Not all recruitment consultancies are created equal. They come in all different shapes and sizes…from your large high street operation to your small but perfectly formed niche specialists, right down to your one-man-band headhunters. Different sized recruitment operations normally mean different sized recruitment fees and varying qualities of service.
Whatever your reason for seeking the services of an external recruitment agent, taking the decision to outsource your talent acquisition and welcome an outsider into your fold can be a daunting one.
One thing is clear…it is also costly. Whether you choose to use an external agency or handle your recruitment process “in-house”, it is estimated that the average cost to fill a vacant role is in the region of £4,500.
If you have never used a recruitment partner before, you may be unfamiliar with the different pricing models, or indeed the services you can expect to receive from your investment. Here we break down the possible options that you could be faced with, but also why paying a little extra will get you a whole lot more.
In short, you get what you pay for.
Most agencies you will come across operate using a % fee structure. This model is based on the agency charging you a % of the successful candidate’s first-year salary. Of course, this % figure will vary from agency to agency, but in the majority, you can expect to be faced with a fee which falls somewhere within the region of 15-25% – this usually depends upon the seniority of the role. However, some agencies have been known to charge as little as 8% to fill a role.
Alternatively, the agency you approach may offer to source your role on a retained fee basis. This model is designed so that you pay a % of the fee at the outset and the remainder once the position has been filled. In extreme cases, a retained search can command a fee of up to 50%.
Why Pay More?
There’s a huge discrepancy between paying 8% and 25% recruitment fees. However, recruitment done well is far from a commodity service. Having to pay in the region of 8% to an agency may seem attractive initially (especially if you are on a limited budget) we would suggest that to add more financial weight to your investment.
What does a low recruitment fee mean?
If you are looking for a recruitment partner to do nothing more than collect CVs for you then low recruitment fees are for you.
A low fee most likely means a quantity over quality model, and operate on the principle that more is better! They compete on price, not quality.
Volume recruiters operate on slim margins, the tradeoff for the client? A lower standard of service and in some instances, even poor or unethical business practice.
In order to try and “get the job done”, they are likely to rush at every stage of the process. In many cases, they will bombard you with a large number of candidate CVs…none of which have been subject to best practice resourcing procedures.
If you are looking a non-consultative solution and for a recruiter to send you 10 CVs for a role that has not really been screened, and that’s it, then cheaper fees might be good for you.
The recruitment fee vs service level trade-off
If recruiters can afford to charge their clients such a small fee, it is likely that they are juggling a large number of projects in order to hit their targets. As such, they will be working on a number of roles for a number of different clients.
They will not be able to afford the time to get to know your role or your company ethos. Not only are they likely to offer you a service which falls short of your expectations, they will undoubtedly be extending that same cursory level of care to your potential employees, potentially damaging your employer brand.
Telephone calls will not be returned, interviews may not be scheduled and candidate feedback may be neglected.With candidates viewing your choice of recruitment partner as an extension of your company, can you really afford to gamble with your employer brand?
Quite simply in this instance; Time is Money.
The exception to the low recruitment fee rule
One exception to this rule, however, is the highly experienced ‘one man band’ operation, vying for their position within the recruitment food chain. They might be offering a lower fee in order to penetrate the market and be ‘heard’ amongst the recruitment noise. Whilst there is an argument to suggest that they wouldn’t be operating at volume, and you would, therefore, receive a personalised, boutique-like experience in exchange for your low fee, what’s to say they wouldn’t put your project on the back burner if something better or more lucrative came along?
Value Vs Spend
Choosing a recruitment partner is not a decision that should be made upon cost alone. Indeed, there are many considerations that will influence your choice. If your role is niche, and therefore requires a heavily specialised skill set you may expect to pay slightly more for a more targetted and specialised service. So what can you expect to pay in this situation? You definitely would not want this one to be handled by a high street ‘jack of all trades’.
Specialist recruiter fees
Specialist recruiter fees will certainly fall into the upper tier of the bracket, but you will almost certainly be assured of a greater return on your investment. A specialist recruiter may command a higher fee, but for that you receive a wealth of knowledge alongside a huge network of skilled, relevant and often passive candidates. Not only that; their drive and passion for their chosen field of specialism will command a higher level of respect both for your role, company and those who work within it. Your
brand will be in safe hands here, and these hands are worth their weight in
There is an element of behavioural economics involved in “getting what you pay for.” Recruitment is a business, but unlike many other businesses, 99% of the workload is paid upon success only.
If an agency recruiter has a fill rate of 50% they are doing an outstanding job, however, it also means that 50% of their time is unpaid.
This is the scenario…
An agency recruiter has a choice of two roles to choose from, they both pay £50,000 salary.
The two roles are from two different clients, one client has 15% terms agreed with the recruiter that will result in a £7,500 fee for the agency and an extra £1500 for the recruiter in their monthly pay.
The other client has agreed to 20% terms. This is a 5% increase in fees for the client but represents a 25% increase in fees for the agency at £10,000 and an extra £500 commission for the recruiter.
The result of this means that the higher recruitment fee will be the priority every time!
When it comes to recruitment fees you get what you pay for. A recruiter who values their ability and their professional reputation will place an equivalent value on their service, and their fee will reflect that. Rather than shying away from this investment in your hire, you should instead be reassured…reassured by the level of expertise and client care this price will command. However, it is not all about recruitment fees and there are other ways to get the most out of your recruitment partners and become their top priority.
How much do you think is the optimum amount to pay your recruitment
partners? 25%? 20%? 15%? 12%?