3 Types of Executive Search Firms and Their Fees

executive search firm fees

There are several types of executive search firms to consider when selecting a firm to fill a leadership position in your company. The differences make up how they conduct their search, their executive search firm fees structure when conducting a search, and the incentives behind what quality of candidates the search firm provides for you. Here we have outlined the 3 types of executive search firms and corresponding fee structures.

Executive Search Firm Fees: 3 Types of Firms & Their Fees

Contingency Firms

Contingency firms are only paid once you hire a candidate they have presented to you. Thus, their pay is contingent on selecting candidates to fill positions as quickly and efficiently as possible. They also tend to take on as many clients as they can to maximize revenue. Therefore, contingency firms typically direct their efforts towards mid- to lower-level positions.

Contingency Firm Fee Structure

The executive search firm fees that a contingency firm will charge are roughly 20-30% of the candidate’s first-year salary. But because they only get paid once the search is completed and the candidate is hired, companies must keep in constant contact with the search firm and express a strong desire to continue through the entire process.

Container Firms

Container firms require an upfront fee and only begin the search once this fee has been paid. This ensures that the client is committed, while the search firm acquires surmountable pressure to perform a quality search.

Container Firm Fee Structure

The fee structure differs slightly from that of contingency firms. The upfront fee is a flat fee of around $5000 to $8000. Once the search is completed and the candidate has been placed, container firms then charge about 20-25% of the candidate’s first-year salary as compensation.  This type of structure provides an incentive for a stricter quality approach to conducting the hiring process.

Retained Firms

Y Scouts is a retained executive search firm. Retained firms develop a hands-on relationship with the company and are hired for a specific period of time to conduct a search. Retained firms charge more than contingency or container firms but specialize in placing upper-level management and positions where qualifications, both professional and personality-wise, are higher. These firms invest valuable time into the company making sure to align the culture, values, and purpose of the client with that of the candidate.

Retained Firm Fee Structure

The overall fee charged by retained search firms is 30-35% of the estimated first-year salary of the candidate. However, payments are typically made in three installments. The first third of the fee is paid to begin the search. The second third is paid 60 days into the search. The final third is paid once the chosen candidate is hired.
Y Scouts fee agreement is equal to a negotiated flat fee prior to the initiation of the search process.  We work on an exclusive arrangement and will work with you and your team to pursue both internal and external candidates you may have identified as potential fits. All candidates sourced by you, Y Scouts and other referral sources will be evaluated through all phases of our process regardless of point of origin.
This structure is optimal for both the client and the search firm as they are both fully committed to the process, and are in a strong partnership to find the right leader for the company.
The three types of executive search firms exist to provide companies with different needs for filling positions. Retained firms conduct higher quality searches to find proven leaders that exemplify the cultural alignment and proven track record the business needs to drive results.

Y Scouts is an executive search firm that helps nonprofits and social enterprises find exceptional leaders. Contact us if you are looking to find an exceptional leader. To be considered for exceptional leadership opportunities with our clients, please take the first step by joining the Y Scouts Leadership Community.

Frequently Asked Questions

Q: What are the models of executive search?

A: Our Four-Phase Executive Search Model begins with discovery and planning, where we assess your organization’s needs and develop a clear strategy. Next, in the sourcing and recruitment phase, we actively seek out top candidates using our network and resources. We then guide the interviews and manage offer negotiations to ensure a smooth hiring process. Finally, in the onboarding and performance management phase, we help the new hire integrate into the company and set up systems to support their ongoing success.

Q: What is the difference between staffing and executive search?

A: Staffing and executive search might sound similar, but they serve different purposes. Staffing is like filling in the gaps quickly; think of it as finding great people for immediate or short-term roles. Executive search, on the other hand, is more like a treasure hunt for top-tier talent. It’s about finding the perfect fit for high-level, long-term positions and involves a more detailed, strategic approach. While staffing is about speed and efficiency, executive search is all about finding the right leaders who can make a big impact.

Q: What is the executive search rate?

A: The executive search rate is basically the cost of finding top-tier talent for your organization. It’s typically a percentage of the new hire’s first-year salary and can vary depending on the firm and the specifics of the search. Consider it an investment in securing the right leader who will make a significant impact on your team and company.

Q: How does an executive search work?

A: Here’s how an executive search works: First, the firm learns about your company and the job you need to fill. They then find and reach out to potential candidates, often including people who aren’t actively looking for a new job. After putting together a list of top candidates, they help with interviews and evaluations. Finally, they assist with making the job offer and getting the new hire settled into their role. The goal is to find the best person for high-level positions in a thorough and strategic way.

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