Your new employee is great – they’ve settled in, made friends and started producing work that’s as good as you knew it would be. It looks like they’re a strong fit, and will stick around for a long time.
You’re pleased with the recruiter who found them, and you’re considering using them again to expand the design team… right up until you receive the invoice.
It feels like just four weeks ago they were sitting across from you taking a brief on the person you needed to find. How could they possibly have performed $15,000 worth of work in a month?
Even if they were working full time, solely on finding your candidate – which you know they weren’t – that’s an average annual wage of $180,000. That’s $80,000 more than you pay yourself! In fact… you don’t even pay your lawyer that much!
So, is a recruiter really worth more than your lawyer?
Well let’s break it down. Good lawyers charge $300-$800 per hour. Traditional recruiters charge 15-35% of the salary of the position they fill. For most roles, that leads to a fee of anywhere between $10,000 – 50,000.
When considering the time required to fill most roles, the effective hourly rate of a recruiter can end up being more than your lawyer.
Is the cost justified?
Sure, talent is critical for a business’ success, and attracting that talent takes special skills and networking. By no means am I diminishing the value a good recruiter can bring in finding the right talent.
Let’s consider for a minute though, what it takes to become a lawyer and charge upwards of $300/hr for your work (at least in the US):
Excellent high school performance, four years of undergraduate studies, LSAT tests, graduate law school for another three years, the Bar Exam, then at least a few years as an Associate.
It takes years, and thousands of dollars in education and training, for lawyers to be ‘qualified’ to charge at least $300 an hour.
On the other hand, while many recruiters have an undergraduate degree, initial requirements in large agencies can be nothing more than a personality test and sales background. While the requirements of the two jobs are clearly different, are the skills and value brought to the table by a recruiter really equivalent to that of a top lawyer?
For difficult positions, a good recruiter can save your company a lot of time and money. However, most positions filled by recruiters are not Executive. The hours worked, and skills required, to recruit your next Customer Service Officer or Marketing Coordinator don’t really justify a price tag similar to that of a lawyer.
Recruiting is a professional service (when done properly). Like other professional services, hourly pricing can make complete sense. If the position was easy to fill, that saving should come back to you. After all, you’re the one who developed the great company culture and offered above-market rates to ensure you closed the right candidate quickly. If a position is difficult to fill, the recruiter continues to look for solutions rather than moving on to easier jobs.
Managing a recruiter by the hour sometimes makes hiring managers nervous. There’s a belief that recruiters may abuse the system and charge more hours than they actually spent.
And in many cases recruiters don’t want to charge an hourly rate, because they lose the potential for the outsized paydays associated with a traditional success fee.
The fact is, I don’t know anyone who would agree to pay a recruiter $500+ an hour. But in many cases, that’s exactly how much – and possibly more – they are being paid via the traditional commission model.
It’s time for the recruitment industry to change and begin charging according to the value of the services being offered.