The average recruitment fee in the UK has increased since the outbreak of Covid-19, causing some controversy. When Candour was founded in 2014, the average recruiter fee was around 15%. Now most companies are looking at 20%. There has been a variety of influences that have caused this increase, and in some cases decrease, in average hiring costs:
In the 1990s the recruitment industry was small and trying to establish itself – due to a lack of supply, the recruiters were able to charge fees in the region of 25 to 30 percent. Throughout the early 2000s the average recruitment fee dropped to circa 15%, more and more people joined the sector and that drove down the costs – as you would expect.
The market became flooded with highflyers from the 90s and 00s, driving costs down to an all-time low. Fees of 10% were commonplace, and even 8% was seen on occasion. Since the outbreak of Covid, the demand for tech staff has increased dramatically, leading to a corresponding increase in recruitment fees of around 20-30%.
But what do you get for your fee?
As mentioned, the market saturation caused many people to take shortcuts, which left a bad impression on the tech industry. Companies are reluctant to adapt to the increase in average recruitment costs because of the fear of being stung again.
This has led to more recruitment companies adopting a quality approach to recruiting and advancing their service offerings to justify the fees involved.
Recruitment fees have been on the decline between 2010-2019, with some companies charging as little as 10%. But what exactly do you get for your money? We spoke to dozens of recruitment leaders to find out.
10% – Unfortunately does not provide you with lots of value.
The recruitment agency posts weekly job listings on all of the available job boards. This is not too different from what you have at your disposal with the use of job boards, etc.
A couple of calls to a list of potential candidates that match your job description, culled from the recruitment agency’s database. This is similar to your Applicant Tracking System (ATS).
Finally, search specialist job boards regularly. If any CVs pop up, the recruiter will reach out and try to get them interested. Utilise the tools at your disposal rather than increased spending from hiring.
As you can tell and are probably thinking, spending anywhere between £1,000 – £10,000 for this level of service doesn’t appear to be great value for money.
15% Recruitment Fee – The ‘Norm’
Although the basic service is the same, you get the added benefit of LinkedIn headhunting and the use of daily InMails. This gives you access to people who are open to new opportunities, as well as those who aren’t actively looking for a new role.
The recruiter is also able to promote your brand and role to a wider audience in a more organised and scaled way. Other discretionary services, such as consultancy services or employee branding workshops, may also be included.
This slowly starts to justify the fee because the recruiters can be aggressive with the market and reach people who you otherwise wouldn’t be able to connect with or have the time to go and approach.
20/25% Recruitment Fee – The new ‘Norm’
All of the above are included, including job descriptions, database searches, LinkedIn Headhunting, and other services that are not limited to, job description assistance, employee branding workshops, recruiting process assistance, RPO, etc.
It is important to have a well-functioning hiring process when there is a shortage of candidates and hiring experts can help you be successful in this area. These additional services have gradually increased the average recruitment costs.
30% – Executive Search
How many C-Suite qualified candidates are there? And how many of them will be open to a new role? That’s why the average executive search fee is much higher than the average.
When we speak with companies who are looking for our services, we ask them one question:
“Do you mind how we recruit?”
The answer provides an indication of what fee we should charge and what assistance you will require, as well as giving us an overall idea of whether the partnership would be beneficial for both parties. We typically avoid the 10% fees, not because we only want large fees, but because we don’t see that as recruitment.
We have set our standards to ensure we give first-degree service that finds you the best candidates and helps you reform your hiring strategy and process to be successful every time.
If you want to get value from your recruiter, then reach out to a consultancy that knows what adding value means! We would love to – and can – help!
0161714 7120
