How much does it cost to work with a recruitment agency?
The price of a service provided by a recruitment agency is an important element in the process of deciding whether a company should work with the agency or whether it should rather consider alternative methods to meet a given recruitment need(s).
The question about the price of the recruitment service is crucial while deciding on the method we will use to recruit the person needed in our company, as it is closely connected to many aspects of the recruitment process such as:
- the duration of the process,
- required human or technical resources,
- the ability to reach the right group of candidates,
- our previous experience in the company with recruitment for similar positions,
- confidentiality, etc.
This is why companies ask agencies so frequently at the beginning of their market analysis about their financial expectations as they need to plan the necessary recruitment budgets.
The price of a recruitment service, like any other service, has many components. For this reason recruitment agencies are rather reluctant to answer this question without knowing more about the client’s needs (and we don’t talk only about job summary).
- The service will be priced differently when the client orders only CVs from the database and conducts the whole process of assessing the candidate and coordinating the process by himself, without expecting a guarantee that the candidate will be suitable for the position.
- The pricing will look different when the client expects:
- reaching out to passive candidates,
- an in-depth assessment of the candidate,
- assessment centre,
- psychological tests,
- a guarantee that the candidate will come to work and stay in the company from 1-12 months (the length of the guarantee has an impact on the price),
- coordination of the whole process with all stakeholders, including scheduling meetings in the candidate’s and the client’s calendars,
- assessment reports,
- weekly progress reports on the project,
- coordination of the negotiation of the final contract with the candidate so that the recruitment process ends successfully and does not break down over the small details that always come up during the finalisation of the interviews with the candidate,
- checking references regarding the final selected candidate,
- the search to the end without the limit of the presented candidates with the possibility of modifying the search area whenever it is needed in the conducted project.
Sometimes it is also necessary/expected that the consultant leading the project will attend all client’s meetings with the candidates. This of course means additional working hours for the consultant.
The reluctance to talk about the price on the agency side without knowing more about what is expected of the process is also due to the fact that sometimes clients compare the price of completely different services. It’s just as if they were comparing the supply of building materials to build a house with the cost of having a house built by an experienced contractor who will give a guarantee for a specific length of service. Both methods will lead to the construction of a house. However, each will require different time, different experience, different resources on the part of the contracting party and will finally cost differently.
It may also happen that it is necessary/expected for the consultant leading the project to attend all the client’s meetings with the candidates. Such requirement obviously means additional working hours for the consultant.
Sometimes misunderstanding of the possible scope of a recruitment service causes frustration on both sides. The client says “…no, I have a completely different price from your competition” without even checking what is included in the price and whether the competition he/she is talking about is actually a competition to the given recruitment company.
Sometimes the agency also hears “I’m completely disappointed in working with agencies, it doesn’t work for me at all”. In such situation it’s worth going back to analyse our own expectations from working with an agency and compare them with what is included in the process we usually/now use. Perhaps with a slight change in the structure of the process, satisfaction from working with the agency will be higher and effectiveness will increase?
OK, but how much can it cost?
The price range is very wide and can range from 0.5 of a candidate’s monthly gross salary when working with a freelancer on a non-guaranteed CV delivery basis (sometimes even without a telephone interview with the candidate) to as much as 35% of a candidate’s annual gross salary (bonus included) for major international recruitment Brands ‘doing’ board positions only.
The most important thing is to compare “apples to apples” when choosing and select the best option for our company. How to choose a good recruitment agency has been described previously and we’d like to invite you to read this material.
We can all agree that price matters, but so does the risk of making a mistake in recruitment – and often much more. We aren’t talking just about a badly matched candidate but also about a protracted recruitment process, the need to re-select a supplier, frustration in the team because we still do not have a person in the key position, board meetings or managemet teams where we have to explain why the process is still going on and, of course, lost of business opportunities as a result.
Ewa Adamczyk and Katarzyna Wojtowicz
Next week on agency payment models. Can retainer be cheaper than success fee?