The biggest mistake most people make in negotiating executive search firm contracts is focusing solely on the outcome and overlooking the process. In hiring, your goal is not merely to hire someone qualified; your goal is to hire and retain a top performer. Your contracts need to reflect that.

This is what almost everyone pays attention to in an executive search firm contract:

  • Fees (total amount due)
  • Payment terms (when payments are due)
  • Replacement guarantee (what happens if things don’t work out with the new hire)
  • Whether the firm has an effective process to interview candidates in-person or virtually.

And this is what almost everyone forgets to negotiate in an executive search firm contract:

  • Flat fee pricing (setting the full fee in advance, regardless of the salary ultimately paid to the candidate)
  • Off-limits policy (the search firm agreeing to not recruit any other staff from the employer for several years)

And although these contract elements are important, they are not enough to prevent hiring someone mediocre. Your contracting process must also ensure that the right recruiting process will be followed. A great hiring process provides structure to the hiring decision, gathers information, identifies alternatives, weighs the evidence, challenges assumptions, and considers the landscape in which the decision is being made. The search firm contract should outline all of that.

The Three Elements Missing From Most Retained Executive Search Firm Contracts

To minimize the risk of hiring someone mediocre, your contracting process should specify these three elements:

  1. The contract should specify a data-driven candidate research and identification process, with clear deliverables and a rigorous method of surfacing candidates from a wide variety of backgrounds.
  2. The contract should outline the reporting and deliverables, including a methodical decision-support process that organizes all the relevant information for the hiring manager.
  3. The contract should outline a discussion process that methodically expands the thinking of the hiring manager. When the recruiting process focuses too narrowly on candidates with one type of experience, it ignores everyone who doesn’t fit that mold. The most highly qualified candidates often take a path to job competency that the manager had not envisioned at the outset of the search. And it is precisely this diversity of career experience that proves to be a candidate’s strongest asset.

Including these elements in your contract review will reduce your risk of hiring an ineffective vendor, and reduce your risk of making a hiring mistake. The key for you as the buyer is to understand what exactly an executive search firm can really do for you.