How To Save £10,000s When Hiring - Recruitment Agency Benefits And Disadvantages

February 10, 2022

Table of Contents

Today, I’m going to show you the recruitment agency benefits (and the disadvantages) that will save you £10,000s.

Once you’re done you’ll have all you need to make better decisions when it comes to using a recruitment agency.

Recruitment Agency ROI Tracker

What Are The Different Types Of Recruitment Methods

There are 3 main recruitment methods:

  1. Referral System
  2. Recruitment Marketing
  3. Recruitment Agency

What Are The Different Types Of Recruitment Methods

This an oversimplification but we’re focusing on the one in this article:

Lower Recruitment Agency Fees

What Are The Advantages Of Using A Recruitment Agency?

We’re covering a few benefits of a recruitment agency:

  • Recruitment agency industry knowledge
  • Access exclusive candidates
  • Save time using a recruitment agency
  • Save money using a recruitment agency
  • Enhance your employer brand
  • Recruitment agency rebate, replacement and guarantees

Let’s get started.

Recruitment Agency Industry Knowledge

Recruitment Agency Industry Knowledge

What Industry Knowledge Should A Recruitment Agency Have?

Think about it, good recruiters should be in contact with scores of people per week. They will probably speak to more people in your industry than you could ever dream of (if you want to that is!). What an opportunity. They’re privy to every opinion and piece of gossip in the industry.

They should know what strategic moves your competitors are making and details of industry performance benchmarks. Recruitment agencies can help you build an attractive offer as they are aware the strengths and weaknesses of comparable vacancies.

Why Is Industry Knowledge Important When Choosing A Recruitment Agency

You should focus on yourself, not your competitors, but knowing what they’re up to can help. Picking the brains of a good recruiter can save you money.

It can lead to new business opportunities and help you avoid the pitfalls of hiring a dud. If a recruiter is entrenching in a niche, they can help you derisk that next big idea. You can have them seek a wider opinion on a candidate’s credentials.

Key Takeaways:

  • Consider your strategic priorities: On the look out for an acquisition? Want to make sure your offer is at the top of the market? Need to keep an eye on competitors. Nail down what information might be useful to you.
  • Ask open questions: Spend a little longer on the phone and ask a few open questions to find out where your recruiter’s network knowledge lies.
  • Put your needs on their radar: Having good relationships with key recruiters is a career win for any professional. For when you need to find good people, make a move yourself AND for support in post with industry goings on. Tell them what you want to hear about and keep in touch, you never know what nuggets you might find!

Access Exclusive Candidates

Candidate Placeability Lifecycle

What Are Exclusive Candidates?

Exclusive candidates are those that wouldn’t apply for any vacancy should you advertise or work with any recruiter going. They’re only passively looking rather than actively scouring job advertisements for a move. They may have sensitivity attached to a move or be working for one of your direct competitors.

Why Is It Important That A Recruitment Agency Can Access Exclusive Candidates?

When you’re hiring for any role, your goal should be to hire the best candidate for that role at that time. A good recruitment agency can give you a picture of the whole market and present your opportunity to all suitable candidates, not only those actively looking.

Key Takeaways:

  • Are you in a competitive space for candidates? If you’re looking for tough-to-hire people, then working with a recruitment agency that can source passive candidates is doubly important
  • Work with a recruitment agency to define an attractive offer: If they’re headed into conversations with candidates who aren’t actively looking you need to arm them with something attractive. Work together to define that offer.
  • Ask for a long list: If you’ve retained a recruitment agency who are able to do a full search of the market, ask them to provide you with the outcome of their initial research or their long list. You can scan for names or employers you recognise and steer a search activity to gain the best outcome.!

Save Time Using A Recruitment Agency

Save Time Using A Recruitment Agency

What Factors Affect The Time It Takes To Recruit?

From the moment of job analysis through to advertising or engaging a recruitment agency and then assessment, the hiring timeline is prone to creep. This is often because you can’t be sure of the quality and/or quantity of the response to the vacant post. A good recruitment agency can give you an idea of how long it will take and also should shorten the time it takes to hire.

Why It's important To Save Time In The Recruitment Process

We’ve all been there. You apply for job and then wait. Then you wait some more. Five weeks later and you might hear some feedback if you’re lucky. How did that wait make you feel? Valued? Like you’re a priority?

Now, what if that is your star candidate? The person to help you on your mission? Time is crucial in the hiring process, especially in a competitive candidate market.

Key Takeaways:

  • Start tracking your time to hire: Use our Recruitment Activity ROI Tracker to start measuring your time to hire. Set a benchmark goal to work to and organise your activity around that.
  • Plan it like a project: Set defined milestones on the hiring process so everyone is on the same page. Candidates especially will appreciate the clarity. Tip: ask all candidates after an application for feedback on the process and timescales.
  • Get an idea of timescales from a recruitment agency: Good recruitment agencies track their metrics so should be able to give you an estimate of how long it will take. You can negotiate that down if you can persuade them to attach more resources to the search. Hint: if they’re flakey on commitment, it tells you that they’re unsure of their processes.

