In 1986, retained executive search fees averaged 30% to 33%, according to historical findings in an IACPR industry survey. Korn Ferry's 1999 SEC filing described a fee of one-third of first-year cash compensation. Its 2026 annual report describes the same general formula, plus indirect expenses and an additional fee when actual compensation exceeds the original estimate.
The tools changed. The tactics changed. The percentage survived.
The justification has eroded
The percentage model made sense when access was scarce. Executives were hard to find, and search firms earned their fees through contact networks, painstaking research and phone calls to people employers could not readily reach.
That world has changed. Professional profiles, company data, candidate databases and sourcing platforms now give employers and recruiters a much clearer view of the market. AI adds new ways to search and organize that information. A specialized healthcare executive search firm can identify and approach accomplished leaders without a global footprint of offices.
Yet under percentage-based agreements, the fee still rises and falls with the candidate's paycheck, rather than directly reflecting the work performed.
What the formula actually rewards
At 30%, a $300,000 package produces a $90,000 fee. Raise the package to $350,000 and the fee becomes $105,000.
That is $15,000 more for the same search, the same process and potentially the same candidate. The increase does not require additional effort or a better outcome. It follows from the formula.
A pricing model that pays more for a higher salary, rather than for better results, deserves scrutiny from employers. The employer carries the higher compensation expense and the larger recruiting bill. The formula increases the firm's fee when the compensation rises.
Don't pay for the brand. Ask about the work.
Large firms lead with their networks, consultants and assessment methods. Those claims deserve the same scrutiny as the price, because a reputation does not tell you:
- who will actually conduct your search,
- how rigorously candidates will be evaluated, or
- whether the firm's network gives it a real advantage for your specific role.
Firms can have different proprietary data and relationships. But a candidate in a database is not exclusive access. Knowing an executive does not mean that executive will take the call. A higher fee does not mean better screening.
Before you sign, ask:
- Who will speak with candidates, and what will those conversations establish?
- How does the firm assess accomplishments, operating experience and fit with our business?
- What exactly do we receive for the fee, and what happens if the hire doesn't work out?
A capabilities presentation is not an answer to those questions.
Good recruiting has value. It should have a price you can explain.
Executive recruiting is not easy. Finding a profile is only the first step. Engaging a leader who isn't looking, understanding what that person has truly accomplished, and judging whether they will succeed in a different organization all demand experience and judgment.
Those services are worth paying for. They deserve a price that connects to the assignment, not to a formula that predates widespread internet use.
Employers are told to adopt better tools, improve efficiency and control costs. Their recruiting partners should be held to the same standard.
A better model exists
At AlediumHR, our Talentlytical® platform supports sourcing, while experienced recruiters remain responsible for candidate engagement and evaluation. When the process becomes more efficient, we believe the client should share in the benefit.
We offer flat-fee, RaaS™ and volume-based arrangements, depending on the role and hiring needs. Our fees are typically at least 35% lower than traditional percentage-based fees, with actual savings depending on the scope and proposal being compared.
On a comparable $90,000 search fee, a 35% reduction saves $31,500. That is an illustration, not a quote, but it shows what is at stake in a single search.
We also back executive placements with a 24-month placement guarantee, subject to the engagement agreement, providing replacement-search protection if a covered departure occurs. A lower recruiting fee and protection against paying a second recruiting fee both belong in the value comparison.
The question every healthcare employer should ask
Alternative pricing has existed for years. That makes accepting a percentage fee without comparison harder to justify than ever.
When you evaluate healthcare executive search firms, insist on a clear explanation of four things: the people, the process, the price and the replacement terms. Any firm should be able to show why its proposal makes sense for your assignment.
Forty years is long enough. Tradition is not a reason to pay more.