How much does it cost to hire a recruiter? Is it worth while? In this article, we’ll take a look at the cost of recruiting internally versus working with a recruiting agency. We’ll discuss some of the pros and cons to recruiting while also offering some tips on how to find the right recruiter for your business. Let’s dive in!
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The Cost Of Recruiting
According to 2022 data from Society for Human Resource Management (SHRM), the average expense per hire was nearly $4,700. However many employers estimate their total expenses when hiring someone can reach three or even four times what they pay at first glance – in essence, if you’re working on filling a position that pays $60k annually it can cost around $180- $200K to fill the position! Wow, let’s find out how.
Soft & Hard Costs
The hard costs of filling open roles are advertising costs, revenue lost due to the open role, and the annual salary of the candidate. (Fact, open roles can be a loss of $1,000 to $10,000 a day in gross profit depending on the role). Soft costs however, do not show up as a line item on the budget but they do effect productivity which effects revenue. Soft costs consist of the time each departmental leader invests in supporting the HR-specific roles. Meeting with potential candidates, screening applications, scheduling a few rounds of interviews and making final decisions etc. all require an ample amount of time and effort from your team. This effort takes them away from their other duties, affecting the bottom line.
Advantages of Recruiting Agencies
There are several advantages to using a recruiting agency. First, recruiters have access to a large pool of candidates. They can conduct 1000’s of candidate screenings each year yet the timing is wrong so the candidate or client passes on the position. However, good recruiters keep in touch with the candidate and let them know about new opportunities in the future. Secondly, recruiters save you time by screening through candidates and conducting initial interviews. This is less time that your team has to use to fill the role internally. Third, recruiters have experience matching candidates with various companies. Pillar Staffing Solutions perform a thorough intake before we begin our search. This helps to make sure we find the right type of candidate for your business.
Disadvantages of Recruiting Agencies
There are also some disadvantages to using a recruiting agency. First, there’s no guarantee that they’ll find candidates that are a good fit for your business. Secondly, you may have less control over the hiring process when you use an agency depending on the search terms. Lastly, recruiting fees can add up quickly depending upon the agency’s pricing structure.
Cost of recruiting services
As previously mentioned, the cost to hire a recruiter varies by the agency, the position, number of positions, etc. To give you a broad idea most agencies will offer a contingent placement fee or a retainer fee. Contingent placement fees are the fees charged to the company only after they’ve decided to hire a submitted candidate. This fee may range anywhere from 10% to 35% of the employees annual salary. To give you an idea, if an employee makes $50,000 annually and the recruiting firm is charging a 15% percent fee, the employer will have to pay $7500 to the recruiting firm for the service.
Similarly, retainers consist of percentage fees. An upfront fee (the “retainer”), is charged to the employer before the search starts. This fee is a percentage of the
total placement fee. This upfront payment secures the recruiter’s exclusive attention and focus on filling the role. The fees are paid in installments (ie. when the search is begun, when a candidate “shortlist” is made, upon delivery of candidates, when an offer is accepted etc).
Find a recruiter
To find a recruiter, start by asking for recommendations from other businesses in your industry. Once you’ve compiled a list of potential agencies, take the time to interview them and learn about their process. Make sure you’re comfortable with their fees and that you feel confident in their ability to find qualified candidates for your open positions.
We hope this article has helped to shed some light on the cost to hire a recruiter. If you want to learn more about our services please visit our employer page.
Happy Hiring!
