Reply to: How much do agents really earn for recruiting a permie?

[Willapp]

But is worth 5k+ to filter a few hundred CV's?

No, I don't think so. But ask any agent and the spiel you'll get is about how they spend soooo much time vetting candidates, keeping track of them, their own advertising costs etc. etc. and that's how they justify the rate.

The problem is that the profitability of their business model hinges on getting a candidate placed with the minimum time/effort so what it really boils down to is they have a database of CVs and when you send over a job spec they will just do a keyword match and send over all the active CVs that match a basic set of criteria. [Now I'm sure any agent would say that's a ridiculous over-simplification but I doubt it sometimes], so their entire 'value' is based around having the largest database of CVs and/or the best matching system. In my experience the only value comes when getting to offer stage so you can deal with the negotiations at arm's length, but even then I'm sure some people would be happy to do that directly.

I tend to think of recruitment agencies much like Estate Agents - nobody likes them and I doubt anyone thinks their fees represent value for money, but they do their damnedest to make sure there's no easier way. (Try advertising your own property on RightMove unless you're an Estate Agent, it won't happen).

[kettlebellBA]

I once sat next to a pair of pimps "filtering" CV's for a perm position in Starbucks.

The "no's" were put to oneside, and the "yes's & maybes" were then cross referenced against the applicants current employer.

Any applicant that worked for a co that this agency was on the PSL list for were then given priority in the 5 cv's they had to send through.

"this way we get the replacement hire as well" said the old, wise 23 year old to his junior......

[louie]

I used to recruit developers in my previous perm role and it's correct that agencies charge a % of the employee's first year salary. What that % is really depends how much negotiation the company is willing to do and how desperate the agent/company is to find the right person.

At best we had agencies working on 10%, at worst 18%. Generally they word their contracts very craftily so that the fee includes any contractual bonuses so if the employee is getting £40k plus a 10% bonus then the rate is considered on £44k.

Most of the agencies we used will invoice as soon as the candidate is placed but they will have a sliding scale for rebates if the candidate leaves within the first 12 weeks, so for example within first 4 weeks it might be 80% rebate, 4 - 6 weeks 60%, 6 - 8 weeks 40% and so on.

It's a lot of money and my boss used to hate using agencies for this reason, but my experience of advertising directly was even worse - put a job spec on Monster and you literally get anybody apply for the role even if they've got zero development experience, so you get bombarded with tulip CVs and out of 100 crap ones there might be 1 or 2 potential candidates. Plus to make matters worse, as soon as you've advertised on Monster you will inevitably get CVs from agencies who've seen the job spec and want to pitch their candidates. They don't seem to appreciate that if you wanted to use an agency, that's what you would've done!!!

[Mini rant over...]

But is worth 5k+ to filter a few hundred CV's?

[Willapp]

I think half the problem is that agents are so desperate to get their candidates in front of you that they end up sending over CVs which aren't even a good fit for the job description, and the whole point of using an agency in the first place is to take away as much of the "leg work" in finding suitable candidates as possible, so the market being incredibly competitive has undermined their very existence.

I agree things like LinkedIn are potentially a big step forward for companies to manage their recruitment in-house, and probably something agencies are very afraid of which explains why we get constantly bombarded with connection requests from agents in some desperate attempt to stop us getting 'poached' by a client directly.

[rambaugh]

It's a lot of money and my boss used to hate using agencies for this reason, but my experience of advertising directly was even worse - put a job spec on Monster and you literally get anybody apply for the role even if they've got zero development experience, so you get bombarded with tulip CVs and out of 100 crap ones there might be 1 or 2 potential candidates. Plus to make matters worse, as soon as you've advertised on Monster you will inevitably get CVs from agencies who've seen the job spec and want to pitch their candidates. They don't seem to appreciate that if you wanted to use an agency, that's what you would've done!!!

[Mini rant over...]

Some good insight in to the contractual workings of an agency. I notice trends are developing with firms gravitating towards social media and using new models for finding candidates. Sites like Linkedin are helping employers go direct to market where they can apply filters on who can actually see the job specification and also as to who can apply based on their profiles, who they've linked too, etc. This is an automated rather than a manual means of weeding through tulip.

