Companies use search firms for a variety of reasons.  A position is above a certain level.  A role is perceived to be too complex.  A hiring manager is complaining about the lack of candidate flow.  All seemingly valid reasons to plunk down a chuck of cash to your favorite search firm.  Having been part of a few internal executive recruiting teams, and, a talent acquisition leader (whose budget was impacted for every search firm dollar spent), I established the following criteria as the only reasons to ever use a search firm:

1. Lack of Bandwidth in Search Firms:   Most recruiting teams run lean and mean these days with recruiters working on 20 or 30 positions at a time (or more).  If a company doesn’t have its own internal executive recruiter (or team), senior recruiters generally have responsibility for the recruitment of more senior/complex requisitions.  The first criteria in determining whether or not to use a a search firm is when the senior-most recruiters are working on so many open positions that diverting them to recruit for 1 complex role negatively impacts the successful recruiting for the bulk of their other positions.  Clearly it is better to hire a search firm for filling the one position than risk making dozens of hiring managers unhappy with the level of recruiting service.
2. Specialty Niche Positions: Most recruiting leaders manage their function through the vectors of frequencyand complexity to determine the appropriate recruiting resources to use.  For low, medium and high frequency, low to medium complexity roles, TA leaders tend to look to their internal teams to recruit.  Niche positions – those that are low frequency/high complexity positions – are more than justified to be sent out to search.  For example, unless an employer is a law firm, it probably makes the most sense to send out to search any senior level legal position that happens to need recruiting (chief legal counsel, associate general counsel, etc.).
3. Senior International Positions:  Unless an employer has an experienced recruiting team outside of their “home” country, senior level international roles are generally sent out to search firms within specific geographical locations for execution.  For example, when I was at Microsoft there was a need to recruit a CEO for the company’s China business.  The decision was made to use a global retained search firm to assist in conducting the search as their knowledge of not only the most qualified executives but also the local customs was vital to making a successful hire.  Sending out senior level international positions to search is the most pragmatic thing to do.
4. Plausible Deniability:  Sometimes it becomes necessary to recruit a person from a direct competitor, partner or customer.  Using a search firm under these circumstances is completely warranted.  In these situations you need to be able to provide your senior management with a way to safely (and legally) deny direct knowledge as to how the candidate was sourced and recruited.
5. Your CEO Says So:  Last but certainly not least, sometimes you are just commanded to use a search firm because your CEO (or direct boss) tells you to.  In most of these cases, not only is a specific search firm told to be engaged but a specific search consultant.  This is perhaps the most frustrating reason to ever use a search firm because it tends to happen towards the end of the quarter and is in direct correlation to a recent golf outing by the CEO with that specific search consultant.

Using search firms are a necessary part of a comprehensive talent acquisition strategy.  Having very specific criteria that clearly explains when, why and how firms are used is critical to appropriately manage the ever-shrinking, talent acquisition budget.