**originally published in 2017, updated with new information in 2024
The complexities and high stakes of a top-level hire like a CEO or executive director often make the expertise and resources of an executive search firm a valuable investment for nonprofits and associations. Search firms have access to a larger and more diverse candidate pool, can leverage current knowledge of the market and the latest hiring research to support an inclusive process, and will save your internal team time and capacity. But if you don’t have a budget allocation for search fees, how do you make your case to the board? Here’s a guide for that conversation.
When Making the Business Case, Partner With Finance
Typically, board members care deeply about the mission and careful stewardship of an organization’s resources but are far removed from day-to-day budget spending. Budget variances happen all the time, so it shouldn’t raise a concern. Board members are usually far more interested in your thought process and the impact of spenditures than what the specific numbers are.
To get the fee for a CEO search (or any new expense) approved, you need to make the proper business case for it with the right people. In most nonprofits and associations, the top financial executive works closely with the finance committee and also presents the budget narrative (also called the budget justification or description) at board meetings. This presentation brings the budget to life, explaining what the numbers represent and how you arrived at them.
If you are requesting a significant budget variance, be sure you give your finance person (the CFO or director of finance) the information they need to create the appropriate narrative. Provide details to show you are allocating resources in accordance with strategic priorities and managing those resources efficiently.
Reasons Why Using a Search Firm Might Be a Business Necessity
Your job advertising is not attracting the right people.
If your job ads aren’t attracting the right people, you put your organization at risk for an extended vacancy and a gap in leadership. Even if you have an interim leader, running without a CEO or executive director becomes increasingly problematic over time. Outline how a vacancy could affect the goals in your strategic plan:
- What projects will not be completed?
- What toll does the vacancy take on other staff member’s productivity?
- How does the vacancy affect service levels, profitability, or reputation?
- How might the position vacancy lead to stress and burnout of other employees, creating a domino effect of staff turnover?
- What is the impact of uncertainty on your organization’s culture? Other employees may hesitate to launch initiatives that rely on the position, or you might scale back on their expectations for projects.
It may be worth noting that when using a search firm, outreach is targeted to candidates who likely match the job competencies and experience required to succeed on the job. Relying on advertising alone gives you a smaller pool of candidates who may or may not have the specific skills you need. (For practical tips to get better results from your job ads, whether working with a search firm or not, read the Staffing Advisors Guide to Effective Job Advertising.)
Your organization is undergoing a strategic shift, and you need a new kind of leader to guide the transition.
Our nonprofit and association clients often come to us when hiring a new CEO or executive director is mission-critical as they undergo any number of different transitions. The previous leadership may have been in place for decades, and the organization needs the continuity and stability of a candidate who can handle the transition smoothly. The organization may be undergoing a major turnaround or facing a crisis and needs to identify a leader with specific experience in navigating challenging situations, restructuring, or crisis management. This list goes on.
In these cases, outline the strategic benefits a search firm can bring to the process:
- A search firm will provide a framework for making the decision so important risk factors are not overlooked. Staffing Advisors uses a competency-driven framework through every stage of the hiring process, ensuring that each candidate put forward has the knowledge, skills, and abilities to solve the particular challenges your organization faces. This dramatically lowers your risk of hiring a CEO who doesn’t align with what your organization needs now and into the future.
- A search firm provides market intelligence and follows an inclusive sourcing process so qualified people are not overlooked. The firm will also adjust its tactics according to the market and candidate responses, something that internal hiring teams rarely have the capacity to do.
- An experienced search firm can add rigor to the hiring process without creating barriers that limit the candidate pool. There is an art to gathering information about candidates through a range of contexts, from the screening call to structured interviews and work sample tests, to gain an accurate picture of how they’ll perform on the job.
- The search firm can provide transparency to external stakeholders, keeping others informed and engaged while still preserving the confidentiality and integrity of the search process.
Don’t Risk the Cost of Hiring the Wrong Leader
Not all leaders are created equal. Finding the person who can navigate the specific challenges of your organization is essential—a great hire can lead to transformative growth and stability. Investing in a search firm is a proactive step toward ensuring your organization’s continued success and impact. Your board’s understanding of the investment hinges on presenting a clear and compelling business case that aligns with your strategic goals and overarching mission. The cost of hiring the wrong leader far outweighs the expense of using a search firm to secure the right one.