Ever wondered whether the costs of using a recruitment agency are worth it to help you find staff for your business? We impartially explain the pros and cons.
“Are recruitment agencies worth it?” It’s a question that you may have asked or discussed in your business when thinking about taking on new staff.
At Anne Corder Recruitment it’s a question we hear often from potential clients and companies that have never ‘outsourced’ their recruitment before.
And as the leading Peterborough-focused recruitment firm you may expect us to always say that using an agency like ours is definitely 100% worth it. But in this article, we’re going to impartially explain the top five cost-related pros and cons of using a recruitment company so you can make your own mind up and decide if using an agency is worth it to you.
We’ll start by looking at the top five cost benefits of using a recruitment agency.
Top 5 Cost Pros / Advantages
- The biggest cost-related benefit a recruitment agency provides is the time it saves you. Instead of having to take time out of your already busy schedule to manage the recruitment process yourself (everything from creating the job specification, to advertising the role, to filtering applications, to liaising with candidates, and much more), the recruitment agency should do all this for you, leaving you to concentrate on your day job.
The process of recruiting the right staff can take weeks (or even months) to complete so this is a significant burden off your shoulders and should ultimately cost you far less than managing the process yourself.
- Likewise, a recruitment agency saves time for your staff and colleagues. That’s why even large companies with fully staffed Human Resources (HR) teams or departments often use external recruitment firms. They know that the time needed to source, attract, filter, and liaise with potential candidates is considerable and will take them away from their day-to-day activities such as supporting existing staff.
When evaluating whether it makes financial sense to use a recruitment agency, make sure to factor in the productive time you or your existing staff will lose if you manage the hiring process internally. Every staff member has a cost (their salary) so it should be relatively easy to calculate how much it will cost your business if you or they are committed to recruitment activities instead of their core tasks for multiple days, weeks, or months.
- Another significant cost-related benefit that some recruitment agencies offer is the savings you will make on external job advertising and promotional costs. Whilst you can certainly advertise and promote vacancies yourself, particularly on social media, when it comes to advertising and promoting roles on online job platforms or in the media (newspapers, trade press, radio, billboards, etc), some agencies can do this far cheaper than clients can do themselves due to the special rates they receive (often because of the volume of vacancies they advertise).
This saving can run into hundreds or even many thousands of pounds, offsetting the cost of using a recruitment agency.
- Businesses that hire in external expertise to help them with interviewing and selecting staff can also save money by using a recruitment agency. Often senior staff within a company realise that they don’t have the depth of skills and experience in their business to truly know what a ‘good’ candidate for a specific new role looks like (despite knowing they need someone), so ask an external expert to come in and help them with this. This understandably carries a cost, but one that they wouldn’t have to pay if they commissioned the right recruitment company.
High-quality recruitment agencies are experts in knowing what to look for in prospective employees, well beyond the job brief provided by the client. And often they have specialist expertise in particular roles or sectors, which means that although you may not really know what a ‘good’ candidate looks like, they will.
- Some recruitment agencies also offer and provide added-value services to their clients, which saves them time and money. These include taking part in shortlisted candidate interviews with their clients, providing in-depth recruitment management reports, and even assisting with ‘outplacement’ processes when companies have to make staff redundant but want to ensure their former employees secure other good jobs.
These added-value services can make a significant difference to a business’s bottom line and reputation.
Top 5 Cost Cons / Disadvantages
- The most obvious cost-related disadvantage of using a recruitment agency is the fact that they charge a fee that could be more than you are willing or able to pay. Fee structures and pricing models vary in the industry, but typically agencies charge a percentage of the salary of the new recruit, charge a fixed-fee, or have a retainer arrangement with their clients that covers them for all the recruitment they plan to do in a year.
Whichever model or fee structure is offered, for some businesses, the costs may just be too high (although the benefits covered above should more than cover this).
- Some businesses may feel that commissioning a recruitment company is not worth it when looking for a small number of temporary or part-time staff. Typically these roles are relatively low paid, so for some companies the cost of using an agency – particularly those that charge a set fixed-fee regardless of the salary of the job – just doesn’t add up.
However, using a recruitment agency does make commercial sense when a company is looking to hire numerous temporary or part-time staff or when the agency’s pricing model is based on a percentage of the starting salary no matter what that is.
- Another cost-related disadvantage of using some recruitment agencies is that it may be difficult or impossible to get the agency fee refunded if the new starter doesn’t work out.
Despite everyone’s best intentions, sometimes staff move on quickly or are found to be not right for the role and are asked to leave, leaving the employer back at square one. In these situations, the company may want their money back from the recruitment agency that sourced them, feeling they have paid for a service that didn’t deliver the results they wanted.
Most reputable recruitment agencies will feel terrible about this situation and will happily refund the fee or put it towards finding another candidate for the role (and in most cases, these agencies won’t even invoice the client for their services until the new employee has been in place for a set period of time).
However, some fixed-fee agencies and online recruitment services, that typically charge upfront for their services, won’t provide a refund, believing they have fulfilled their obligation of finding a candidate for the role (regardless of how long they lasted).
- Some agencies are also inflexible with their pricing and charging model, insisting the client pays them their top price in a way, and at a time, that suits them (the agency). This can be difficult for some businesses to accommodate, even if they very much want to work with the agency.
Reputable high-quality agencies, particularly those that are independent, will want you to become a client of theirs and will generally be far more flexible than many larger agencies and fixed-fee and online services. They may offer different payment terms, a discounted initial rate, and much more that their competitors can’t or won’t.
- Related to the above point, being inflexible on when the agency fee is paid can impact the cashflow of some companies, particularly smaller businesses. These companies may be faced with paying their new member of staff and paying the recruitment agency fees in the first month the new employee starts, which simply may not be feasible.
Using a reputable high-quality recruitment agency should be well worth the investment and save you valuable time and money.
However, it’s important to be mindful of the cost-related disadvantages of using one, particularly if you are a small business where cashflow and obtaining the best value for money are key.