The headline number
In the UK a retained executive search is usually 25 to 33 per cent of first-year earnings. Contingency work, where you pay only on a placement, runs 15 to 25 per cent.
In the United States the same work is priced higher: 30 to 35 per cent retained, 20 to 25 per cent contingency. The gap is not a quality difference. It reflects a market where search is more established and where more of the fee is expected to cover a genuinely exclusive process.
On a £150,000 chief financial officer in the UK at 30 per cent, the fee is £45,000. On a $250,000 CFO in the US at 33 per cent, it is $82,500. Those are the numbers to hold in your head while reading the rest of this.
What the percentage is charged on
This is the clause that matters and the one people skim. A percentage of base salary and a percentage of total first-year cash are very different bills.
Total first-year earnings usually means base, guaranteed bonus, car allowance and any sign-on. If a target bonus is included rather than a guaranteed one, you are paying a fee on money the person may never receive.
| Charged on | On a £150k base with a £45k target bonus | Fee at 30 per cent |
|---|---|---|
| Base salary only | £150,000 | £45,000 |
| Base plus guaranteed bonus | £150,000 if none guaranteed | £45,000 |
| Base plus target bonus | £195,000 | £58,500 |
| Total first-year cash including sign-on | £215,000 | £64,500 |
How it is paid
Retained search is conventionally billed in thirds: one on engagement, one on shortlist, one on offer accepted. The first third is not refundable in most contracts, and that is the point of it. It buys the firm's commitment to run an exclusive process and buys your commitment not to hand the same brief to four agencies.
Contingency is paid once, on a placement. Nothing is owed if nobody is hired, which is why it feels safer and why it quietly changes the incentive: a contingency recruiter is paid for speed, not for the right person.
The three places the number grows
- The base it is calculated on. Agree in writing whether bonus is included and whether it is target or guaranteed, before the search starts rather than at offer stage.
- The uplift clause. Many contracts recalculate the fee if the final package lands above the brief, so a candidate negotiating themselves up also negotiates your fee up.
- Expenses. Advertising, assessment, psychometrics and travel are often charged on top. Ask for a cap or a fixed sum.
What a fixed fee looks like instead
This company prices its fractional search flat: £999 to run it and £2,500 only if you hire, so £3,499 in total, or £2,500 to run and £2,500 on a hire for the deeper tier. For a permanent, full-time executive we run a retained search on the conventional percentage model, because that is the correct model for a permanent hire and pretending otherwise would be dishonest.
The honest summary: a flat fee is better value on a straightforward brief in a deep market, and a percentage-based retained search is better value when the brief is genuinely hard, because the firm's work is not proportional to the salary but their effort on a difficult mandate is real.
Questions
- What is a typical executive search fee?
- In the UK, 25 to 33 per cent of first-year earnings for a retained search and 15 to 25 per cent for contingency. In the United States, 30 to 35 per cent retained and 20 to 25 per cent contingency. The percentage matters less than what it is charged on.
- Is the retainer refundable if nobody is hired?
- Usually not. The engagement third is the firm's commitment fee. What you should negotiate instead is what happens if the search fails: a free re-run, a credit against a second mandate, or a stop point where you can walk away after the shortlist.
- Can executive search fees be negotiated?
- Yes, and more often on the terms than on the headline percentage. The base it is charged on, the expense cap, the guarantee period and the off-limits clause are all movable, and they are usually worth more than a point off the rate.