Globally, Exclusive & Retained Executive Search fees range anywhere between 25% to 35% of the Total Annual Compensation Package of the successful candidate. Contrast this to Contingency Search fees which typically range anywhere between 12% to 20%, and it’s understandable why many clients (who are unfamiliar with Exclusive & Retained Executive Search) balk when inquiring about fees and fee structure.

Owing to the perceived high cost, Exclusive & Retained Executive Search is more commonly utilized for Senior Corporate Executive Level positions – for leadership positions where big picture decisions have a massive impact not only on the bottom line, but also on the strategic objectives of a company.

However, particularly in the Hospitality Industry where human capital is literally every organization’s most critical component, experienced operators are all too acutely aware of the massive negative impact that a mediocre performer can have on the bottom line of a Restaurant, or on the entire F&B Department, or on Rooms Revenue, or in the case of a General Manager…on the entire hotel asset.

Let’s crunch some numbers on the difference that a peak performing Executive Chef can make in comparison to a mediocre performer; (we’ve made the numbers simple for the sake of getting the point across)

Let’s say that the total annual Food Revenue for the hotel in this example is USD 10,000,000 (it’s a luxury 800 room casino hotel with 7 F&B concepts, a very busy all day dining restaurant, room service, and a huge banquet facility. For the sake of argument – that’s an extremely conservative number to the point where it’s entirely unrealistic)

For the previous 5 years, the annual average food cost has been running at 30% - that’s USD 3,000,000

Now let’s assume that an extraordinary Executive Chef can utilize his considerable expertise to reduce the food cost by 2% with absolutely no negative impact on quality. That translates into a annual reduction in food costs of USD 200,000

The hotel’s budget for the total annual compensation package for the Executive Chef is USD 140,000. A 25% fee (the low end of Exclusive & Retained Executive Search fees) translates into an investment of USD 35,000 for an ROI of USD 200,000

Now imagine ending up with a mediocre shortlist of Executive Chef candidates from a Contingency Search firm, and ultimately hiring an Executive Chef who unfortunately ends up increasing the food cost by 1.4%....

Those kinds of numbers are hard to ignore

Footnote: Whilst the hotel and revenues in the above example are fictional, this example is based upon an actual case where a client opted to go with a Contingency Search firm and suffered some disastrous consequences after hiring a Chef who they had been advised had good references despite a few red flags on his CV – not only increased food costs, but also the loss of an extraordinary Executive Sous Chef along with several other key personnel of the culinary team in the wake of a poor hiring decision.

Scott Chiesa

Managing Director 
EO Excecutive Search