Steps to a New Job

Executive Recruiters: Your Job-Search Commandos

The Two-Party System

You've probably heard of the so-called schism in the world of executive search between "retained" and "contingency" headhunters. True, differences exist, especially in regard to billing methods, candidate salary levels, and operational procedures.

However, I prefer to think of the entire search industry as a microcosm of the American political system, in which both Republicans and Democrats live in peaceful co-existence.

"Gee, that's a far-fetched analogy, isn't it?" you ask.

No, not really. Republicans and Democrats are both loyal Americans; they just have different views concerning society and the way the country should be run.

The same could be said of the retained recruiters (who get their fees paid in advance and work to fill higher level positions) and the contingency folks (who only get paid once their candidates are hired). Each serves a different slice of the employment population, and each has a different concept of how the search business should work.

Interestingly, the lines of demarcation have begun to blur in recent years. Just as Republicans and Democrats have cross-bred portions of their constituencies, so have the retained and contingency headhunters. Although the traditional break point in salary is around $75,000 (with retained above and contingency below) it's no longer unheard of for a contingency recruiter to place a CEO at $200,000 a year; or a retained headhunter to place a manufacturing manager at $55,000. What's more, each camp will, if the situation warrants, borrow from the other's method of billing the client. Lately, I've heard stories of contingency recruiters charging partially retained fees, and retainer headhunters accepting assignments "on spec."

As the search industry continues to evolve, it'll matter less and less how the client is billed. Currently, there are about a dozen different billing schemes, from flat fees to hourly fees to itemized service charges. One clever recipe combines contingency with retained to produce -- voila! -- "contained" search.

Understanding these broad divisions will help avoid confusion and save you time if your salary level is fairly polarized. That is, if you're currently earning, say, $35,000, there's virtually no chance you'll be working any time soon with a retained headhunter. Similarly, if you're earning over $100,000, the odds are, the headhunter you work with will be retained by the client company.

Both contingency and retained recruiters play for big stakes. Fees generally run from twenty to as high as thirty-five percent of a placed candidate's first year compensation. With that type of arithmetic, it's easy to see why headhunters develop ulcers, not to mention a healthy skepticism towards their clients and candidates. All it takes is for an employer or candidate to change his mind at the last minute, and the headhunter has lost, say, $10,000 or $20,000 in personal income for months of work.

Next: Some Common Sense Ground Rules >