Executive hires are more expensive than ever, highlighting a growing challenge for organizations that are looking to remain competitive in the workplace while coping with shifting budgets.
The cost-per-hire for executives has spiked by 113% since 2017, according to SHRM’s 2025 Recruiting Executives Benchmarking: Insights to Maximize Recruitment data brief. Meanwhile, the cost-per-hire for nonexecutives has declined 27% over that same period.
What’s behind this widening gap in cost-per-hire between executive and nonexecutive roles? Recruiters and HR professionals offered some answers to help leaders optimize their recruitment efforts.
The cost-per-hire for executives has increased in part because the price tag for executive compensation packages has gone up, especially amid heightened competition for talent, according to Jessica LaRochelle, senior manager of executive search and talent consulting at W Talent Solutions.
Another reason behind the surge is that hiring an executive often involves enlisting specialized search firms, whose services come at a high price, and setting up numerous rounds of interviews, she said.
“A bad hire at this level can have major financial and strategic consequences, so organizations naturally invest more to get it right,” LaRochelle explained.
Talent shortages have also contributed to the spike in executive hiring costs, said Jennifer Clark, vice president of talent acquisition services at insurance brokerage Gallagher.
“Many organizations continue to struggle to find candidates with the right leadership experience and strategic skill sets,” Clark said. “This scarcity drives up competition, leading to higher recruiting and compensation costs.”
As a result, many employers are investing more money in recruitment advertising and AI tools to improve sourcing of and engagement with executive candidates, she said.
Lack of movement in the job market has helped trigger the scarcity of executive talent, added Jeff Herzog, president of FPC National, a network of more than 60 executive search firms.
“If someone has a good job, they are keeping their head down and are working hard, so it takes a lot to incentivize someone to leave,” Herzog said. “Sign-on bonuses, big salary increases, and recruitment fees are necessary to attract and retain the passive talent that companies are looking for.”
Besides more competition for executives, executive hiring costs are being driven up by longer search periods, pricier relocations, and greater demands for specialized talent, noted Helena Ferrari, global HR leader at remote staffing firm Office Beacon.
“Most organizations are still relying on outdated traditional search models that are unresponsive to the realities of the current workforce,” she said.
Given the myriad monetary challenges of hiring executives, how can you reduce your organization’s cost-per-hire? LaRochelle, Clark, Herzog, and Ferrari offered these eight suggestions.
1. Use a search firm strategically.
“While it can feel expensive upfront, a search firm often saves time and money compared with leaving a critical role vacant or spending internal resources on candidates who aren’t a fit,” LaRochelle said.
2. Streamline your hiring process.
Clearly defining a role and relying on consistent interviews and standard assessments can lead to a more productive hiring process and faster decision-making, LaRochelle said. That in turn can minimize the cost-to-hire.
Clark agreed. “Lengthy interview cycles and excessive testing can deter top candidates,” she said. “A more efficient, well-structured process improves the candidate experience and reduces drop-off.”
3. Audit recruiting costs.
Your organization should review recruiting costs each year to pinpoint potential savings, Clark recommended.
“Track which channels and strategies yield the best hires at the lowest costs,” she said. “This includes evaluating your sourcing platforms, agency spending, and internal processes.”
4. Negotiate with vendors.
Explore volume-based or performance-based pricing, which could decrease how much job boards, search firms and tech providers charge you, Clark said.
5. Ramp up leadership succession.
Preparing high-potential leaders within your organization to assume higher-level roles can limit the need for costly searches and help fill executive vacancies more quickly, LaRochelle said.
6. Emphasize networking.
Regular networking can keep an organization’s pipeline filled with candidates who can be contacted when an executive role opens up, according to Herzog. Ultimately, this can help keep recruiting costs down.
“It’s also important for companies to be proactive and anticipate future needs,” he said. “The process always gets more expensive when you have an urgent need to fill a job.”
7. Lean into remote talent.
“The pandemic experience taught us that leaders can be recruited from anywhere, and do not necessarily need to be located at a corporate or business center,” consultant Ron Ashkenas wrote in Harvard Business Review. In fact, executive search firm JRG Partners identified the hiring of remote leaders as a top executive search trend for 2025.
The notion that managers and executives need to be onsite or in close proximity to their colleagues to be successful has been refuted, Ashkenas wrote. Therefore, organizations should expand their leadership talent search to include remote applicants.
Ferrari said organizations that dip into global talent pools for their executive searches can also avoid onsite costs and relocation expenses.
8. Boost your employer brand.
Clark noted that strengthening your reputation as an employer can organically attract a higher number of qualified candidates, thereby lessening the need for expensive outreach efforts.
“Partner with your marketing team to amplify your brand across digital channels, social media, and employee advocacy programs,” she said.
John Egan is a freelance writer based in Austin, Texas.