The Dollar Cost of Searching for a New Executive Director
MANP is pleased to present the following guest blog post by Jeff Wahlstrom of Starboard Leadership Consulting–an endorsed provider of executive search services. This post is part of our ongoing Mission Driven Leadershift initiative, which offers resources, services and programs to help Maine nonprofits successfully prepare for and manage leadership transition.
One of the early questions board members face in a leadership transition is, “How much is this going to cost?” While the answer often begins with, “That depends,” here are the kinds of expenses you might anticipate:
It is not unusual for search consultants to charge 25% to 33% of the first year’s salary, though some might be prepared to charge a flat fee based upon the range of services to be provided. MANP’s endorsed executive search partners charge 20% of the first year’s salary (plus expenses), with a minimum of $18,000.
With all or most advertising conducted online today, advertising costs have dropped dramatically. One or two major job sites and a couple of industry specific sites might cost less than $1,000 total, with $1,500 being on the high end. One of the best deals is MANP’s Job Board, where members can post an ad for just $35!
It is standard practice to reimburse candidates for their travel expenses. You can reduce some of these expenses by conducting initial screening interviews via Skype, Zoom, or another online video service. For on-site interviews (the ideal with finalists) it makes sense to play it safe and include in your search budget an estimate for reimbursing one or two of your candidates for flights and, potentially, the cost of rental cars and overnight stays.
Candidates who need to relocate in order to take a senior role in your organization are likely to expect, or ask for, money or reimbursement for moving expenses and related costs. This expense might become part of your offer and negotiations with the finalist, but it would be prudent to anticipate $5,000 for a regional move and more for someone coming across the country.
While the estimated expenses described above are directly associated with the search process, it is worth noting that there are likely to be other expenses that come with a leadership transition: a farewell event and gift for the departing leader, the cost of any overlap between the new and departing leaders, welcoming events, a new computer, business cards, and other office set-up. You may also find that the hiring process and your negotiations with the new leader results in upgrading or adding health coverage, increasing the salary, or the need to offer a signing bonus.
A professional search consultant can help you to refine your budget, find efficiencies and cost-savings, and support you and the board through the negotiation process. Hiring a new leader is expensive, so it is essential to do it right the first time!
About the Author
Jeff Wahlstrom is managing director of Starboard Leadership Consulting and a MANP-endorsed provider of executive search services. He has more than 30 years of hands-on experience as a nonprofit leader, board member, and consultant to an extensive list of clients, large and small, throughout Maine. He regularly provides counsel to boards on governance best practices, leadership succession and transition planning, and strategic planning. Jeff has developed an online board self-assessment tool and strategic board recruitment toolkit for Maine nonprofits, and he is a frequent speaker on a wide range of board governance and nonprofit management topics.