The first question many employers ask right out of the gate is “How much will it cost me?” Because there seems to be a great deal of controversy and myth associated with headhunters and recruiter fees, we did some research.
And what we came up with – the uncontested facts and figures – well, some of these surprised even us.
The Elephant in the Room – Recruiter Fees
- In general, agencies charge a fee calculated as a percentage of the annual salary and are paid based on the number of candidates placed within your company.
- The majority of recruiter fees run between 15% and 25% of the candidate’s total first year annual earnings. A retained search assignment can be charged up to 50% in extreme cases when it’s a senior position and the role is hard to fill. (I want to work there!) That information comes from Undercover Recruiter.
- In 2014 average US spend on recruiter fees was 21%, as reported by The Fordyce Letter, with trends indicating more increases to come.”
- Bullhorn’s North American Staffing and Recruiting Trendsreported in 2013 that the average permanent placement fee paid by to a recruiting firm was $16,602 per placement.
- Simply stated, you should expect to be spending anywhere between 15 and 25% depending on the nature of your engagement with the recruiting firm, and the volume of hiring you will be doing with them.
Value vs Spend
Recruiter fees are only one part of the equation. What about the value of sourcing and headhunting passive candidates who are typically the top drawer A-player candidates that employers otherwise do not have access to. This is precisely where a skilled recruiter is worth their weight in gold.
Speaking in terms of pain based selling, many employers see huge value in alleviating the pain they’re caused by unfilled key vacancies.They simply can’t find the talent they need.
Others are relieved to have someone take on the heavy lifting that comes with recruiting, and grateful to have the hiring actually getting done.
What’s it all worth?
This chart shows the top 10 hardest to fill jobs of 2014 (according to Workopolis) along with the cost to employers when left unfilled. Bang! Compared to very reasonable recruiter fees, these numbers are pretty hard to ignore.
(To learn more about vacancy costs visit Ere.net’s cost of vacancy formulas.)
How Much is the Cost of In-house Recruiting?
In terms of time and effort, not to mention extended vacancies and crippling bad hire decisions, the short and long term costs of keeping recruiting inhouse is precisely why so many employers today are hiring recruiters who can and will get the job done, on time and in most cases cost-effectively.
The average in-house recruitment cost of filling a vacancy, using internal or external recruitment methods is reported by Monster.com to be around $9000 CDN.
Compare that to the fees vs vacancy costs listed above for the critical hard to fill vacancies. It’s not hard to see why more and more employers are seeing the value of using external resources who are trained and highly experienced at sourcing critical, hard to find skilled candidates.
The Take Away on Recruiter Fees
The important thing to remember about when assessing recruiters and their fees, is that they aren’t all created equal. Some recruiters and executive search firms use more effective tools and resources to source right fit passive candidates than others.
Good recruiters invest far more time into tracking and building long term ‘know-like-trust’ relationships with passive A-Level talent.
Always be up front with your recruiter about what you need, and don’t be afraid to ask questions. It’s your business to know about the search methods, tools and techniques your headhunter will be using on your behalf.
At the end of the day, isn’t having talented staff worth it?
Barbara Ashton is the President and Founder of Ashton & Associates Recruiting. She is a leading social recruiter fast approaching 12,000 LinkedIn followers. Phone: 800-432-6893 Email: firstname.lastname@example.org
Ashton & Associates Recruiting Inc. Placing Powerful People.
Offices in Kamloops and Kelowna serving BC industry leaders.
More insightful information for recruiting top employees, and for businesses and individuals looking to improve a career, can be found here on the Ashton & Associates Recruiters Blog.
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This post has been approved for public release by Barbara Ashton. All certified posts carry this Google Authorship link to Google.