For decades, recruiting agencies have charged 20-30% fees for a successful full-time hire. As starting salaries have escalated, those fees regularly reach $20-25,000 or more. Meanwhile, due primarily to internal increased efficiencies and capabilities, the average cost per hire in many industries has fallen closer to $5,000. This cost divergence has many hiring managers using recruiting agencies either only in hot markets or as an expensive last resort, even though they desire the recruiting networks and expertise agencies can offer.
Contrary to some perceptions, conventional recruiting agencies are not greedy – they must charge these rates. The above diagram explains why.
A conventional recruiting firm only gets paid when an offer is accepted and the candidate starts. Everything else in the blue shaded areas, while taking a lot of expertise, time and effort to develop and sort through, is essentially ‘waste byproduct’ in the search effort even though these are good quality candidates. So, the fees need to be high to cover all the time and effort it takes to get to a successful hire for the specific search.
At Cloud Talent, we have developed methods to automate and monetize more of the steps in the search process, thereby allowing us to offer the same search expertise and service as conventional agencies, oftentimes at half the cost.
Or for even further reduced costs, you may choose to get visibility into our search ‘byproducts’ (we call them Talent Clouds) and hire screened, specific talent that is just right for your needs at an extremely low fixed fee (usually at or near your current cost per hire). Every day we talk to quality candidates around North America, learn their motivations, etc. but they are not a fit for our active client searches. Yet they may be just the person you need.