What is a recruitment agency?
A recruitment agency is a company that is paid to find employees for other companies who need them.
In other words, recruitment agencies work as a middleman between companies who are looking for employees and people who are looking for a job.
Why use a recruitment agency?
In today's highly competitive, candidate-driven job market, finding and hiring the ideal job candidate is quite hard. This is why many companies turn to recruitment agencies to help them recruit the right people for their open job positions.
Here are the 4 main reasons why companies decide to use recruitment agencies’ services:
Reason #1: To save time
There are two main ways in which using a recruitment agency can save your company’s time. First, a hiring process can be quite time-consuming. Using a recruitment agency can help you save your employees’ time.
Second, recruitment agencies are professionals who recruit for a living. This is why they probably already have candidates in their applicant pool who are exactly the right fit for your open job positions. This is a great advantage that can significantly shorten the full cycle recruiting process. In other words, you can hire the best candidate much faster!
Reason #2: To improve the quality of hire
The second main reason why many companies turn to recruitment agencies is to improve their quality of hire. The main advantage of using a recruitment agency is that most of them are specialized in certain industries or functions, which means they already have a pool of talent at their disposal.
Reason #3: No in-house hiring expertise
Some companies, such as startups and small companies, don’t have a dedicated in-house recruiter. These companies lack the expertise and resources to find and hire the best candidates. To ensure that their hiring process is done professionally and effectively, they choose to use the services of recruitment agencies.
Reason #4: For additional security
For many companies, the most important advantage of using a recruitment agency instead of in-house recruiters, is that recruitment agencies offer additional security when it comes to new hire retention. All the best recruitment agencies offer guarantee periods. This means that they guarantee you that your new hire will stay at your company for a certain period of time (usually 3-6 months). If your new hire is terminated or leaves before the expiry of a guarantee period, recruitment agencies will give you a full refund or, most commonly, find a new, replacement candidate for no extra charge.
In short, choosing the right recruitment agency can help you recruit and retain the right people faster and even cheaper!
How much does it cost to use a recruitment agency?
And now, the crucial question: Can you afford the services of a recruitment agency? How much will this cost you?
First, you need to know that the average cost to fill an open position in-house is almost $4,000, as reported by Bersin by Deloitte. However, note that this is an average, which means that the cost per hire will vary greatly depending on role, your recruitment strategies, etc.
A recruitment agency fee also depends greatly on the position you are looking to fill. Most recruitment agencies have different fees depending on the:
Number of people you need to hire
Type of position
The salary for the position
The type of hire (permanent or temporary, full-time or part-time, etc.).
In general, recruitment agencies calculate their fee as the percentage of the annual salary of the placed candidate. The majority of recruiting fees run between 15% and 25% of the candidate’s total first-year annual earnings, according to Undercover Recruiter.
However, the recruitment fee can go up to 50% for hard to fill or senior positions.
To help you understand how these fees work, here is an example from CV library:
Junior role – advertised salary £10,000
Agency fees would be around 10%, so you would pay £1,000 per hire.
Executive role – advertised salary £20,000
Agency fees would be around 15-20%, so you could pay up to £4,000 per hire.
Types of recruitment agencies
There are many different types of recruitment agencies out there. Recruitment agencies come in different shapes and sizes and offer different recruiting services.
To choose the best recruitment agency that will perfectly fit your hiring needs, you need to know the most common recruitment agency types. Hopefully, the classification below will help you understand the difference between the main types of recruitment agencies.
There are 3 main types of recruitment agencies:
Type 1: General recruiting agencies
General recruitment agency (also known as or Contingency recruiting agency), is the type of recruitment agency that usually focuses on recruiting for a specific industry, such as healthcare recruiting, hospitality recruiting, retail recruiting, finance recruiting, or technology recruiting.
Use this type of recruitment agency when you need to fill an entry and middle-level positions in a certain industry.
Type 2: Staffing recruitment agency
Staffing recruitment agency (also known as a Temporary recruiting agency), is the type of recruitment agency that focuses solely on recruiting temporary employees.
Use this recruitment agency type when you need to hire seasonal workers, help on a certain temporary project or you need to cover a leave of absence of your full-time employee (who is on an extended sick or maternity or paternity leave).
Type 3: Executive recruitment agency
Executive recruitment agency (also known as Retained search firm or Executive search firm; sometimes also called a boutique recruiting firm), is the type of recruitment agency that specializes in executive recruiting.
Use this type of recruitment agencies when you need to fill your top level or so-called C-level positions.
How to choose your perfect recruitment agency?
Follow this 4-step process to choose the best recruiting agency for your hiring needs - and your budget!
A 4-step process for choosing your perfect recruitment agency:
Step #1: Define your hiring needs
The first step in choosing the best recruitment agency is to clearly define your hiring needs. Do you need help hiring many, a few or just one employee? What kind of a position are you looking to fill? Permanent or temporary? Entry-level or executive-level? Do you need an employee with niche skills or a jack of all trades?
Defining your hiring needs and specifying all the details about the position(s) you are looking to fill is a necessary prerequisite for choosing the right recruitment agency.
Step #2: Choose the right recruitment agency type
The second step in choosing your perfect recruitment agency is to choose the appropriate recruitment agency type. This will help you narrow down a pool of possible recruitment agencies to consider. If you have completed the previous step and clearly defined your hiring needs, choosing the right type of recruitment agency should be fairly easy.
If you need to hire temporary staff, your best choice is staffing recruitment agency. If you need to hire high-level executives, you should go for executive recruitment agencies. For everything else, your best choice will probably be a general recruiting agency. Just make sure to look for general recruitment agencies that specialize in your industry!
Step #3: Check affordability
Finding the best recruitment agency is useless if you can’t afford its services. This is why the third step in choosing your perfect recruitment agency is to check if you can afford it. Most recruitment agencies have the general information listed on their websites.
However, to get a more precise and detailed information, you’ll probably need to contact them. Prepare a list of a few agencies of the appropriate type and send them an inquiry. Ask for detailed information about their services, terms and price.
Step #4: Check the expertize
The fourth, and final step in choosing your perfect recruitment agency is to check the expertise of your top 3 chosen recruitment agencies. If you followed the previous steps, you should be down to a top 3 recruitment agencies of appropriate type that you can afford. To choose a final winning recruitment agency, compare the quality of your top competitors’ work. Do your research!
Pay special attention to their guarantee period and terms. Search for and study their client list. Look for their clients and placed candidate's testimonials. Check if they have a positive social media presence. Make sure they are members of relevant professional associations. You can also check their status on recruitment agencies top lists and review sites from different sources.
Additional tips for choosing the best recruitment agency
Here are some useful additional resources to help you choose the best recruitment agency:
Compare recruitment agencies on G2 Crowd
Type in your company size, industry and preferred price range and get a list of recommended recruitment agencies. Plus, you can check the recruitment agencies’ reviews by real, verified users!
Browse the top list of the best recruitment agencies by Clutch
Browse the list of the best recruitment agencies, check out their reviews and compare them. You can also filter the results by different criteria.
Check out Forbes’ list of the best recruitment agencies in 2018
For the full list of America’s Best Executive Recruiting Firms, click here.
For the full list of America’s Best Professional Recruiting Firms, click here.