Recruiting Myth #4: Cutting the Fee Percentage

This is myth is straightforward, and it also looks good on paper.  However, looks can be deceiving, as we shall soon see.

Recruiting Myth #4 is as follows:

Cutting the fee percentage is the best way to cut costs.

There are smart ways to cut or contain search costs.  Simply reducing the fee percentage isn’t one of them.  Cutting percentages can affect results because it lowers the recruiter’s incentive and enthusiasm.  This slows down the candidate flow, and the results are often less than satisfactory.

In this blog post, I’m going to present one way to cut search costs in the correct fashion.  That way is with a flat fee.  (I’ll present additional ways in future blog posts.)

Most search fees are based on a percentage of the new hire’s first year of compensation.  Choose the mid-point of the salary range and offer a fee based on that salary.  That will be the flat fee for the search.

If you hire a candidate in the upper portion of the range, you have saved money on the fee.  If you hire in the lower portion of the range, you have saved money on the salary while keeping the recruiter totally engaged in the search.  That’s because the recruiter has no incentive to find top dollar candidates, only to fill the search quickly.

In addition, the recruiter has a potential upside and knows there won’t be an attempt at a fee negotiation at the end of the search because a candidate might be more expensive than anticipated.

In my next blog post, I’ll explore the engagement fee or engagement deposit as another way to reduce search costs.

(For more information about maximizing the benefits of working with a recruiter, download a copy of Dan Simmons’s e-Book, Hunting the Headhunter: Your Guide to Debunking Myths, Cutting Costs, and Changing the Way You Play the Recruitment Game.)

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