Placement fee

The placement fee is the contingency model typical of executive search and staffing agencies. The fee is computed as a percentage of the hired candidate's annual gross salary, typically 15-25% for mid-level roles and 25-35% for executives.

Unlike a retainer, the agency receives nothing during the search: it gets paid only on success. This reduces client risk but incentivizes the agency to close fast. The placement invoice is subject to clawback if the candidate resigns or is dismissed within a guarantee period (vesting), typically 90 days.

The economics of contingency work are decided by the fill rate rather than the fee percentage. An agency that closes one search in three earns its fee three times over in unpaid effort, so the practical discipline is qualifying the mandate before accepting it: whether the client is genuinely committed, whether the salary matches the market, and whether the hiring process can move at the speed the search requires.

The guarantee period deserves attention on both sides of the table. It protects the client, and it also creates an incentive worth knowing about: a candidate placed quickly into a poor fit costs the agency the fee anyway. Firms that track the reasons behind clawbacks usually find them concentrated in one or two clients whose onboarding, not whose hiring, is the actual problem.