If you are a small business owner, you’ve likely partnered with, or thought about partnering with a recruitment agency. Recruitment agencies can be key in growing your business and your talent pool. This comes, of course, at a cost. So why do recruitment fees cost what they do? While these fees may seem high at first glance, there is plenty going on behind the scenes that contributes to the price.
In this blog post, you’ll gain a clearer understanding of the components included in the recruitment process, why certain parts of the process cost more than others and how external factors have impacted the pricing structure of recruitment over time.
By the time you’ve finished reading, you’ll know exactly what you are paying for, but more importantly how recruitment agencies bring value to your hiring process.
A Breakdown of Recruitment Fees
Finding the ideal candidate for a business takes time, resources and expertise. Here is a closer look at the key components contributing to the cost:
Sourcing Candidates
Recruitment agencies use specialised tools, platforms and their network to identify and attract top talent for clients. From premium job boards and candidate bases to LinkedIn recruitment tools and AI technology, the list is endless. While going alone might seem cost effective, access to these tools and technologies will only end up costing you more in the long run. A recruitment agency will have access to these tools, and more importantly, they have the knowledge and skills to maximise the output. Of course, use of advanced recruitment tools will add to your overall fees.
Screening and Shortlisting
An agency will review dozens (if not hundreds) of applications during the screening and shortlisting process, assessing qualifications, skills and suitability of candidates for a role. This step is time consuming; CV reviews, pre-screening interviews and skills assessments can be arduous tasks. It’s a time intensive process that requires specialised recruitment expertise. While advances in technology such as AI have helped agencies streamline these processes, this incurs an extra cost for the client.
Expert Consultation
A recruitment agency provides more than a list of names and CVs to a business—they act as consultants. They work to truly understand your company culture and specific hiring needs. They advise on best role fit, market salary benchmarks and strategies for attracting the highest quality candidates. This level of expertise is worth its weight in gold.
Candidate Engagement and Negotiation
Top candidates are often in high demand. Recruiters actively engage with them throughout the process, pitch your company, and negotiate offers on your behalf to secure the hire. This can be especially valuable when hiring for hard-to-fill roles.
What Are the Most Expensive Parts of Recruitment and Why?
Some elements of the recruitment process are inherently more costly than others. Let’s take a look at where the largest expenses lie:
Recruiter Expertise and Time Investment
Finding the perfect fit for a role takes time and expertise; it is one of the most significant contributors to recruitment fees. This process is more than just matching CVs—cultural fit is assessed and market trends analysed to ensure the candidate doesn’t just meet the technical requirements of the role, but has the skills and personality to thrive in your organisation.
Technology and Tools
Agencies can now combine their expertise and experience with advanced technologies to further improve the recruitment process. Applicant tracking systems, premium job boards and AI-driven recruitment tools now exist that help streamline processes, finding the highest quality candidates for your business. These tools require hefty investment, but allow agencies to deliver top-tier results that would otherwise be difficult (and expensive) for a small business to replicate in-house.
Specialised Roles
Recruiting for specialised or senior-level roles often requires more time and effort. The candidate pool is smaller and these individuals are typically not actively job-seeking, meaning agencies must tap into their networks and use strategic outreach to connect with suitable candidates.
Why Recruitment Costs Have Increased
Numerous factors have influenced a rise in recruitment fees over the years. These include:
Technological Advancements
Innovations like AI and data-driven hiring platforms add incredible value; they also come with a big price tag. To remain competitive, recruitment agencies have had to adopt these technologies, with the costs often filtering down to their clients.
Evolving Job Markets
The world is changing; remote and digital roles are scattered across every job board. This has led to a more complex job market, requiring agencies to cast wider nets to source their talent, screen candidates from diverse locations and handle new and increased logistical challenges in hiring from across the globe.
Wages and Market Demands
Politics and the economic climate have caused an increase in salary in the UK. This has led to rapid employee turnover and competitive salaries, creating an urgency for roles to be filled quickly. Many recruitment agencies have had to shift their focus and upscale their services to invest more time in engaging top talent, resulting in higher fees.
Skill Shortages
Industries experiencing skill shortages—like tech and healthcare—often see higher recruitment fees as agencies need to dedicate extra resources to source highly sought-after professionals in these fields.
Is It Worth It for Small Businesses?
Recruitment agency fees can seem a steep expense for a small business on first viewing. It is only when you assess the time, effort and expertise they bring to the search that you begin to realise the invaluable investment they can be.
These key advantages highlight the efficiency of outsourcing:
saves time
avoids expensive hiring mistakes
grants access to resources, networks, and market insights you might not otherwise have
Agencies bring efficiency and expertise, allowing you to focus on what you do best—running your business.
Maximising Your Recruitment Investment
If you’re working with a recruitment agency, aim to make the most of your investment with these tips:
Be Clear About Your Needs
Provide a detailed breakdown of the hard and soft skills you're looking for, as well as your company values. The clearer your brief, the more targeted the search will be.
Discuss Fee Structures
Recruitment agencies use varying fee structures, including percentage-of-salary fees or flat-rate fees. Ask your agency to explain their pricing model so you understand exactly what you’re paying for.
Partner for the Long Term
Building a strong relationship with a trusted agency can pay off over time. Agencies that understand your company well tend to deliver even better results with each new hire.
Final Thoughts
The expertise, technology and time that a recruitment agency provides results in a process that is much more than simply finding a candidate. The process is efficient, and highly targeted, reducing the risk of hiring the wrong fit for your organisation. For a small business owner, these fees provide value that outweighs the cost. You will find the best fit for your team without the difficulty of navigating the process solo.
If recruitment feels like a stumbling block for your business, it might be time to leverage the efficiency and expertise of a specialised recruitment agency. Their support allows you to focus on growing your business, leaving the hiring to the experts.
ACR is dedicated to transforming your hiring process with unmatched expertise and efficiency. By leveraging advanced tools, cutting-edge recruitment strategies, and personalised service, ACR ensures that you not only find qualified candidates but also the perfect cultural fit for your team. Get in touch with us to find out more.