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India’s Executive Search Firms Adopt Pay-for-Performance Fees
Companies hire executive search firms to find top leaders.
The firms do not receive all their fees at once.
One part pays for finding a suitable candidate.
Another is paid when the candidate accepts the job.
The last part is paid after the new executive has stayed for six months.
If the candidate drops out or leaves during that period, the search firm must find a replacement without charging extra.
Executive search firms divide their fees into three stages.
The first payment covers the cost of finding a senior executive.
A second tranche is paid when the candidate accepts the offer.
The final tranche is paid after the executive stays for six months.
If the candidate drops out or leaves within six months, the firm must restart the search at no extra cost.
- Who
- Executive search firms and companies seeking senior executives.
- What
- Search fees are paid in stages, with a no-cost restart required if the candidate drops out or leaves within six months.
- Where
- India.
- When
- The final fee tranche and replacement condition relate to the candidate’s first six months.
- Why
- The article describes a fee model that links payments to the search process and the executive’s early tenure.
Key facts
- Fee stages
- Three: search cost, candidate acceptance, and six-month retention.
- First payment
- Covers the cost of hunting for the CXO.
- Second payment
- Due when the candidate accepts the offer.
- Final payment
- Due after the CXO has stayed for six months.
- Replacement condition
- If the candidate drops out or the CXO quits within six months, the search firm restarts the process at no additional cost.
Sources
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