Recruitment agency fees are a rip-off, say employers

Tim Latham - 18 January 2010

An interesting article / press release, with which I have some sympathy. However, might I ask what the sample size and research methodologies were for this survey???

I don't wish to be overly negative about a new business and their PR but these figures are being presented as facts by HR Magazine so I'd like to know more about the scale of the research etc.

Virginia Raemy - 18 January 2010

The survey of 250 business owners and HR staff at UK organisations, with up to 750 employees, was commissioned by TalentPuzzle to gain a better understanding of how companies are currently engaging with recruitment agencies. The research was commissioned by www.talentpuzzle.com and conducted by independent research company Vanson Bourne."

Victoria Thurlby - 18 January 2010

The archaic pricing structures that traditional search companies impose are, in my opinion, the lead weight that's dragging them down to an uncertain future. The majority of executive search firms will take a fee of about 30% of the candidate's full package which will include pensions, bonus, cars, etc. They charge 1/3 up front and then another 1/3 upon presentation of a shortlist of candidates. This means that by the time the client receives a list of potential candidates they have already paid 2/3 without even getting a glimpse of the winning post. The reason that search companies have to charge this much is because the process of generating candidates is so labour intensive and the pricing structure needs to reflect that. Significantly, it could take up to four months just to arrive at a short list whether a placement has been made or not. The cost has been incurred and will not be refunded, if no successful conclusion is reached.

The resolution?

In contrast, executive recruitment agencies placing permanent candidates will only take a relatively small fee which acts as a deposit and creates a sense of commitment, securing the client/agent relationship. It is only when a successful placement has actually been achieved that the client is required to pay a percentage of the annual salary only, less the initial fee from the beginning.

Using Executive recruitment agencies will have a strategy that means they can produce and present a well qualified short list swiftly, and organise interviews for a successful placement without delay. The key to this strategy is not to rely on one method for candidate generation. The number of possibilities is endless such as using search marketing, social networking sites and executive CV databases in unison. This candidate generation methodology should speed up the process and deliver suitable candidates within weeks, rather than months. It is important to bear in mind of course that a number of variables may come into play when predicting start dates, for example the candidate may be obliged to finish an existing contract before starting new employment.

So it is not about the fees - it is which recruitment company you choose and what their methodologies are.

Steve Hale - 18 January 2010

The article raises some interesting issues. I wanted to share my views from an in-house recruitment point of view, having worked with many recruitment agencies across a number of sectors.

It is interesting that UK businesses spend a huge amount of money with recruitment agencies and intend to continue doing so, and yet the perception of such a high proportion is that they do not receive value for money. Recruitment agencies provide a very valuable service which, when used appropriately and managed well, returns good value for money.

As the survey looked at businesses with less than 750 employees, their use of recruitment agencies may be infrequent. Building long-term relationships and benefiting from economies of scale may be more difficult. However, the article implies that businesses are not even questioning the fees that agencies propose. Do these businesses have the internal skills, knowledge and focus to get the most from the agencies they use? Recruitment agencies are commercial beasts and will generally take advantage of this.

I agree that businesses and agencies can work in partnership, giving each other the best possible service which will benefit both parties. Some recruitment agencies do strive to work in partnership, only working on assignments where they add value, and are not afraid to offer fee structures that suit the cleint's budget and transparent pricing. What businesses need to do is find the right recruitment agency, negotiate mutually acceptable terms and manage the relationship effectively.

Santha Hope - 28 January 2010

We agree that a high percentage of recruiters charge fees that are not value for money. For years clients have paid between 20-30% of a candidates salary for a consultant to search an existing database of candidates, send CVs and

then manage part of the offer process. Talent Works have looked to offer a much slicker cost effective and innovative resourcing solution that reduces the cost of the average hire to 3-4k per head irrespective of salary.

Our methods work on talent pooling and research for recruitment, which allows our clients to focus on mapping specific industries and competitors in order

to understand who the best candidates are in the market for their role and not just those sat on a recruiter's database.

Our model reduces the resourcing process to 8-10 days per assignment and, best of all, there is no placement fee. Our clients get a transparent search and can use the data for future hires as well as the current need.

We have built and managed Talent Pools for many global corporates with high volume recruitment needs and we continue to support them with this method across each business area.

Our method is based on attracting passive talent and reducing our client's recruitment spend Vs using costly contingent or retained recruiters.

emily wills - 31 May 2010

I can highly recommend an excellent new Legal Recruitment Agency called Austen Lloyd, their rates are really competative.  They really do listen, which makes them different. For further info go to www.austenlloyd.co.uk

Billy Davies - 14 June 2010

Good recruitment agents are worth their weight in gold. They find the right candidate for the role and in the long run recruitment costs are lower due to lower staff turnover. A fair few recruiters are only after a quick buck though and so resort to finding any candidate for the job which doesn't help anybody as the employer/employee relationship starts to quickly degrade.

For those employers who are looking for a viable method to bring their recruitment a bit more 'in house' they should give:

http://www.NoRecruitmentAgencies.com

a try. It's a 'No Agency', ultra low cost jobs board. As a result real employer jobs stand a fighting chance of gaining some visibility by jobseekers due to the lack of anonymous recruitment agency posted job adverts that flood other jobs boards like Reed, Monster etc.