Essential Employer’s Guide: How much should you pay recruiters?

We all know that bitter defeated feeling when you walk out the store with a shiny new purchase just to realize you could have paid less at the store down the road.

The truth is, overpaying for anything sucks. And that includes recruitment agency fees.

So it’s no surprise that we at Find Recruiter get asked all the time “how much should we pay recruiters?”

Everyone wants to engage recruiters at that sweet spot where they’re not overpaying market rate but still provide enough incentive for recruiters to introduce great candidates quickly.

Nowadays, there’s a price comparison site for almost everything – Trivago for hotels, 28Hse for flats and Price.com.hk for electronics. For the best recruitment agency rates, there’s Find Recruiter.

When it comes to partnering with a recruitment agency in Hong Kong, you’ve got plenty of choices (1,642 choices to be exact). Most agencies work off a contingency model, meaning they only charge a commission fee upon a successful placement. This fee is based on the candidate’s annual salary and according to our data can range anywhere between 8% to 28%. With so many agencies out there that are priced so incredibly differently, how do you decide on the agency rate that’s best for you?

Here are 3 considerations to help you find that sweet spot.

1) TRANSACTIONAL OR CONSULTATIVE RECRUITING?

The first thing to consider is the recruiting experience you’re looking for; is it transactional or consultative? The biggest differences between them are the level of service and candidate quality.

With transactional recruiting, expect to pay 8% to 15%. At this commission rate, you’re merely buying CVs from a recruitment agency’s database that simply match the buzz-words on your job description. Don’t expect the recruiter to thoroughly qualify candidates or spend time headhunting passive candidates. You’ll get a large mixed bag of candidates that may or may not be what you’re looking for.

With consultative recruiting, expect to pay 16%+. At this commission rate, recruiters will invest time understanding the job’s requirements beyond the job description, provide specialist market advice and tailor their search to your needs. They’ll qualify every candidate’s experience, motivation and culture-fit before making the introduction. You’ll get a shortlist of candidates who have been headhunted specifically for your job opening so you don’t need to spend hours sifting through irrelevant CVs.

2) DOES YOUR JOB REQUIRE A SCARCE SKILL SET?

If your job opening requires a scarce skill set that is sought after by many others in the market, recruiters will generally require a premium on their commission rate because these candidates are more difficult to find. A simple indication of scarcity is to do a cross-check of talent demand and supply between JobsDB and LinkedIn.

For example, if you are hiring a Data Scientist in Hong Kong, right now there are 931 jobs but only 390 candidates in the market. This infers that the scarcity of Data Scientist is extremely high and will require a higher than average commission rate to incentivize recruiters.

Based on our data at Find Recruiter, 19% is the recommended commission rate for employers hiring Data Scientist. This is 3% (net 20%) higher than average.

3) HOW URGENTLY DO YOU NEED IT FILLED?

Similar to courier services, if you want something delivered quickly then you’ll need to pay a premium for recruiters to prioritize your job order. It’s difficult to figure what that premium is since every job is different. However, a common strategy to fill job openings quickly is to set a time incentive. For example “candidates introduced within 7 days will be at 20%, 14 days will be 18% and after that 16%.”

If you’re still having trouble figuring how much to pay recruiters check out the Commission Calculator on Find Recruiter. Using data from hundreds of job orders, Find Recruiter ensures you’re always paying the best agency rates.

‍