What the US market charges
Retained search runs 30 to 35 per cent of first-year cash compensation, billed in thirds. Contingency is 20 to 25 per cent.
On a $250,000 base with a $75,000 target bonus, a fee charged on total cash at 33 per cent is $107,250. Charged on base alone it is $82,500. That single definition is worth twenty-five thousand dollars, and it is the clause to fix first.
What differs from the UK
- Equity is part of the package and usually outside the fee base. Confirm that in writing, because a firm that includes the value of a grant is charging you for money nobody has yet earned.
- At-will employment means no notice period. A US executive can start in two to four weeks, which makes the search itself the whole timeline rather than half of it.
- Pay transparency laws in several states require a posted range. That changes what you can hold back in negotiation and makes an under-market package visible immediately.
- Non-competes are much weaker than they once were and vary sharply by state. Assume you cannot rely on one.
The timeline advantage
| United Kingdom | United States | |
|---|---|---|
| Search | 8 to 12 weeks | 8 to 12 weeks |
| Notice | 3 months, often 6 in finance | 2 to 4 weeks, at-will |
| Decision to desk | About 6 months | About 3 months |
| Fee | 25 to 33 per cent of first-year earnings | 30 to 35 per cent of first-year cash |
Before you engage
Ask the same off-limits question as anywhere else, and ask it by state. A firm strong in New York financial services may be fenced out of exactly the companies you want in that market and wide open in Chicago.
Questions
- What do US executive search firms charge?
- 30 to 35 per cent of first-year cash compensation for retained search, billed in thirds; 20 to 25 per cent for contingency. Confirm whether equity is inside the fee base.
- Why is US executive search more expensive than the UK?
- A deeper, older market with more competition for the same senior people, higher compensation to calculate the percentage on, and an expectation that the fee funds a fully exclusive process.