A: I welcome your question because I get a lot like it. Many executives and professionals consider becoming executive recruiters, often because they are between jobs and think it might be a solution to their search difficulties. But in general, what people know about the search industry and what it's actually like are two different things.
Being an executive recruiter isn't as much about finding candidates as it is about sales. You have to win the assignment before you can complete it. "This is a sales job, no matter how you cut it," says Paul Hawkinson, publisher of the Fordyce Letter, an industry journal based in St. Louis, Mo. Not being able to ask for the order and close the sale is a key reason why the failure rate for newcomers is so high, says Janet Jones-Parker, an executive recruiter to the recruiting business, who is based in Chapel Hill, N.C. Mr. Hawkinson estimates the drop-out rate in the first year at about 90% among newbies to the contingency-recruiting world, while Ms. Jones-Parker believes it's about 70% to 80% among new hires to retained-search firms.
Knowing the distinction between the two types of firms is important. Contingency recruiters are paid only when a client hires someone they've found. They typically handle searches for candidates earning between $50,000 and $200,000 a year. Retained recruiters usually fill only jobs in the upper-earnings bracket, from $200,000 a year on up. And clients pay them their fees even if they don't hire anyone the firm recommends.
Both contingency- and retained-search firms receive 25% to 35% of a new hire's annual compensation as the fee for their work. The percentage depends on what they've negotiated with their client companies. But what you receive as a recruiter is much less. In the contingency world, typically a third of that fee goes to overhead expenses, a third to the recruiter who does the search and a third to the firm owner. Most first-year contingency recruiters working for an existing firm bring in an average of $146,000 worth of business in their first year. Of that, about 35% to 40% goes in their pocket -- or about $50,000 to $55,000, according to a 2005 survey conducted by the Fordyce Letter. Their earnings are about the same in the second year and then jump to about $80,000 to $86,000 in the third year, says Mr. Hawkinson. In the meantime, you'll usually receive a "draw" against your commission earnings of about $2,000 a month.
If you choose to work for a contingency firm, you'll start out as a recruiter, making cold calls to land business. If the retained-search industry is your bailiwick, you might start as a senior associate working for a senior partner, who brings in the business. You'll be paid a salary of between $75,000 and $110,000, plus bonuses for performance, says Ms. Jones-Parker. There's a shortage of associates now due to cutbacks firms made during the past four years, so that might be a good point of entry. "Executing work for someone else allows you to learn the process, methodology and nuances," she says. "The work you do then becomes your part of your personal selling platform."
But the senior associate job is best for more junior people who want to learn the ropes. For senior executives, a more suitable route is to talk your way into a senior partnership. Some retained firms are willing to let an executive with good contacts in an industry come on board as senior partners without pay until they land their first assignment, says Ms. Jones-Parker. You'll get a desk, research assistance and marketing materials.
If you go down this path, be prepared to work hard and suffer lots of rejection. "It takes much longer to be a real contributor from a revenue-stream point of view than one thinks," she says. "You have to keep knocking on doors, and eventually you will get invited to the table to make a pitch." A senior partner is paid all on commission and receives about 35% of the first $500,000 in revenues brought to the firm and 45% up to $750,000 in revenues.
While Ms. Jones-Parker and Mr. Hawkinson agree the best way to enter the field is by working for an existing firm, some people have been successful going solo and opening offices in their homes. In this case, try to leave your current company with a commitment to handle several searches for it a year, and then hire independent research assistance to help you locate candidates. After you make a successful placement, everything you earn is yours. In contingency recruiting, "an awful lot of people go on their own after the second year," says Mr. Hawkinson. "They figure, 'Why share it?' " About 40% of all contingency recruiters are independent operators with offices at home, he estimates.
With search work on the rise as the economy remains stable, this may be a good time to enter the field. About 60% of contingency firms are seeking new recruiters. But examine your abilities and personality before jumping headfirst into something that might not suit you. Be sure you enjoy the prospect of selling and can take rejection. You also must be patient, as the wheels of the hiring process sometimes turn very slowly at client companies. And you need to be a skilled negotiator to align the candidate's and the client's perspectives during the offer stage. Being a recruiter means being an individual contributor. The adjustment may be especially hard for executives accustomed to having their own staffs and being part of the chain of command at their former employers, says Ms. Jones-Parker.
"The reason a lot of people try it is that they are between jobs, so this is a second choice," she says. "It sounds fun, and it is fun, but all of a sudden you go from having staff and support systems to being someone who is sharing an administrative assistant, has to make cold calls and get their own business. A lot of people find they aren't comfortable."