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Executive Search vs In House Hiring: What’s the Real ROI?

Updated: Sep 2

In senior recruitment, the choice between managing the process internally or engaging an executive search firm is rarely straightforward. While the comparison is often framed in terms of cost, the true measure lies in return on investment, the impact a successful appointment has on organisational performance versus the cost of getting it wrong.

For leadership and niche roles, the hiring decision shapes strategy, culture, and competitiveness for years to come. McKinsey reports that investors believe leadership quality can affect a company’s market value by up to 30 percent, while a poor appointment can lead to operational setbacks, reputational damage, and significant financial loss .


The Society for Human Resource Management (SHRM), the world’s largest HR association,  notes that fully loaded turnover costs for senior roles can reach 1.5 to 2.5 times annual salary when separation, replacement, and training are included . For roles with direct P&L responsibility, the figure is often higher. Internal teams, particularly in smaller organisations, may underestimate these risks when they rely on known networks or generic advertising rather than exhaustive market coverage.

In house recruitment teams understand their organisation’s culture and operational needs, yet they are often constrained by time, budget, and the immediate network they can tap into. This limits access to the “passive candidate” market, individuals not actively seeking a move but open to the right opportunity.


Executive search firms dedicate their resources to mapping entire markets, benchmarking compensation, and approaching candidates discreetly. This is particularly relevant for sectors such as financial services, compliance, and fintech, where top performers are unlikely to respond to job advertisements and where confidentiality is essential.


Example:

In a recent European fintech leadership search, an executive search partner approached more than 150 targeted candidates across five countries. Over 80 percent were not actively looking for new opportunities. The final shortlist included candidates who would never have been reached through in house sourcing methods.

Delays in filling senior positions can cause strategic projects to stall, unsettle teams, and reduce market confidence. Internal hiring processes, managed alongside other HR priorities, may take longer to complete and can sometimes be rushed at the final stages under pressure to fill the role.


Search firms operate to defined timelines, with dedicated researchers and consultants working exclusively on the assignment. Industry benchmarks show that the average time to fill for executive search assignments is typically 90 to 120 days, compared with 120 to 150 days for internally managed senior roles.


Internal recruitment carries the risk of bias, whether conscious or unconscious. Existing relationships, internal politics, or a desire to promote from within can cloud judgement. While internal mobility has its advantages, it must be balanced with a robust assessment of external talent.


Executive search partners offer structured evaluation processes, psychometric testing, and independent referencing that go beyond CV reviews and informal conversations. This external perspective reduces the likelihood of making a decision based on familiarity rather than fit.


Not all senior appointments can be advertised openly. Succession planning, replacement of underperforming executives, or strategic expansion into new markets often requires a discreet approach. Executive search firms manage candidate engagement in complete confidentiality, protecting both client and candidate reputations.

When In House Hiring Delivers Strong ROI

In house recruitment can be highly effective for roles where:


  • The talent pool is easily identifiable and accessible

  • The organisation has a strong employer brand in the sector

  • Speed is less critical, allowing internal teams to balance competing priorities


Mid-management roles, positions with standardised skill requirements, and hires within well-established local networks can often be filled internally at a lower cost.


Calculating the ROI

To determine the real ROI of each approach, organisations should consider:


  1. Direct costs – salaries, recruitment advertising, agency fees

  2. Indirect costs – internal time spent, disruption to teams, delay to projects

  3. Performance impact – measurable contributions of the appointed executive to revenue, efficiency, or strategic goals

  4. Risk mitigation – likelihood and cost of a failed appointment


For a senior role with a £250,000 annual salary, a failed hire replaced within 12 months could conservatively cost £600,000 once all factors are considered. In such cases, the fee for a high-quality executive search can be a fraction of the total loss avoided.

Ultimately, the decision between executive search and in house hiring should be guided by the complexity, confidentiality, and strategic importance of the role. While in house teams can deliver strong results in certain scenarios, the expertise, market reach, and risk management offered by specialist search partners can generate a significantly higher return when the stakes are at their highest.


An executive appointment is an investment, not a transaction. The value of that investment is realised not in the hiring process itself, but in the measurable impact the leader delivers over time. By weighing the risks and potential rewards, organisations can choose the approach that offers the greatest long-term return.


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