How much to pay a recruitment agency

How much should I pay a recruitment agency? As the CEO of an online recruitment agency marketplace, it’s a question I get asked a lot. And my answer? “As much as you can afford.”

People are the single most important ingredient in any company, so why would a business even entertain the idea of under-investing in sourcing the best talent?

But they do. Constantly. Why? In part because they don’t value the work recruitment agencies do to bring quality candidates to the hiring table.

I could bang on about this ad nauseam, but won’t. If you want to know why we, at Hiring Hub, built a marketplace to champion small, independent, specialist recruitment agencies you can read this blog. Although here’s a quick extract:

“The value of a recruitment agency is to find off-market talent, talk to it, persuade it, coach it, nurture it, and bring it, enlightened, motivated, excited, to the hiring table.

“This is a time consuming and exhaustive task that hiring managers simply don’t have the time, capacity, inclination or soft skills to undertake. It makes absolute sense to outsource the process to a good, specialist recruitment consultant. One you can trust.”

So how do you motivate a good recruiter to invest their time and energy in finding candidates for your business, and then send you their best? Not by chipping a couple of percent from their fee at the beginning of the process…

I get it. I empathise. Fees are high and you find them difficult to stomach against other costs on your P&L, but if you want to see the best talent in your market – not just on the market – then you need to incentivise a recruiter to go the extra mile to find it, and then send them to you. Not an employer down the road that will pay them more.

And that’s often what it comes down to. If you’re so fixated on saving money and paying low agency fees, why would an agency send you their best candidates? They won’t. They’ll send them to the companies they know will pay market rate, and you get the candidates those companies didn’t want to hire. The rejects.

No one wants rejects.

We see this play out all the time on our marketplace. ‘Company A’ is located in Manchester and recruiting a Front End Developer on a £45k salary. They post their job with a 10% fee.

Meanwhile ‘Company B’, also in Manchester, is seeking a Front End Developer at the same salary level but posts their job on Hiring Hub with a 17.5% fee. Who do you think attracts the most agencies and sees the best candidates, faster?

The fee disparity makes a £3,375 difference which, granted, is not insignificant, but in the grand scheme of things it’s not even a month’s salary for the Front End Developer. Worth the extra outlay of a month’s salary to find the right candidate? I’d say so. Yes.

So next time you’re considering negotiating hard with a recruitment agency, unless you’ve something of value to offer them in return, like exclusivity, think again. Go the other way. Incentivise them. Pay 20%, 25%, 30%… and give them a proper brief.

They’ll get the job done and you’ll be the first person they call next time they have a candidate they know would be perfect for your company.

Investing in recruitment agencies to source the best candidates may feel expensive upfront, but it pays dividends in the long term as that talent is your business.

Originally published 11th June 2018