Why are recruitment fees so expensive?
The answer to this is straight forward and is a combination of how employers choose to buy, and how recruitment companies choose to sell their recruitment services.
These issues are predominately the result of the contingency recruitment model, where multiple agencies are engaged, but only one can be successful. If the risk is not shared, then it is difficult for both parties to achieve a fair deal.
It is widely agreed that agencies working to a multi-agency contingency model, probably have a c25% fill rate which means they have to register 4 vacancies in order to create one placement.
Let’s consider the following scenario!
You need your company accounts completing by your accountant. You speak with your accountant, agree a price of say £1000 and an invoice will be created for this amount. They complete the accounts and you pay them the £1000. Seems a fair deal.
Now consider how the deal would look if we said to our accountant that we want them to prepare our accounts, but we are going to ask 3 others to do the same and then pay the one that comes up with the best result. Well quite frankly, I doubt you would get any to do it and if you did, then the fee is going to be a great deal more than the £1000 first quoted.
And that my friends is why recruitment fees are so expensive! When you operate on a success only contingency basis, every time you pay a recruitment fee, you are not only paying for the work the recruiter has done for you but also for the work they have undertaken elsewhere but not created any revenue.