Search Fees in South Africa

08 December 2009 by Gail Burns

Search fees in the S.A. can vary significantly dependent upon industry sector, client drivers and the ‘name’ and thereby the status of a search firm. The most well known, South African based headhunters, frequently trade on their name and position in the market and, inevitably, there are organisations who will only use such firms. Conversely, there are organisations that place greater emphasis on personal service, industry expertise and cost Typically fees vary from 21.5% to 35% of the employee’s first year earnings, with the largest search firms frequently agree to lower search fees to secure business in this highly competitive market, and some accept greater ‘back-end’ risk. Consequently, there is increasing flexibility on stage payments, though many firms still protect the more traditional three, one-third installments – which we call Performance Based Retainers Interestingly, there has been a move towards fixed fee arrangements to counter some clients’ perceptions that consultants are tempted to negotiate the salary upwards’ as a way of increasing fee levels, or simply, as a unique selling point. However, I believe smart organisations are now recognizing that the ability to rebuild the best talent quickly outweighs the small cost savings they might make by negotiating fiercely on fees. There is now greater pressure on S.A. search firms to deliver within increasingly shorter timeframes and the competition is mounting. Social Media Client Networking is fast becoming a greater tool. ! Such pressure inevitably tests the depth and flexibility of a search firms resources and its capability to manage the search process quicker than was previously the case The ability to succeed without compromising on quality of service tight deadlines is an increasingly important aspect of maintaining fee levels. A search firm that can do so and genuinely still and value to a client’s business has the opportunity to rightly justify and maintain higher fee levels Gail Burns Target Search & Selection

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