I can almost hear the howls of, 'Traitor!' from my industry colleagues as I write this. How dare I give away tips on how to secure a discount from a recruitment agency? The reality is that many consultants regularly have these conversations with their clients, both of whom do not have enough information to be able to secure a result that works best for both parties. So I thought I would share some information to try to inform the market.
The level of competition in the recruitment industry provides hiring managers with the opportunity to brief multiple agencies regarding vacant positions. This practice, whether justified or not, means that costs are actually generally increased. Let me explain: for example, if a hiring manager briefs four recruitment agencies, then those agencies would have engaged in a recruitment search, incurring direct and indirect (e.g. the consultants' time) costs.
These costs need to be recovered if recruiters are to stay in business, so recruitment agency fees are higher than they would be if all roles were given to a recruiter exclusively. Consequently, if a recruiter is not given exclusivity, then they need to factor in the costs of all of the placed and unplaced roles, with only the placed roles being invoiced.
By giving a brief to an agency and leaving it with them exclusively, you have greater bargaining power, as the recruitment consultant will secure a fee if they do their job properly and fill your vacancy. Of course, this does mean hiring managers need to do their homework in choosing a recruiter. I have written previously on the subject of selecting a consultant to work with. If you are comfortable with your decision, then you can comfortably ask for a discount from a recruiter, knowing you are providing value to the recruiter, which they value highly, namely, exclusivity.
If you trust your recruiter implicitly, have confidence in their ability and want their complete attention, then a retained assignment is the best way to secure a discount. Executive and search recruiters generally work this way by default, and standard practice is that a third of the fee is on the initial briefing, a third is on receipt of the shortlist, and a third upon placement or commencement.
Investing 'up front' demonstrates the confidence you have in your recruiter. Prepaid fees place an increased obligation on your recruiter, and if they are working on several roles at one time (which is quite common for the better recruiters), they will prioritise retained and exclusive work ahead of contingent based work.
Offering a retained assignment arrangement also guarantees a return on investment for the recruiter, and, consequently, you can negotiate on standard placement fees. A caveat – there is always one! The best recruiters, who have more work than they can service, may only work with clients who accept a retained arrangement and may not offer any discounts at all.
Finally, you can try to achieve a discount with a recruiter by taking on greater risk. The industry standard provides a three month guarantee for permanent placements. Many hiring managers trade off the length of guarantee against the value of the fee. To do this, hiring managers are normally confident in their hiring ability and the environment in which the new employee will be working.
So there you have it, three tools available to secure a discount. In each case, both parties receive something in return for the discounted invoice. Good luck, and happy recruiting!