Why the percentage barely moves
A firm's rate is its positioning. Dropping it for you invites every other client to ask, and they know you will tell people. What a firm can do without damaging that is give ground on how the fee is calculated and when it is paid, which does not appear on any rate card.
The six things that do move
- The base. Fix the fee against base salary rather than total first-year earnings. On a package with a £45,000 target bonus that is worth around £13,500 at 30 per cent.
- The uplift. Cap the fee against the package in the brief, so a candidate negotiating up does not negotiate your fee up too.
- Expenses. Ask for them inside the fee, or capped at a fixed sum.
- The guarantee. Push the replacement period out, and get the list of what voids it in writing.
- Payment terms. Thirty days from invoice rather than on acceptance.
- A failure clause. What happens if there is no hire: a re-run at no fee, or a credit against a second mandate.
The leverage you actually have
Exclusivity is the thing a firm wants most and the thing you are giving away for free if you do not price it. Offering a genuinely exclusive mandate, with a commitment to interview inside a set number of days, is worth real money to them.
A second mandate is worth more still. A firm will discount a first search against a credible pipeline of the next two.
What not to do
Do not run the same brief through four contingency agencies to save the retainer. The market finds out within a week, the best candidates see the role twice and assume it is troubled, and you have made a hard search harder.
Questions
- Can you negotiate an executive search fee?
- The headline percentage rarely moves. The base it is charged on, the expense cap, the guarantee and the payment terms almost always do, and together they are usually worth more.
- What is a fair executive search guarantee?
- Six to twelve months with a free replacement, with the voiding conditions written out. Anything under three months is close to meaningless at executive level.