The "Invisibles" of high-quality Search | Part 1

A hiring manager is tasked with filling a senior position within her team. She meets with three search firms to explore their capabilities. Among them, one firm stands out for its significantly lower fees. While the traditional firms propose charges of around 30% of the candidate’s total remuneration, with an upfront retainer, the cheaper firm suggests a fee of only 20% of the candidate’s base salary, with no retainer required.

To simplify, let’s consider a total remuneration of £300,000, comprising a £150,000 base salary with an anticipated 100% bonus. The traditional firms would likely charge £90,000 (30% of £300k), with a retainer ranging from £40,000 to £60,000. On the other hand, the cheaper firm proposes no retainer and a final success fee of £30,000 (20% of £150k). Puzzled by the substantial price difference, the hiring manager wonders about potential pitfalls. However, the cheaper firm’s ‘no hire-no fee’ structure offers a safety net—if they fail to deliver, there is no financial obligation. Thus, the manager opts for the cheaper option, reasoning that it’s risk-free and she can always resort to the more expensive firms if needed.

The cheaper firm presents a variety of candidates, some of whom are suitable while others are not. Although the process takes longer than expected, the hiring manager eventually identifies a suitable candidate and successfully completes the hiring process, all at one-third of the cost. She concludes that cheaper pricing yields the same outcome and decides to stick with it in the future.

However, does opting for the cheaper firm truly result in the same outcome? While it may seem so on the surface—a successful hire for the role—there’s a reason high-quality search firms charge more. They provide a range of value-added services that may not be immediately apparent but significantly impact the likelihood of success.

In the same way that fund selectors focus on process and people, as well as performance -you would not select a fund based simply on the performance because, as sophisticated buyers know, there can be a world of difference between two managers delivering the same return – so too, our hiring manager should consider factors beyond the short list, delving deeper into factors such as candidate evaluation, process quality, and cultural alignment.

There is a lot going on under the surface in a high-quality Search to ensure a higher-quality outcome, relative to cheaper search processes.

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Last edited 10th April 2024