“How could you possibly charge by the hour for recruitment?”
Perhaps you’ve never heard this question before. But believe me I am asked this question all the time. This really shouldn’t come as a surprise though, given that we’re building a marketplace of on-demand recruiters who all bill by the hour.
I had spent my entire career B.RL (life Before RecruitLoop) justifying to all my clients what I could possibly be doing behind the scenes to justify my (on several occasions) 30% placement fee. After all often they just saw an ad, a few résumés, … and then the invoice.
So I totally appreciate that it can take quite a bit of effort to shift your mindset as a recruiter and to start to think more like a professional services provider.
There. I’ve said it. It’s time to start to value what you do as a recruiter just like other professional services providers – your accountant, your attorney, or your local IT consultant.
If you’re still not sure about the whole notion of billing for your time, let me help you get your head around it.
1. How do you even calculate your hourly rate?
The first thing you need to do is stop thinking like a recruiter. Immediately.
The biggest mistake you can make is to think along the same lines as you would if a client asked you to help them calculate a temp or contractor’s hourly rate.
We’re all accustomed to explaining to a client that if a full-timer’s salary is $100,000 per year, then they should be prepared to pay around $50.00 per hour for a temp or contractor doing the same job.
Wrong way. Go back.
Do you think if a lawyer’s salary is $120,000, that her employer is charging her out at $60.00 per hour? Ah … I don’t think so.
You are charging for your time and expertise, so it’s not just a case of halving your annual ‘salary’ and moving the decimal point a few places.
Accountants charge $150-$400 or more an hour, depending on the type of work; meanwhile attorneys will typically charge between $200 and $400 per hour depending on the matter at hand.
This is how you should be thinking when working out what you will charge your clients. Remember you are a professional recruiter, you are adding value, and you are not simply ‘filling in’ for someone else.
Once you’ve grasped this concept, the rest should start to fall into place.
2. What exactly are you charging for?
Your time. All of it. Every moment you are working on your client’s brief.
Accountants and attorneys have ‘billable hours’. Recruiters can too.
Unfortunately when they start charging by the hour, too many recruiters will often think too ‘big picture’ and think only of the the time they have spent interviewing candidates.
Just because you interviewed 5 candidates and each interview went for about an hour (hopefully!), are you just going to charge your client for 5 hours?
How long did you spend crafting your job ad? How many hours did you spend looking through all those résumés and cover letters deciding who you would then phone screen? Then how long did you actually spend phone screening those candidates? What about all those phone calls backwards and forwards to all the candidates and your client scheduling interviews; rescheduling interviews; the negotiation process. And what about your time conducting reference checks?
If an attorney wakes up in the middle of the night thinking about your matter, believe me that time will somehow find its way into your bill.
Can you see where I’m going here? Just don’t undersell yourself.
3. What if your client doesn’t end up making a hire?
What if your attorney doesn’t win your case at trial? What if your accountant doesn’t quite get you the tax refund you were hoping for? What if after your IT guy has come in there’s still a bug in your system?
You will still receive a bill.
Sure there are a few attorneys who stand by a “no-win-no-fee” policy (think contingent recruiters) but in the majority of cases you will still have to pay them for their time and expertise.
Always keep in mind that you are also charging your clients for your time and expertise.
I appreciate that it’s a totally different approach and you need to shift your mindset but you must believe that you are an expert at what you do. The moment you start to doubt this, you will undersell yourself.
4. How can your client trust what you do?
When you receive a bill from an accountant or attorney, for some reason there’s just an ‘implied trust’.
Why?
Usually because there’s an extensive amount of study involved in becoming a lawyer or an accountant. Or in the case of your IT consultant, often there’s the impression that they are playing in a space so foreign to you that you just trust them when they tell you they need to pull apart your motherboard!
You need to make sure you know what your client is thinking and you need to ensure your clients trust that you are doing what say you are doing too.
How? Show them.
Don’t just include a line item on your invoice that says “5 hours interviewing candidates” or “2 hours reference checking”.
Which specific candidates did you interview? Why not include your notes? Who did you speak to during the reference check stage? If you just tell your client that you conducted the reference, they might just assume you spent 2 minutes on the phone to the candidate’s previous boss. Worse still they might not believe you even conducted the reference. But if you can provide in-depth notes, this is re-enforcing that you are an expert and can be trusted.
Full transparency pays off. Big time.
If your head is still spinning and you’re not convinced that this whole hourly rate thing can work for recruiters, just think of all those times you didn’t quite make the placement.
That time your candidate did a runner the day before starting in the job; or when your client called to tell you that an internal referral had miraculously appeared that was ‘absolutely perfect’ for the role; or when after spending 3 months on a contingent search, your client let you know that there had been a organizational restructure and that role was no longer a priority.
If you had been charging your client for your time and expertise, you still would have been paid.
I rest my case.
5. Can a platform help you do this?
Yes. RecruitLoop!
Hourly recruiting with RecruitLoop is simple, and specifically tailored for independent recruiters who love recruiting but find the whole admin process a real PITA. So if you’re concerned you’d lose track of what hours you’d spent working on which client briefs, you have nothing to worry about at all.
The online platform has been designed to help you keep track of all your hours in an online shared workspace with your client (making the process totally transparent). You can also display all feedback and reviews from clients who have worked with you under the hourly rate model – allowing you to build a ‘portfolio’ of work that verifies your experience and specialty.
Validation from clients actually verifying your performance. You couldn’t ask for a better self-promotional tool.
Author
Paul Slezak
With over two decades of experience in the recruitment and human capital industry, Paul Slezak has established himself as a transformative force in the realm of leadership and career coaching, group facilitation, and talent acquisition. His unique perspective, drawn from his early career as a leader in global recruitment firms and his entrepreneurial success with his own start-up, has enabled him to make a significant impact on leaders, teams, and organizations across the world. Paul's passion for helping others achieve success and high performance is evident in his commitment to transforming leaders and their teams at local, national, and international levels. He specializes in promoting the importance of human-centered intelligence, focusing on soft skills such as authenticity, transparency, and trust to complement business-centered acumen and drive better workplace outcomes. As an impartial facilitator, Paul brings his expertise to team offsites and strategy days, ensuring alignment on goals, values, and culture while keeping participants on task. His engaging and energetic presence, coupled with his unique "entertraining" and "edutaining" delivery style, enables him to connect with audiences both large and intimate, sharing personal and professional anecdotes that inspire and energize.
