As a business owner or hiring manager, you’re likely no stranger to working with recruitment agencies to find top talent for your organization. But have you ever wondered how recruitment agencies calculate their charges? In this blog, we’ll break down the different types of charges, how they’re calculated, and what you can expect to pay.
### Types of Recruitment Agency Charges
Recruitment agencies typically charge clients in one of the following ways:
1. Contingent Fee (Permanent Staff)
- Definition: A contingent fee is a percentage-based charge that’s only payable if the agency successfully places a candidate in a permanent role.
- Calculation: The fee is usually calculated as a percentage of the candidate’s first-year salary (e.g., Lynx charge 10% to 15%).
- Example: If the agency places a candidate with a salary of £50,000, the contingent fee would be £5,000 (10% of £50,000).
2. Temporary Staff Charges
- Definition: Temporary staff charges are hourly or daily rates paid to the agency for temporary or contract staff.
- Calculation: The charge is usually calculated as an hourly or daily rate, with a markup added to the candidate’s hourly or daily rate (e.g., £15-£25 per hour).
- Example: If the agency provides a temporary staff member with an hourly rate of £12, the agency might charge £18 per hour (to cover costs of payroll).
3. Permanent Staff Charges (Flat Fee)
- Definition: Some agencies charge a flat fee for permanent staff placements, which can be a more cost-effective option for clients.
- Calculation: The fee is usually a fixed amount, regardless of the candidate’s salary (e.g., £2,000-£5,000).
- Example: If the agency places a candidate in a permanent role, the flat fee would be £3,000, regardless of the candidate’s salary.
### Additional Charges to Consider (Lynx do not charge for the following)
In addition to the main fee, recruitment agencies may also charge for:
- Advertising costs: The cost of advertising the job on various platforms, such as job boards or social media.
- Travel expenses: Reimbursement for travel costs incurred by the agency during the recruitment process.
- Psychometric testing: The cost of administering psychometric tests to candidates.
### What to Expect from Your Recruitment Agency
When working with a recruitment agency, it’s essential to understand their charging structure and what you can expect to pay. Here are some key takeaways:
- Transparency: Your agency should provide clear and transparent information about their charging structure and any additional fees.
- Flexibility: Some agencies may offer flexible pricing models or discounts for bulk hires.
- Value-added services: Consider the value-added services provided by the agency, such as candidate screening, interviewing, and onboarding support.
### Conclusion
Understanding how recruitment agencies calculate their charges can help you make informed decisions about your hiring process. By knowing what to expect and asking the right questions, you can ensure a successful partnership with your recruitment agency and find the best talent for your organization.