“Money for old rope” and “daylight robbery” – just a couple of phrases that have become synonymous with recruitment agencies and their charges but how do we get away with charging what we do?

Sadly the recruitment industry has developed a somewhat murky reputation and this has occurred through some out there over promising and under delivering and not being deemed to add value yet charging a pretty price in the process.

But is it fair to tar every recruitment business with the same brush?  Not in my view.

Why do recruitment companies charge what they do?

Across the majority of businesses that employ people, staffing costs will be the largest overhead on their P&L however it is also true to say that it is the talent of the individuals within that drives a company to perform.

The success of your company truly does boil down to how your team delivers on your promise to your customers so surely getting the very best people is absolutely non-negotiable.

There are generally 3 popular approaches to recruitment agency charges;

  • Fixed monetary fees, percentage of annual salary (ranging from roughly 10-25% depending on the supplier)
  • Retainers which historically went hand in hand with “head hunters” but has become more commonplace within specialist recruitment.
  • Outsourced recruitment team approach (RPO) which is on a bespoke basis.
  • It is a bit “pot luck” and unregulated but the real question is not of cost, but what value should you be getting?

Let’s start with what goes on behind the scenes with a good recruiter in order to find suitable candidates for their clients from start to finish so we can start to justify the fees involved.

The first piece of the recruitment agency puzzle is to win the hiring clients in the first place so a huge part of our role is business development which in itself takes investment.

When we are given a brief we have an in depth consultation with a client (normally in a face to face meeting where possible) but failing that a comprehensive call /zoom which goes through the needs of the client in full, including finding out about culture and what makes the company tick.

Once we are fully aware of what is required the next step is to start to bring together suitable candidates and this is done through another number of approaches.

We write a specific job advertisement for the role and we will then access multiple advertising platforms, including our own growing social media channels to place these to ensure that we spread the net as wide as possible. We have our own database of candidates that has been cultivated over many years and continuously cleansed which we will search based on the criteria given.

In recent times, pre-Covid, we were experiencing challenges with labour shortages so we have also had to invest heavily in resources whereby we seek out passive candidates who are not necessarily looking for a role but would be of interest to our clients.

Once we have candidates who are showing interest, we go through an in depth, two stage interview process with those individuals to ensure that they meet the brief for our client before we even discuss the role or the client.

We put each candidate through a robust process before presenting a suitable shortlist to our clients. At which point, we will arrange interviews, confirm them all in writing, hold the hand of the candidate and obtain and provide feedback at every stage. This provides reassurance to both parties and helps to keep the process running as smoothly as possible.

There is nothing more frustrating than putting aside time in your diary for an interview, only for someone not to turn up and our process ensures that this does not happen to our clients.

Once the client has decided upon their chosen candidate, we will liaise and negotiate on their behalf to gain an acceptance – pure joy!

As before, we will check in regularly with both parties throughout to ensure that any queries are resolved and things go to plan until the happy day that they come together on the person’s first day!

What does our involvement provide;

  • Gives clients access to the widest net of available candidates for their roles
  • Provides up to date recruitment market knowledge to all clients who may or may not recruit regularly
  • Gives advice and support on employer brand, job descriptions, specifications, interviewing techniques
  • In a candidate abundant market we sift through hundreds of CV’s to ensure only the most suitable sit in front of a busy client in interview – saving time and money
  • In a tough candidate market we find people that would have remained out of reach
  • Provides support and a safety net against things getting lost in translation and people being let down through irregular communication
  • Gives some financial protection for the cost of hire not working out through a rebate

“Since day one Elite have brought a refreshing change to our recruitment strategy. As our preferred partner, they take the time to understand our business and culture to ensure that we get the right people not just focus on experience and expertise. Trust and partnership are key values to us and the reason our relationship with Elite works is that they share the same values as we do. ”

Matthew Pyke, CEO – Lloyd & Whyte

So why does it cost so much?

We’ve demonstrated the amount of work that goes into getting a short list of quality candidates for vacancies but in addition to the associated workload with one vacancy, there are also the business running costs that any of our clients are exposed to.

It is also important to remember that the majority of recruitment agencies who are not on retainers, only get paid when a successful candidate starts in their role and even underwrites that fee with a rebate for up to 12 weeks plus.

In addition, you should be paying for an expert to turn their hand to your problem and having access to knowledge that has been developed over many years and experience.  It’s not necessarily just finding the person, it’s knowing how to find the person within a defined timescale.

When you consider the revenue generated by your hire, how does the fee charged compare? Flip that the other way, how much does it cost your business by not having the right person in that job?

What does a bad agency look like;

  • Repeatedly hounds you asking for “any jobs”
  • Doesn’t take the time to build a relationship
  • Sends multiple CV’s that do not match the brief given
  • Doesn’t bother to advise candidates where their CV is being sent
  • Do not check in with the candidates allowing for the client to be let down constantly
  • When things go wrong, make no attempt to work in partnership to figure out a workable solution
  • Churn of their own consultants not allowing for the development of strong client partnerships
  • Fail to update candidates or clients appropriately
  • Doesn’t interview candidates just sends CV’s without permission or qualification

The above are definite examples of behaviours that do exist within some agencies but I also know that there are many other recruiters that work tirelessly to provide an exceptional service and add significant value to their clients.

We seek to obtain feedback from the clients we work with in an effort to continuously improve.

In conclusion

An important decision for many clients to make is why would they pay an agency if they can do it themselves. You have to consider whether you can get exactly the same result and ensure you have given yourself the very best chance of success by going it alone.

Also, whilst you are tied up (on average a minimum of 2 weeks of your time) what are you not doing in your day job and how much revenue does this lose?

So the question is not can you afford to use us… but can you afford not to?!