than a decade can be a good indicator of quality, since they’ve managed to remain sustainable, probably by accruing repeat clients and winning many pitches.

It’s even more of a positive sign when a search firm has survived times of recession or other economic hardship. This means that they can provide tried and tested business advice, and will have established relationships with highly attractive, seasoned leaders who are experienced in navigating financially challenging times.

 

A personal stood up in a business meeting, giving direction to the other attendees.

 

2. Where They’re Based

Salary and benefit expectations vary drastically from region to region. That’s why you should find an executive search firm that is based or has lots of experience recruiting for the location that you’re recruiting in.

A good executive search firm should be able to strike a balance and negotiate the best deal for both you and your ideal candidate. If a firm has a lack of understanding of the company benefit expectations in the designated area, then there’s the risk that they might provide poor advice on what remuneration package you should be offering to attract and retain top talent.

 

A row of £20 notes.

 

3. Their Specialisation

Some executive search firms choose to specialise, whether it be the size of the company, industry, or sector. For example, here are our practices. Take the time to research whether there are any with extensive experience recruiting on behalf of businesses similar to yours. Even if you’ve previously had a good experience working with one search firm to place your Chief Marketing Officer, maybe another firm would be more appropriate to help you to appoint your next Chief Financial Officer.

 

4. Who Works There

It’s always worth asking about the experience of the person assigned to manage your role(s). For example:

  • How long have they worked in executive search?
  • What sort of industries have they completed jobs on behalf of?
  • Have they worked with any businesses like yours?
  • How many connections do they have with leaders in your industry?

 

5. Their Processes

During the initial consultation stages with an executive search firm, ask them about their approach to executive search. Ensure that you understand their processes and procedures and that they align with the needs of your business so that you don’t encounter any unwelcome surprises along the way. This is also a great opportunity to enquire about anticipated timeframes, and if you have any deadlines, discuss whether they are realistic for the firm to be able to meet.

 

A close up of a gantt chart.

 

6. What Their Testimonials Say

Besides a word-of-mouth recommendation from a trustworthy professional connection, external review websites can provide great insight into what an executive search firm is like to work with. Refer to resources like Trustpilot or Google Reviews for unbiased opinions from previous clients and candidates.

 

Close up of a person using a laptop with different reviews floating above the keyboard.

 

How Much do Executive Search Firms Charge?

It depends on a lot of factors.

How much executive search firms charge ranges significantly, as with any business, you can probably expect to pay more partnering with an established market leader than you would a newly founded start-up still finding its feet. And as with everything, being more expensive doesn’t necessarily guarantee better quality.

Here are some of the other factors that can greatly influence the cost.

 

Longevity of Relationship

How much you’re quoted can depend on whether this is your first time partnering with the firm or not. This can work both ways; some firms might reward returning clients with a loyalty discount, whereas others might offer a one-off introductory price for new businesses.

 

Volume of Work

If you are looking to hire 2 or more executive-level roles in one go, most firms will probably offer you a discounted rate in exchange for taking them all on. Similarly, perhaps you’re only looking to hire one executive role but have other non-executive roles to fill throughout the business, executive search firms which are a part of a wider recruitment group (for example, Parkinson Lee who are a subsidiary of Elevation Recruitment Group) might quote a lower bundled price.

 

Location

The location of the firm can play a huge factor in how much they charge. It probably won’t surprise you to learn that in the UK, London-based firms are typically the most expensive. We’d estimate that, when you collaborate with a firm in London, you can expect to pay between 30-40% of the role’s entire package (including basic, car/car allowance, and an average of any commission, bonus, and other monetary incentives) over the first 12 months of their employment. To put that into context, we on average will exclusively charge around 33% of the basic salary and the value of any company car.

A comparison table showing the cost of London firms versus firms outside of London. The table reads: Average London Firm charges between 30-40% of a role’s entire package (including basic, car/car allowance, and an average of any commission, bonus, and other monetary incentives) over the first 12 months of their employment. Average Non-London Firm charges 33% of basic salary plus the value of a company car.

 

Benefits Package

Some executive search firms will charge a percentage of just the basic salary, whereas others will look at the entire remuneration package. If you have a very generous benefits package, then finding a firm that mostly charges by basic salary might be most cost-efficient for you.

 

How Long Does an Executive Search Take?

Different Executive Search Firms Work to Different Timescales

How long an executive search takes to complete can depend on a myriad of different factors; from what industry the role is to how many other roles the assigned account manager has on. As a guide, we would say that most executive firms will take between 6 and 12 weeks, which starts with the firm receiving the brief and ends with the successful candidate receiving an offer.

 

Some Roles Typically Take Longer to Complete

No two jobs are the same, but we’ve found that roles in the tech industry typically take longer to complete. Due to IT, computer science, and digital marketing, for example, all being relatively new disciplines, there’s a shortage of candidates with enough experience to do these roles at an executive level. And unfortunately for employers, demand for these positions is high, so expect to have a competitive remuneration package to stand a chance in this challenging market.

 

Close up of a person using a laptop.

 

Factors That Can Make the Process Longer

Before approaching executive search firms, determine what your internal approval process will be. Who is going to be involved in the shortlisting, interview, and decision-making stages? Although hiring at the executive level is crucial to get right, involving too many people in the process can cause delays and risks making a bad impression of your business to the candidates. It’s worth checking whether any of the decision-makers have annual leave booked in, and if so, consider how you will work around it to prevent setbacks if you cannot postpone advertising the role.

Once you know who’s going to be involved, take the time to decide how many interview stages you plan to have, and what they will entail. Discuss what qualities and attributes your ideal candidate would have until you all agree along the same lines. This helps to communicate a clear brief to the executive search firm and improves the quality of the shortlisted candidates the first time around.

 

An in-person business meeting.

 

Key Takeaway

To summarise, processes, costs, and timescales all vary wildly from firm to firm. To ensure a smooth hiring experience for everyone, it’s important to implement an efficient internal process before liaising with executive search firms. Once you’re ready, research firms specialised in your location, size of company, and/or industry. From this list, refer to review websites or consult your contacts on whether they have any experience with these firms to help you refine the list further before you reach out.

 

Get In Touch

To arrange an initial consultation and learn more about our executive search process, please contact Parkinson Lee’s Managing Partner, Lee Bhandal, at l.bhandal@parkinsonlee.com

Parkinson Lee has been operating for close to a decade, and in that time has established a huge talent pool of executive-level professionals across the UK. We have extensive experience serving PLCs, AIM-listed companies, PE-backed firms, and SMEs across both the private and public sectors, spanning many different industries.

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