Micha Wotton
Micha Wotton, Head of Development at SavvySME

Attracting talent and recruitment

How much do recruiters typically charge?

I am looking at hiring developers and was wondering how much recruiters would charge. Do their fees vary by industry or by role?

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3 Answers

John Belchamber

John Belchamber , Owner & Senior Consultant at Invoke Results

External recruitment fees (usually based on a percentage of salary) generally vary by industry, role type, salary level and how much 'up front' financial commitment and/or exclusivity you are prepared to give them. In this market, if you know how many people you are looking for and how much commitment you are prepared to offer, you should have far more leverage to negotiate on the fees and guarantee period given. 

You can also consider outsourcing your recruitment function to an 'internal recruiter' who would act as if they were a member of your team. This is often far more cost effective as it can be based on a fixed fee or a per-hour basis and has the benefit of building your own candidate database rather than the recruiters. However, you might see a downside in that there is no replacement guarantee.

I hope that this helps you and am happy to chat further offline if you like.

 

John Belchamber

John Belchamber , Owner & Senior Consultant at Invoke Results

Sorry, I should also add that thinking of using recruiters as a 'cost' may be worng. Ask yourseself what your time costs and how skilled you are in staff attrac... read more
Sorry, I should also add that thinking of using recruiters as a 'cost' may be worng. Ask yourseself what your time costs and how skilled you are in staff attraction and selection (i.e. can you find the right people for your business). On average making a bad recruitment decision costs the business one-year's salary for the role. In addition, bringing the wrong person into a small business has a far bigger imnpact on the business than doing the same in a business with 100 people.
Micha Wotton

Micha Wotton , Head of Development at SavvySME

Fantastic answer John, thank you. Just the information I was looking for, and a new way of looking at the 'cost' of using a recruiting agency.
Fantastic answer John, thank you. Just the information I was looking for, and a new way of looking at the 'cost' of using a recruiting agency.
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Nathalie Lynton

Hi Micha,

It is possible to engage some consultants and agencies on a fixed fee irrespective of the role. There are some agencies that have a service model where they change 5k for example to fill a permanent admin role. Though there are not many of them, and their service offering maybe as simple as post and pre-screen candidates and that’s it.
The more usual model is to negotiate terms with an agency. Usually this is about 14-19% of a salary of the person you choose to hire.
Some roles will have a higher percentile depending on how hard they are to fill, similarly if they are more senior roles – Where the candidate’s salary is over 150k for example there will be less candidates in that pool; So the fee will go up because they are harder to find.
If you work with one agency exclusively they may reduce the fee when they negotiate terms with you.
If you are going to spend 100k salary of a Developer and also pay up to 19k to your recruiter, you have to ask… Is that $ well spent? Could you for example spend some of that on a digital marketing recruitment campaign, internal blogging, and social media presence that draws candidates to you on an ongoing basis.
That’s said once you have an agency working on your role there is no guarantee they will find you the developer of your dreams either.
And the cost of a bad hire IMO has very little to do with your external or internal recruiter. In my nearly 20 experience in HR and Recruitment, poor hiring usually comes from the company not having little ability to define its company culture and then interview for it, as well as a lack of understanding and practices to undertake interviewing for emotional intelligence.  “Hire in haste…”

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Scott Brown

During my career as an IT recruiter (and as the initial scope of my business subsequently - moved into internal hiring consulting now), some agencies are bound to charge nominal, non-negotiable fees for all recruitment activity. Averages sit in the 12-18% of annual salary (base  plus superannuation). If you are determined to go down the agency path, my advice would be to shop around. Fortunately, it's a market skewed to the client currently, so you could get yourself a great deal...but only with the smaller, boutique firms, as they will be more accommodating on negotiating fees. There are ways and means of doing that negotiation to make it even more mutually beneficial, but I could be here for days going through them! Suffice to say: shop around.

John makes some great points, particularly on the impact of bad hires...but I will challenge one of them. The research I have done suggests that a bad hire's cost can be anywhere from 30% of the annual salary to over 5 times, depending on the role, customer interaction and propensity of business development. Regardless of the actual figure, though the point remains - it's a major risk.

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