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.
Fee by level, because the percentage is not flat
Firms quote one rate and then apply a different one depending on the seat. The spread is real and it is rarely volunteered.
| Seat | UK retained | US retained | Why |
|---|---|---|---|
| Senior manager | 18 to 22 per cent | 20 to 25 per cent | Often contingency territory; the market is visible |
| Director, function head | 22 to 28 per cent | 25 to 30 per cent | Approach-led, but a wide pool |
| C-suite | 28 to 33 per cent | 30 to 35 per cent | Small pool, long approach, heavy assessment |
| Chief executive, board | 33 per cent, or a fixed project fee | 33 to 35 per cent, or fixed | Fee often decoupled from salary entirely |
One hire, costed properly
A £150,000 chief financial officer in the UK, hired through a retained search at 30 per cent of base. Most companies budget the salary and the fee. These are the lines that are actually on the invoice or on the profit and loss in year one.
| Line | Amount | Note |
|---|---|---|
| Base salary | £150,000 | The number everybody quotes |
| Employer National Insurance | About £21,000 | Roughly 15 per cent above the threshold |
| Pension, minimum | About £4,500 | Three per cent of qualifying earnings, usually more in practice |
| Search fee | £45,000 | 30 per cent of base, billed in thirds |
| VAT on the fee | £9,000 | Recoverable if registered, real cash either way |
| Assessment and expenses | £0 to £6,000 | Ask whether these are inside the fee |
| First-year total | About £229,500 | Before bonus, equity or equipment |
The line nobody puts in the budget
A search takes eight to twelve weeks and a UK notice period is usually three months. That is six months of the seat being empty, and for most companies it is the largest number in this article by a wide margin.
Price it honestly. If the chief financial officer seat carries the raise, and the raise slips a quarter because nobody is in it, the cost of that slip is not measured in tens of thousands. If a chief marketing officer seat is empty through a launch quarter, the launch is what it costs.
This is the real argument for a search rather than doing it yourself, and it is also the real argument for covering the seat fractionally while the search runs. Six months of a fractional executive at two days a week is roughly £28,000 to £69,000 of day rate, against a gap with no floor on it.
Where the percentage bends
- Two hires from one search. Many firms discount the second, often to half rate, because the map is already built. Ask before the search starts, not when the second candidate appears.
- Private equity portfolios. A firm working across a portfolio will usually cut the rate for volume, and the discount is negotiated at fund level rather than by the company doing the hiring.
- Regulated sectors. Financial services and healthcare searches carry a premium, because the compliance and referencing burden is genuinely heavier.
- Non-profit and public sector. Frequently a fixed project fee rather than a percentage, because the salaries would not fund a percentage-based search.
- Interim and fractional. Charged as a margin on the day rate rather than a percentage of anything, typically 20 to 40 per cent on top of what the operator receives, which is the model this company does not use.
What a fixed fee looks like instead
This company prices a fractional search as a search fee of £2,500, then 15% of annualised value if you hire, with a minimum of £3,500. The published band for fractional placement in the UK runs from 10 to 15 per cent of annualised value, so that sits at the floor of it. For a permanent, full-time executive we run a retained search on a percentage of first-year base, because that is the correct model for a permanent appointment 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.
Common 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.
Does the search fee include VAT?
In the UK, no. VAT is charged on top at the standard rate, so a £45,000 fee is £54,000 out of the bank. It is recoverable if you are registered, but it is cash you need at the time.
What does it cost to hire a CFO in total?
On a £150,000 base in the UK: roughly £21,000 employer National Insurance, £4,500 minimum pension, a £45,000 search fee and £9,000 of VAT. About £229,500 in year one before bonus or equity.
Do you pay twice if you hire two people from one search?
Usually not at full rate. Most firms discount a second hire from the same mapped market, often to half. Agree it before the search starts rather than when the second candidate appears.
What does executive search cost for a non-profit?
Usually a fixed project fee rather than a percentage, because a percentage of a charity salary would not fund a properly mapped search. Expect a flat fee in the low tens of thousands.
More of them, on hiring, contracts and what a fractional engagement costs, on the fractional executive FAQ.