AI CUT THE COST OF EXECUTIVE SEARCH. THE LOGO KEPT THE PRICE.

This year, the world's largest executive search firm told its investors that AI is making its consultants more effective and efficient. In the same annual report, it said its search revenue grew because clients paid more per search. Both statements are true. Together, they describe executive search in 2026: the work underneath a search has never been cheaper to produce, and the price of buying one keeps climbing.

That isn't a scandal. It's a pricing model doing exactly what it was built to do. But if you're the talent leader signing the retainer, it changes the question worth asking. Not "how much does this search cost?" but "what, specifically, is this fee paying for?" For a growing share of retained searches, the honest response is the name on the door.

What is a retained executive search fee?

A retained executive search fee is a payment, usually split into installments, that secures a search firm's exclusive work on a senior role, calculated as a percentage of the hire's first-year cash compensation.

The standard is still one-third. Talent leaders often miss what sits around it. Korn Ferry's 2026 annual report adds a percentage on top for indirect expenses, plus an "uptick fee" when the final offer lands above the estimate. And as the firm's 2020 filing put it, the fee is owed whether or not anyone is hired.

What did AI actually change about executive search?

It automated the part of the search that used to justify the headcount.

Think about where the hours in a retained search have always gone. Not the pitch meeting, and not the final dinner with the finalist. The hours went into research: mapping every company in the market, building org charts, working out who sits in which seat and who reports to whom, finding contact details, writing first-touch outreach, chasing replies, and turning interviews into candidate reports. That was weeks of work for a team of researchers and associates, and it was the operational backbone of the fee.

It's now the most automated part of the process. In a Hunt Scanlon Media survey of 97 executive search firms in early 2026, 91% said they use general-purpose AI tools like ChatGPT and Claude. Among the fifth of firms furthest along, 68% use AI for research and market intelligence, most run custom AI agents shared across the team, and more than half have automated multi-step workflows. The report frames the opportunity in plain business terms: in a market growing roughly 10 to 11%, the winners are the firms that can deliver more searches, faster, with the same or leaner teams. One firm described its goal as scaling revenue while lowering operating costs. (The survey was produced with Recruiterflow, a recruiting software company. Worth knowing as you read it.)

Now read that from the buyer's side of the table. More searches. Faster. Leaner teams. Lower operating costs. Every one of those gains belongs to the firm. Not one of them mentions the client's invoice.

Talent leaders should pay closer attention to a second shift. The tools automating research inside search firms are the same tools already sitting on your own team's laptops. The largest firm's own filing says it outright: it lists in-house HR professionals, newly equipped with AI-based search tools, as competition. The firm that sells the research layer is informing its investors that you can increasingly build that layer yourself.

That doesn't mean you should run every executive search internally. It means the research layer is no longer the scarce part of a search. When something stops being scarce, it stops being worth paying a premium for.

If the work got cheaper, why didn't the fee go down?

Because the fee was never priced on the work; it's priced on the hire's salary and what the brand can command.

Only one of the largest global search firms still reports its numbers publicly, which is why its filings carry so much of this argument. Heidrick & Struggles went private in December 2025. In its fiscal 2026 results, the largest firm reported $924.1 million in executive search fee revenue, up 9%, and credited the growth to higher average fees per engagement. Divide that revenue by the 9,511 engagements it billed, and you get roughly $97,200 per engagement, up from about $92,500 the year before. That's our math, not theirs, but it points in the same direction the firm does.

Heidrick's last public filing showed the same pattern. Its 2024 annual report put average revenue per executive search at $146,000, up from $140,000 the year before.

The largest firm's search margins also rose, from 24.4% to 25.7%. It attributes that to higher revenue and lower administrative costs, not AI, and it would be overreaching to claim otherwise. But whatever efficiency AI is creating inside these firms, it isn't showing up in what clients pay.

The firms know the tension exists. In the risk factors section of its annual report, the largest firm warns investors that generative and agentic AI could affect its service pricing, and that clients may start using AI to do work the firm does today. That's a sensible thing to disclose to shareholders. It's also a conversation almost no client is having with their search firm.

What are you actually paying for with a big-name firm?

A brand, a network, and a staffing model built so the people who win the work aren't always the people who do it.

The largest firm's annual report lists 566 executive search consultants and 1,169 support staff in that business, including associates and researchers. It defines consultants as the people primarily responsible for originating client services. That isn't a criticism. That's how large professional services firms are built: senior people win and oversee the relationship, and a team underneath them runs much of the day-to-day.

The model carries a second cost that rarely comes up in the pitch: off-limits agreements. Large firms agree not to recruit out of their own clients, so the more clients a firm has, the more companies it can't touch for you. Its own risk factors note that smaller firms face fewer of these restrictions. Some of the strongest candidates in your market may be off the table before the search starts, and nobody tells you which ones.

Brand is worth something. A recognizable name can reassure a board and open doors with candidates. But brand isn't the same as attention, and the one-third fee pays for both, whether or not you get the second.

What does it look like when the logo is doing the work?

A client of ours had worked with one of the largest global search firms for years. They paid the standard one-third. Over time, the pattern became hard to ignore: the partner who sold the engagement rarely ran it, there was no real intake, and the shortlists kept arriving full of candidates who didn't fit the brief.

When they brought us their CRO search, we started with diagnosis, not sourcing: what the role had to deliver, what had gone wrong before, and what the first year needed to look like. We filled the seat almost 20 days ahead of the timeline their previous firm had quoted. Then we stayed through onboarding to make sure the person we placed was set up to succeed.

Average CRO tenure sits at 1.8 years, according to Pave compensation data, as analyzed by SaaStr. That CRO is still in the seat today, well past it.

None of that came from a better database. It came from someone senior actually doing the work.

What is still worth paying a premium for?

Judgment. The parts of a search no tool can do and no junior team should do alone:

• Defining the brief before anyone is contacted, so there is something real to evaluate against. (The same gap shows up in the boardroom, where boards are buying speed and calling it rigor.)
• Reaching people who aren't looking. AI can find anyone. It can't get a performing executive to take the call.
• Telling you no. The comp won't close, the scope is wrong, or the internal candidate deserves a harder look.
• Staying past the offer. A search is finished when the hire is working, not when the offer is signed.

A firm that does those things may well be worth its fee, whatever its size. A firm that doesn't is charging a judgment price for a research product.

What should a talent leader ask before signing a retainer?

Seven questions to ask before the first installment is paid:

1. Who will run this search day-to-day, and how many other searches are they running right now?
2. Which parts of the search does AI handle, and has that changed your fee or timeline?
3. What is added on top of the one-third: expense percentages, uptick fees, or anything else?
4. Which companies are off-limits to you because they're your clients?
5. What does your intake look like, and who attends it?
6. What happens if the shortlist doesn't align with the brief?
7. How involved are you after the offer is signed?

A firm that answers those clearly is selling you judgment. A firm that deflects is selling you the logo.

So what's the real cost of a retained search?

The one-third fee isn't going away, and it shouldn't be the whole conversation. The talent leaders who get the most from executive search aren't the ones who negotiate the lowest percentage. They're the ones who know what they're buying and who will actually do the work. (If you're still deciding whether outside help is worth it at all, start with why smart companies don't hire alone.)