18 February 2010

Do recruitment consultants overcharge for their services?

A typical answer from recruitment consultants will be along the lines of: “I certainly don’t, but some of the less reputable organisations in our profession …….” And from users of the services: “Some are better than others, but most seem expensive for what they do”.

We have asked the question from a different angle. “Why do so many recruitment consultants (and their clients) negotiate a % rate of final salary?” And “What is the justification for paying £5250 for a £35k salaried role and £9750 for a £65k one?” (Both being 15%)

Our own experience over the 7 years before and during the recession has been enlightening, especially when also considering the impact of technology and the extensive growth of e recruitment. Independent research reports that 80% of the UK workforce under the age of 50 regards the internet as the primary source for a new job. So, where and how will a potential employer find the ideal recruit for an executive, management or senior role and where will a recruitment consultant look?

Both will look to the mass of (over 2,000) job boards, their own databases and increasingly at social networking sites. There are a few wrinkles to address which for many correctly form the basis of the reason(s) to use a recruitment consultant rather than tackle the whole process directly as an employer.

  • Which are the most relevant on line boards to research for a particular role?
  • How are the boards to be researched? (advertise the role and/or search for possible CV matches) – It is worth noting as many as 60% of job board CVs can’t be accessed by performing a search (an incumbent employee doesn’t want their employer to know they are “in the market” after all!)
  • Can the employer attain a competitive price for advertising and search access across multiple boards?
  • How will CVs be assessed, especially if advertising produces 100’s of responses?
  • Who will take up references, check eligibility to work in the UK, manage the interview and offer rejection process, perform competency and technical testing, organise and run assessment days etc?

But these are amongst the reasons to use an external professional, not a rationale for charging a % of final salary as a business pricing model. Neither the core recruitment processes nor the time taken to execute them satisfactorily changes significantly in relation to the final annual salary. Indeed the time taken and the process do not change if the recruitment assignment is for one or several people for a specific role. So why do so many employers who use an external recruitment provider whether on a contingency, preferred supplier or managed service basis continue to negotiate costs based on a % of final salary when there is and probably never was a real basis for this?

Shouldn't external multi disciplined recruiters for salaried or long term contract roles where the annualised remuneration is at least £25k change their business model and define the recruitment process they provide in an SLA and fix the cost as a flat fee for all roles on a no placement no charge basis and not overcharge!


R Hewitt