When considering a new senior hire, boardroom decisions on how to commence the search often start along the lines of:
The CEO wants a retained search for a critical hire. One stakeholder agrees. Someone else pushes back with, "let's just use the agency we've always used, no fee if it doesn't work out." Or even worse, "I know someone. Let's just ask around within our networks."
I fully appreciate this instinct, especially as I used to work within contingency recruitment. However, this instinct often costs more than it saves. Let's run through why, with a couple of real examples along the way
The "free" option isn't free
Contingency recruiters are only paid if they place someone. This sounds like it removes your risk, but it only transfers it.
Contingency recruiters operate at high volume. They must spread the risk of not placing a position that they’ve been briefed on.
Furthermore, multiple firms are usually working the same brief at once, which means nobody is fully accountable for getting it right, only for getting there first. And guess what, if they catch wind of other agencies working on the vacancy, or a client interviewing from their own network, they’ll drop working on it.
Accessible candidates versus approaching the full market
Speed is the essence as a contingency recruiter. Database mailshots, adverts and a quick sweep of LinkedIn is the go-to strategy.
Clients are rarely met with to gain the full brief or a sense of what makes the company successful. Specifications are taken over the phone, with CVs sent in mass after a few days.
As a client you’re left to sift through dozens of CVs. These are often wide of the mark, or leave you underwhelmed upon meeting them.
A strong, retained headhunter takes the time to meet and explore both the company and needs from this position in full. They should have a deep knowledge of your industry and so are able to truly consult with you.
With this knowledge, they will then completely map out the market, ensuring all possible target candidates are identified.
LinkedIn Talent Trends data points towards 70% of the workforce being not active on job boards. I suspect that this is even higher at leadership level.
Being fair on the sceptics
Retained headhunting does require some upfront commitment from you as the client. A clear and agreed upon brief, timely decisions, a process that doesn't stall internally are required.
Occasionally, the dream candidate doesn’t exist. This is where a retained headhunter, upon sharing key data, will work with you to shape what will work.
I once worked with an international interior building products manufacturer in the search for their next Commercial Director. The brief read more like a shopping list, as the previous director had responsibilities added to her role over the past 15 years. Her role was unique. My task was to demonstrate to the CEO what range of skillsets were available within the industry.
Hedging your bets versus making an informed decision
As mentioned, a good, retained headhunter will consult with you throughout the approaching phase of the headhunt. They will also provide detailed feedback on their own interviews, along with candidates that didn’t make the grade.
You are going into your interview rounds fully equipped with what the market conditions are (salary ranges, skillsets, performance of competitors employees etc).
The ‘from our network’ option worries me even more in this respect. Based on interviewing a handful of known candidates, stakeholders have even less judgement or objective feedback on what the market conditions are.
I’ve been brought into briefing conversations on numerous occasions when a client has had a candidate introduced by a contingency recruiter or through their network fail within 18 months. Most of the time it’s due to them having to take a punt on the best of an average shortlist.
What a wrong hire at this level actually costs
The Recruitment & Employment Confederation puts the cost of a poor hire at leadership level at £132,000, once you account for lost productivity, management time and the impact on the wider team. The CIPD's own research shows the cost of a bad hire can exceed 30% of first-year earnings; rising as high as 400% for senior or specialist positions. And in their 2024 survey, 41% of UK employers admitted they'd made a hiring decision in the past year they later regretted.
Hiring at leadership level often determines whether your future strategy is going to succeed. It can also be the contributing factor as to whether other leaders feel fully engaged, or start looking elsewhere.
The real question for your next critical hire
It should never really be about, "what does this cost." It should be, "what happens to this business if we get this wrong."
At leadership level, it's a strategic decision.
And so, the next time this debate happens in your boardroom, ask the sceptic in the room:
What did our last bad hire actually cost us and are we willing to find out again?
Can we afford to hedge our bets on this hire, or do we need to search the whole market for the optimal recruit?
If you'd like to talk through a critical hire you're weighing up, I'd welcome the conversation.
