Why Recruiters Are Worth What They Charge

“When I need a heart by-pass, rest assured that I won’t select my surgeon on the basis of what he charges.”

That’s what an ailing executive recently opined when he was informed by his doctor about his arterial blockage problems.

Why then are corporate executives so tightfisted when dealing with what is so commonly thought of as the “heartbeat” of their companies . . . top-talent?

Companies think very little about paying the often excessive fees charged by their outside accounting and legal firms . . . or even to the gaggle of consultants who promise cost-cutting and streamlining miracles in other areas of operations.

Yet, when faced with brain drains, talent deficiencies or the need to replace one employee with a better one, their thoughts too often turn to parsimony. This K-mart mentality belies and contradicts their stated objectives to “hire the best,” especially at pecking order levels below the “big picture” executive suite inhabitants.

Of course recruiting fees can vary from firm to firm but, when they do, you will almost always find that those on the low side are sure to exclude some very key ingredients of the process, all of which are vital to providing the indispensable services necessary to satisfy the needs of the employer.

So why are recruiters worth what they charge? Just a few of the often unspoken reasons are:

Expertise – Nobody knows the employment marketplace better than a professional recruiter . . . nobody! In-house human resourcers, no matter how effective, view the marketplace through an imperfect or misrepresentative prism and tunnel vision is their occupational hazard.

Just as physicians are cautioned against treating members of their own families, so too is it folly for an in-house H/R professional to believe that they have an undistorted and unbiased picture of the employment landscape. They are vulnerable to the pressures of internal politics and cultural dimensions which do not hinder the outsider.

Street-smart recruiters already know the neighborhood, including the unlisted addresses so often overlooked by the insiders.

Cast a wider net – A professional fisherman will always have more to show than a weekend angler. Recruiters are in the marketplace day in and day out. They know the unfished coves, reefs and inlets that are unknown to others. The job-hunter bookshelves are filled with lore about the “hidden job market.” The same holds true for professional recruiters who have a detailed roadmap to the hidden talent sources which will never be accessed by newspaper ads, alumni associations, applicant databases, job boards or any of the other more familiar sources of people.

There are occasional pearls through these sources (and someone inevitably wins the Publisher’s Clearinghouse Sweepstakes too) but you have to shuck an awful lot of smelly oysters to find them. Recruiters only give you oysters proven to contain pearls. Your only job is to determine which pearl is the best.

Want to catch what you’re fishing for? Hire a guide!

Cost – There is a misconception among employers that the cost of a hire equals the cost of the ads or Internet postings run to attract the person hired. Nothing could be further from reality.

Try adding these to the true cost and you’ll see just how cost effective an outside recruiter can be:

Salaries and benefits of the employment/recruiting staffs plus those of the line managers involved in the hiring activity (who are not productive in their normal job pursuits when they’re out recruiting); travel, lodging and entertainment expenses of in-house recruiters; source development costs; overhead expenses including but not limited to telephone, office space, postage, PR literature, applicant database maintenance, reference checking, clerical costs to correspond with the hundreds of unqualified respondents, etc.

Unbiased third party input – Contrary to what some believe, recruiters don’t try to put square pegs into round holes. A recruiter’s stock-in-trade is their integrity and their reputation for finding someone better than a company could have found for themselves.

For a mid to senior-level executive, the average recruiter may develop a “long list” of a hundred or more possibilities. Each must be called and evaluated against the position specifications as well as the personality “fit” with the company and the people with whom they will ultimately work. Once this is winnowed down to the “short list,” an even more intensive interviewing process begins to narrow the search to a panel of finalists for review by the client.

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This process is not, as some believe, simply romping through the file cabinets, harvesting from the Monster lookalikes or putting the job opening out to others on the recruiter’s network with crossed fingers that someone good will show up.

It is highly unlikely that a professional recruiter will be plowing new ground with your opening. They deal within spheres of influence far more familiar with your needs than any internal recruiter and, more often than not, view the finalists as people who are competent to solve client problems rather than just fill an open slot in the organizational chart.

Because they want to do business with you again and again, they are looking for (and challenging you to excellence by hiring) the “truly exceptional” rather than the “just satisfactory” so often settled for by in-house hirers.

Confidentiality – Advertising or otherwise publicly proclaiming an opening, aside from its cost and demonstrated ineffectiveness for sensitive senior level openings, often creates anxiety and apprehension among the advertiser’s current employees who wonder why they aren’t being considered or worry about newcomer transition problems. Just as often it alerts competitors to a current weakness or void within the company.

Speed – The recruiting process is always faster through a search professional who is continually tapped into the talent marketplace than one having to start the process from scratch. For every day that a key opening remains unfilled, a company’s other employees must grudgingly do double duty. And this doesn’t factor in the profit opportunities or competitive advantages lost to a company because a position remains unfilled or is done on a part-time basis by others less qualified.

Post-Hire Downtime – Not only is speed an essential part of the professional recruiter’s process, the ability to locate a person who can immediately “hit the ground running” with a minimum of “ramp-up time” saves time after the hire. All too often, a hire selected through less effective sources offering a smaller talent pool requires several months of expensive training and orientation.

Reality – Professional recruiters often recognize and have a duty to inform clients that they may be mistaken as to the type of person sought, the salary required to attract them or the possibilities that the solution might just lie in areas outside the traditional target industries . . . something an internal recruiter is politically disinclined to do. Too many hirers fail to understand that a professional recruiter’s primary function is not necessary to fill a slot but to provide the right candidate to solve a problem.

