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Why Do Recruitment Agencies Charge So Much?

Why do Recruitment Agencies Charge So Much?

Recruitment agencies will nearly always work on a contingency basis (they only get paid once they have placed a candidate with an employer and the candidate has started work). This naturally means they are taking on a lot of risk; They may work 5 or maybe 10 jobs, and only successfully place a candidate once; that one invoice might be the only one they send out in the month.

Low success rates can be down to:

  • Unrealistic skill expectations on the employers part
  • Salaries being too low
  • No candidates in the market
  • The same job being worked by multiple recruitment agencies
  • The job being worked both internally and externally
  • Found candidates are already known to the employer

It is common that when multiple recruitment agencies are involved in the recruitment process, the percentage they charge increases due to the higher risk.

There are fixed cost recruitment agencies and job advertising agencies that will charge a set fee, whether or not they are successful in finding an employee. The great thing for employers is the lower costs these services attract. In the first instance, just advertising your job to establish the quantity and quality of candidates might be a good starting point, and then commissioning further work to outsource the shortlisting and inviting to interview, significantly reducing the burden to small businesses in particular.

Why do recruitment agencies charge so much?

Recruitment agencies work on a contingency basis; if they don’t place an employee with an employer, they don’t get paid. It is likely that they will also have rebate periods, say if the employee they have placed leaves after two months, they may have to return a large percentage of their fee. Agencies need to charge high fees to be have a successful business.

Do recruitment agencies advertise jobs?

A lot of recruitment agencies will work on the model of accepting a job spec, then advertise, and filter and put through a shortlist of applicants to employers, whilst charging 10% to 30% of base salary.

Do recruitment agencies advertise fake jobs?

In the UK it is illegal to advertise a job which doesn’t exist.

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