Executive Search & Direct Hire
The two models
Retained search is exclusive and paid in stages (commonly a third at engagement, a third at shortlist, a third at placement), typically 25-35% of first-year compensation, used for executive and hard-to-fill leadership roles. Contingency search pays only on placement, commonly 15-25% of first-year salary, and often runs non-exclusively - faster to start, but the recruiter's effort follows the probability of getting paid.
When each fits
Retained fits when the role is senior, confidential, or scarce enough that a dedicated search process beats a race; contingency fits volume professional hiring where speed and market coverage matter more than process depth. The honest broker's rule: if three firms are racing on contingency, none of them is doing research - they are doing retrieval.
The cyclicality warning
Direct hire is the most cyclical revenue line in staffing: it falls first and hardest in downturns and rebounds sharply. Canada's forecast illustrates both sides - place-and-search revenue declined 20% in 2025 and 10% in 2024, and SIA forecasts a 14% rebound in 2026. Agencies balance the swing by pairing search with contract revenue that bills every week.
Fee benchmarks (typical ranges):
Contingency direct hire: 15-25% of first-year salary
Retained executive search: 25-35% of first-year compensation, staged
Conversion fees: defined in the staffing agreement, declining with assignment length
Frequently asked questions
What is the difference between retained and contingency search?
Retained search is exclusive, paid in stages (typically 25-35% of first-year compensation), and used for senior or scarce roles. Contingency search pays only on placement (typically 15-25% of salary) and often runs non-exclusively, trading process depth for speed and coverage.
How much do executive search firms charge?
Retained executive search commonly runs 25-35% of first-year compensation, staged across engagement, shortlist, and placement; contingency direct hire commonly runs 15-25% of first-year salary, paid only on a successful hire.
Why is direct hire revenue so cyclical?
Because permanent hiring is the first thing companies freeze in uncertainty and the first thing they resume in recovery: Canadian place-and-search revenue fell 20% in 2025 and is forecast by SIA to rebound 14% in 2026.