Flat Fee Recruitment

What is Flat Fee Recruitment?

You would be forgiven for thinking that flat fee recruitment means that you pay a flat fee to recruit a new person to your business. Well it could mean this, then again it might not. To get to the bottom of what flat fee recruitment is, we need to take a look at how the flat fee recruitment model came about.

How it all started

Recruitment agencies traditionally charge a percentage fee to fill an employers job vacancy. The fee is calculated as a percentage of the starting salary and usually only becomes payable when the candidate starts their employment with the employer.  Percentage based fees vary dramatically depending on the type of role, however typical average fees tend to be between 10% and 20% of starting annual salaries.

The Office for National Statistics show current average earning across the UK are at £26,500.

A quick calculation based on typical recruitment agency fees would therefore give the employer a recruitment bill of between £2,650 to £5,300 to successfully recruit a candidate on average earnings.

In the 1980’s and 1990’s when skilled candidates were hard to find, high recruitment fees were in some way justified.

The birth of the job board

The growth of internet usage in the late 1990’s and early 2000’s meant that people started to look online for jobs. Websites advertising jobs started to pop up. The first job board in the UK was ‘Jobserve’ and was aimed at IT professionals, after all, the early users of the internet were typically IT savvy individuals.

Before long, recruitment agencies realised that job boards were a great new source for candidates to fill their percentage fee based recruitment assignments. The growth of job boards mushroomed.

Reducing the cost of recruitment

So the early adopters of job boards [recruitment agencies] benefited from this new, easy to access labour pool and to a great extent were also responsible for the continued growth of job boards due to the ever increasing supply of new job postings.

What could possibly go wrong?

The two most significant events responsible for driving down recruitment costs were competition from within the recruitment industry and the global recession which stemmed the flow of jobs.

Creative recruitment solutions

Most recruitment agencies met the challenge of a rapidly changing labour market by reducing their percentage based fees. This of course was welcomed by employers, however things didn’t stop there.

What if employers could advertise their job vacancies directly with job boards and cut out the recruitment agency completely?

Employers soon realised that if they had the internal resources to filter mountains of CVs and sift through countless job applications and interviews, then the ‘direct’ cost savings were worth while.

The dawn of the flat fee recruitment model

Recruitment agencies quickly identified the new market and created the flat fee recruitment model. The solution was to advertise an employers job vacancy across a number of job boards and charge a flat fee.  Recruitment agencies were able to add value by creating keyword rich recruitment advertisements.

The fee was no longer calculated as a percentage of the commencing annual salary of the successful candidate, instead a fixed fee would be offered and was payable regardless of whether the job vacancy was filled.

Two types of flat fee recruitment

There are now two types of flat fee;

  1. A fixed fee to cover advertising and copy writing services. Not based on the successful recruitment of a candidate.
  2. A fixed fee, only charged if the agency successfully recruits a candidate for the employer. Similar to a percentage based fee, instead a fixed fee is agreed up front.

Flat fee recruitment is essentially nothing new.  Recruitment agencies have been charging flat fees instead of percentage based fees for years. If you are an employer with a vacancy to fill, be sure to establish whether you are paying a fee to advertise (with no guarantee of filling the vacancy) or the fee only becomes payable once the recruitment agency has placed a candidate with you.

If you are looking for a job advertising only solution, Hiredonline offer a low cost job board advertising solution.