Why use a PAYG recruitment model?

There is no shortage of recruitment agencies. How much do recruitment agencies charge and is it good value? There is significant variation, but the traditional model is well established, and it drives cost. Those costs may be prohibitive for SME.

Traditional Recruitment Costs

Permanent

A standard, percentage-based recruitment fee is charged to employers, usually 15-30% of a candidate’s remuneration package. While you’ll often find the average fee sitting around the 15% mark, this is highly dependent on the industry and role. For example, a lot of lower-level jobs may attract fees closer to 10%, but at the other end of the spectrum, it’s not uncommon for recruitment agencies to charge up to (and in excess of) 30% for executive placements. In general, this variation comes down to more work being required to recruit at higher levels, however, this isn’t always the case. To put it into perspective, the table below will give you an idea of typical recruitment agency fees when hiring on a contingent basis.

Traditional Recruitment Is Expensive

Salary $50,000 $100,000 $150,000
Average fee (%) 15% 20% 25%
Cost per role $7,500 $20,000 $37,500

You Shouldn’t Have To Pay This

Labour Hire and Temp to Permanent

The candidate is paid by the recruitment agency directly, and employers are then invoiced for the hourly rate in addition to a margin of profit. This margin is highly changeable depending on the industry.

Recruitment agencies will usually charge a ‘transfer fee’ in temp-to-perm situations. Basically, if you have hired temps through a recruitment agency, you’re likely to be charged if you wish to bring them on in a permanent capacity.

Why Do Traditional Recruitment Agencies Charge So Much?

Agency fees were traditionally based on a no success no fee basis. For that reason, they have charged a higher fee, simply because most of their efforts go unrewarded when they only charge on this basis. The reality is that most assignments are completed, and most agencies now charge on the completion of milestones. The elevated cost structures remain.

Why we believe pay as you go is a superior model for SME

Unlike traditional recruitment agencies, pay-as-you-go recruitment is a transparent and flexible approach that ensures you pay only for the services you need. From a complete outsourced recruitment service to selecting just a set of recruitment tasks, you have full control from start to finish.

Project transparency – every hour is tracked, justified and reported so there are no surprises.

Cost effective – generally the cost is around 50-60% lower than a traditional contingent assignment. At Heron Cove we guarantee costs won’t exceed 50% of a standard 15% placement fee.

Access to the same high quality, high touch professionalism found with agency recruiters.

Are recruitment agencies worth the cost?

In some cases yes. Where a role is particularly hard to resource or where there is a shortage of applicants with specific skills, agencies may have wide networks and the ability to “tap” potential candidates. Having said this, some agencies are more effective than others and it really comes down to the individual recruiter, their networks and tenacity. Why pay for this expertise when you are sourcing more common roles and you just don’t need high end head hunting. For the majority of roles, we believe that either an in house or pay as you go outsourced model is more economical and just as effective.

Summary

At Heron Cove, we want to disrupt the current model. We’ve always been aware of the cost barriers that organisations face when it comes to engaging recruitment agencies. This is the reason that we developed our offering as a flexible, pay as you go recruitment service at a fraction of traditional pricing.

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AVANTAGEHeadquarters
Organically grow the holistic world view of disruptive innovation via empowerment.
OUR LOCATIONSWhere to find us
https://heroncovegroup.com.au/wp-content/uploads/2019/04/img-footer-map.png
GET IN TOUCHAvantage Social links
Taking seamless key performance indicators offline to maximise the long tail.

Copyright by Heron Cove Group. All rights reserved.

designed and developed by Nimbleweb

Copyright by Heron Cove Group. All rights reserved.

designed and developed by Nimbleweb