Negotiation – Master negotiator Herb Cohen says that, “negotiation is the analysis of information, time and power to affect behavior . . . the meeting of needs (yours and others’) to make things happen the way you want them to.” As a buffer and informed intermediary, the professional recruiter is better able to blend the needs and wants of both parties to arrive at a mutually beneficial arrangement without the polarizing roadblocks which too frequently materialize in face-to-face dealings.

Prioritizing company resources – It is often amazing to see how much of a company’s revenues are squandered on non-productive perks for existing high-level employees while they penny-pinch on what is every company’s lifeblood . . . talent acquisition.

Club memberships and the like may be fine, but no one with an IQ higher than Forrest Gump’s believes that these expenditures substantially contribute to a company’s profit margin. But one well-placed employee can be the cause of a company’s profits skyrocketing. And the fee for having hired these people pales to insignificance when compared to the contributions they make to the bottom line.

The next time you think a recruiter’s fees are too high, put them in the proper perspective before asking for that Blue Light special or spinning your wheels thrashing about trying to fill vital openings with less effective (but not necessarily less expensive) pedestrian methods. Savvy executives learned long ago that the fee paid to a recruiter is a shrewd strategic investment, not an extraneous expense. They also know that the “best” is far different from the “best available.”

Once you have a handle on these ?closes’ you’ll have a much better chance of turning a prospect into a paying client.

Paul Hawkinson is the editor of The Fordyce Letter, a publication for third-party recruiters that's part of ERE Media. He entered the personnel consulting industry in the late 1950's and began publishing for the industry in the 1970's. During his tenure as a practitioner, he personally billed over $5 million in both contingency and retainer assignments. He formed the Kimberly Organization and purchased The Fordyce Letter in 1980.


18 Comments on “Why Recruiters Are Worth What They Charge

  1. This is an exceptional article by its very completeness. The comparison with accountancy and management consultancy fee levels is particularly insightful. I have read it over several times and to an experienced recruiter like myself who is passionate about his professional capability it’s like a breath of fresh air. Thanks, Paul for putting this together

  2. I appreciate the article and would like to add a point. The reasons listed certainly justify the use of executive recruiters, but fails to resolve the more pointed questions that come from the client’s perspective, such as:

    1) What are my alternatives?

    2) Why hasn’t search changed over the past 40 years? Fees are the same, time-to-complete is the same, etc.

    Don’t get me wrong – there is justification for search. However, I see it as an industry who’s processes have been improved, yet with little change in results fom the client perspective.

  3. Human Beings are not commodities that you buy, sell, trade – so that the “process” can be streamlined to the point of a product placement type of perspective. Our best interpretation.

  4. Anyone can justify a fee for service in business. You have certainly made a very good attempt at just that, however, as the last posting points out, charging a human being a fee to sell them to a company which in turn pays you for that human being seems a bit jaded and greedy at the very least. Oh yeah, I see your point, your personal expertise is light years ahead of your colleagues, and surely warrants your fee, right? RIGHT…


    Take what the companies are paying you for quality candidates and hopefully the next time you look into the mirror you won’t see a vulture on your head. Recruiters who charge their candidates are nothing more than cowardly, insecure, and greedy sales people that have somehow brainwashed each other—with articles like your’s—into believing that charging someone who is either in between jobs, in search for something better, or tragically unemployed is the right thing to do.

    “Humans, they’re what’s for dinner”
    —-Vultures with Headsets, Inc.

  5. This article was written in 2005 and here I am responding in 2010. How things have changed in the sourcing and recruiting world. Today, top Corporate recruiters who have been establishing solid connections as a result of social networks, are actually doing a much better job than a third-party recruiter would. I just found an executive and saved the company $75,000, and it was done in 30 days from the time I met with the hiring manager to the time the offer was accepted. Having first hand knowledge of the company, the culture, its goals and objectives, being able to discuss the employee value propositon and other knowledge about the company that an internal recruiter has, were huge in selling the company and the position to the candidates.

  6. This article is fantastic !! By the way, I have subscribe to your Fordyce Letter since 2005. While moving to my new office, my secretary threw away all my back issues. 🙁 Is it possible to have mailed to me the 2005-2009 issues and the Jan and Feb 2010 issues? My new mailing address is Bernard Joe (BJ) Hughes 7117 Wood Hollow Dr. Suite 512 Austin, Texas 78731. My phone #’s are 512-243-6652; 512-560-5488. Fax: 512-418-0401

  7. This article is a great comeback to a client who thinks our markup is too high. I agree with all of these points, and love how this portrays our worth as recruiters.

    As for the comment above regarding humans as commodities and the other mentioning charging a fee to poeple who are out of work…that is not how this works. Clients are hiring managers and they are charged a fee for the service of finding a quality employee. Candidates/applicants are charged nothing. The sevice to them is free. I have never heard of a recruiter charging a fee to it’s candidates, but rather the sevice is to help them find the next best thing for them and their situation. Recruiters are the good guys. 🙂 Candidates come to us in their time of need and employers use our services to cut out the dirty work of sorthing through hundreds of unqualified resumes, relentless interviewing, and placing someone who turns out to be the wrong fit. We as recruiters do the dirty work for them. They have a better chance of finding the right candidate in less time with less effort.

    -Stepping off soapbox 🙂

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