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Eliminating the costly percentage based placement fees for recruitment

Before we started our own recruitment company – Harrison McMillan – we sat down and discussed the recruitment problems and challenges that were facing organisations.  We knew they understood the importance of the recruitment process and finding the right people for their business however very few people had the time to facilitate the process, had access to top talent in the market or had the right level of recruitment expertise to do it well.

Additionally our clients were telling us they rarely rely on external recruitment agencies due to the minimal value they felt they were receiving for the fees they were being charged and that they did not understand why the % placement fee was so high.  This was the primary barrier for them to partner with an external recruitment provider.

This got us thinking, there must be a better way to- provide clients access to cost effective recruitment expertise, however before we could come up with a solution we needed to understand the problem in more detail.

So why are the % placement fees so high?

Firstly, the % placement fee is entirely performance based. Which means as a Hiring Manager you do not need to pay the recruiter anything unless they successfully recruit an employee for your company. This sounds ideal however as this is outcome based you have limited control or transparency over the process.  These fees are typically in the vicinity of 10%-25% of the salary of the person hired, assuming this averages out to around $10,000 – $20,000 per hire, you can start to see how these costs quickly add up.

Secondly, 75% of organisations were engaging with two or more agencies for each position to be recruited to “see what talent is out there” which, in essence, has the industry responding from a place of conflict.  What this actually means is that the recruiter has to choose whether to put in all that work and then face the possibility of not getting paid for any of that work if their candidate is not chosen.  Unfortunately, this has been creating a dynamic where quality of service may slip and due- diligence and best practice processes may not be followed which leave many clients questioning the value for money of the service provided to them.

From what we discovered we knew for us to be able to add value to organisations through the recruitment process and provide a cost effective solution we had to eliminate the “percentage fee placement model” for our business.  That’s right.  We decided to totally eliminate it.

Instead we provide our clients an affordable yet effective outsourced recruitment solution, where we act as their internal recruitment team to assist them with the challenging task of facilitating a recruitment process to identify and hire the right people for their business.

We do this by offering our clients access to leading technology, processes and recruitment expertise, where they have the flexibility to select from a variety of recruitment services and only pay for what they require.

So, has it been successful and are we glad we made the decision to change the way we partner with our clients and eliminate the costly % placement fee? Absolutely!  Our cost- effective pricing model has assisted our clients to reduce their external recruitment spend and time commitment throughout the recruitment process, without comprising on quality. We have partnered with over 120 different companies across Australia and our clients are telling us they feel our team of experienced recruitment partners are a genuine part of their business and a reliable source of regular expertise.

If you looking to reduce your recruitment related costs and create efficiencies through your recruitment process then please watch our free 30 minute presentation on “How to effectively recruit the right people… Without spending money on costly % placement fees” or don’t hesitate to contact us on 08 7071 7094


Dani Cuff and Jodi Walton