[Willapp]

I used to recruit developers in my previous perm role and it's correct that agencies charge a % of the employee's first year salary. What that % is really depends how much negotiation the company is willing to do and how desperate the agent/company is to find the right person.

At best we had agencies working on 10%, at worst 18%. Generally they word their contracts very craftily so that the fee includes any contractual bonuses so if the employee is getting £40k plus a 10% bonus then the rate is considered on £44k.

Most of the agencies we used will invoice as soon as the candidate is placed but they will have a sliding scale for rebates if the candidate leaves within the first 12 weeks, so for example within first 4 weeks it might be 80% rebate, 4 - 6 weeks 60%, 6 - 8 weeks 40% and so on.

It's a lot of money and my boss used to hate using agencies for this reason, but my experience of advertising directly was even worse - put a job spec on Monster and you literally get anybody apply for the role even if they've got zero development experience, so you get bombarded with tulip CVs and out of 100 crap ones there might be 1 or 2 potential candidates. Plus to make matters worse, as soon as you've advertised on Monster you will inevitably get CVs from agencies who've seen the job spec and want to pitch their candidates. They don't seem to appreciate that if you wanted to use an agency, that's what you would've done!!!

[Mini rant over...]

[GillsMan]

I helped a recruitment agent I've worked with before place a role at a client of mine recently. He charged 17.5% on the annual salary, so netted a cool £7875+VAT on the £45K salary.

[farout117]

I hear from a guy I know who used to work in recruitment (not IT, but oil and gas) that is can be 3 or 4 months salary.

Talking to a recruiter once, he told me that they get 25% of your annual salary once you finish your probation, be it 3 months or 6 months. That is why they are normally relucant to place a contractor in a perm role..

[sunflower]

I hear from a guy I know who used to work in recruitment (not IT, but oil and gas) that is can be 3 or 4 months salary.

[Wanderer]

Thats interesting. I always thought that agents get a one off payment once the employee has passed their 3 month probabtion period. It is quite lucarative for agents..and more then their agencies can make on placing people on contracts?

Years ago I got placed by an agent who told me he was getting paid 25% of my annual salary provided I worked at the company for more than 6 months. These days I would guess that the cost is anything from 5% to 25% of the employer's salary.

If a contractor takes the king's shilling and goes permie then there will normally be a temp-to-perm fee that the agency gets. How much this is will vary widely depending on the relationship between the client and the agency and how much business they put their way.

As for contractors, the agency will take from 5%-30% of the contractor's daily rate so I guess it all balances out.

The ideal scenario is for an agency to place a contractor on a fat 25% margin and they stay on with the client for years, blithely unaware that the agent is making money for old rope.

[northernladuk]

that's true but there are always seem to be more permie jobs on offer than there are contract jobs. The expectation of experience also seems to be higher for a contract engagement than it is for a company looking for a permanent employee, if lets say for example all things we're equal.

I think that is because they have to do more ringing round for them and are harder to fill than contract jobs so just appears there are more. Jobs are open longer to get the right people so more people get rung per role.

[rambaugh]

Always a stream of contractors going permie so we are our own worst enemy here. So many people go contract just because it is easier than getting a perm job and are happy to switch back. They wouldn't do it if no one ever took it up. Just one of those things we have to deal with.

that's true but there are always seem to be more permie jobs on offer than there are contract jobs. The expectation of experience also seems to be higher for a contract engagement than it is for a company looking for a permanent employee, if lets say for example all things we're equal.

[Weegee]

It depends but I believe an agent will typically charge a 20% retainer of base which is spread across a year or alternatively may charge an upfront flat fee of x value. Not bad if you are able to recruit for middle / senior management permanent roles.

Thats interesting. I always thought that agents get a one off payment once the employee has passed their 3 month probabtion period.

It is quite lucarative for agents..and more then their agencies can make on placing people on contracts?

[northernladuk]

Always a stream of contractors going permie so we are our own worst enemy here. So many people go contract just because it is easier than getting a perm job and are happy to switch back. They wouldn't do it if no one ever took it up. Just one of those things we have to deal with.

[rambaugh]

It depends but I believe an agent will typically charge a 20% retainer of base which is spread across a year or alternatively may charge an upfront flat fee of x value. Not bad if you are able to recruit for middle / senior management permanent roles.