Save Money Using A Recruitment Agency

Save Money Using A Recruitment Agency

What Is The True Cost Of Hiring

The true cost of hiring should include:

  • Time spent on hiring activities (hourly rate of employees involved x time spent)
  • Revenue per employee
  • Cost of recruitment marketing
  • Employee turnover rates
  • Lift in ‘on costs’ should you end up paying over market rate
  • Recruitment agency fees (optional)

The common perception of using a recruitment agency is that it’s expensive. It is a front loaded investment but they can support you to avoid overspend on the areas above, as can the right advertising or, even better, a brilliant internal referral system.

Why It's Important To Save Money When Using A Recruitment Agency

Hiring is one of the most expensive and risky activities an organisation carries out. If you can derisk it then why wouldn’t you! Recruitment agencies should be one cog in your hiring machine.

I believe that a good hiring system should incorporate a stellar referral system, internal resource, great recruitment marketing and recruitment or search consultancy when needed. At the right time, on the right vacancy, with the right recruiter - recruitment agencies can save you a bag of money.

Key Takeaways:

  • Identify your low hanging fruit: Speak to your teams about referring people into your organisation. Check your internal hiring resource level and on what roles you can easily hire for at a lower up front investment level than using a recruitment agency.
  • Know your cost of hiring: Do a quick P&L on your hiring activities. Know your revenue per person and therefore profit per person.
  • Identify high impact roles: Knowing the difference a star hire can make will help you identify where a front loaded investment on a dedicated recruitment agency can make a difference to your organisation’s performance.

Enhance Your Employer Brand

What Is An Employer Brand?

Employer brand is what candidates in your industry and your employees say about you as an employer when you’re not in the room.  It’s corporate speak for if people think you’re good to work for or not.

Why It's Important That A Recruitment Agency Enhances Your Employer Brand

Think about hiring in 2020. Location of a candidate is less relevant. It’s easy to get a lot of applications to a vacancy. Everyone has universal access to job market information. Therefore, you need to work hard on your employer brand to stand out as an employer of choice. A good employer brand will lower the cost of hiring and set in motion a Hiring Flywheel.

When you instruct a recruitment agency, they become an extension of your employer brand. You have chosen them to represent you to potential new team members. They are the first point of contact (brand touchpoint) with prospective employees.

They can enhance by identifying and shining a light on the virtues of working with you, being courteous and communicative, and having a high degree of integrity. They can detract by inaccurately describing your organisation and opportunity, wasting prospective candidate’s time, spamming, not relaying feedback, and commoditising applicants.

You get the picture - it’s an important responsibility. Guard your employer brand well.

Key Takeaways:

  • Set clear goals for your employer brand: these could include talent pooling, reduce recruitment agency reliance, improve your advert responses, improve your offer to acceptance ratio, reduce cost per hire or time to hire.
  • Get the right people on the bus: Define your target employee values and candidate profiles, preferences and behaviours through proper job analysis
  • Control your brand reputation: Make sure your selected channels (referrals, advertising, recruitment agencies) are fully briefed with channel specific employer brand content to enhance the conversion of good candidates into great employees.

Recruitment Agency Rebate, Replacement & Guarantees

Recruitment agency rebate

What Is A Recruitment Agency Rebate Period?

Often the secret weapon in recruitment agencies winning your business. They will offer to insure their fees by offering a rebate or replacement guarantee should a hire not work out.

Why It's Important To Consider Recruitment Agency Rebates

Like any good insurance policy, they derisk a purchase. You won’t get a refund on job advertising spend so it makes the investment in a recruitment agency fee more palatable.

Key Takeaways:

  • They are one part of the picture: Rebate policies and replacement guarantees are often used to move clients up and down on fee level. They form one slice of the pie, be aware of this when negotiating.
  • Check the small print: There are typically qualifying conditions for entitlement to a refund or replacement including things like paying on time and communicating regarding any leaver.
  • You shouldn’t be triggering a rebate or replacement policy often: If you’re triggering rebate policies often then something is wrong. You could be hiring the wrong people for the role. Action steps include revisiting the job analysis, specification, your assessment process, examining recruitment methods and reviewing recruitment agencies.

What Are The Disadvantages Of Using A Recruitment Agency

Here are the disadvantages of using a recruitment agency:

  • The quality of service can be poor
  • Problems when you engage multiple recruitment agencies
  • Recruitment agencies can damage your reputation
  • Recruitment agency fees are a front loaded investment

Let’s get started.

The Quality Of Service From Recruitment Agencies Can Be Low

the quality of recruitment agencies

What Does A Good Quality Recruitment Agency Do?

A good quality recruitment agency identifies and helps you to secure the best match for your vacancy. They enhance and amplify your employer brand along the way.

Unfortunately, the barriers to starting a recruitment agency are low. You need an internet connection and a computer. You used to need a phone but most use Voip now.

Why Is It Important That A Recruitment Agency Can Access Exclusive Candidates?

Echoing some of the points in the employer brand section above, a poor quality candidate experience can detract from your reputation as an employer.

You have little control over conversations and communications that a recruitment agency has with people in your industry. This includes managing application processes, head hunting, and being privy to your confidential company information. A good recruiter is a source of industry knowledge, so it’s important to have relationships with the good ones.

Key Takeaways:

  • Shop the market: Look for recommendations, have conversations with recruiters, test their knowledge, ask for introductions to advocates, pretend to be a candidate. There are lots of ways to get a feel for the quality of a recruitment agency.
  • Choose the consultant, not the brand: Recruiting is a human game. Choose a human to work with, not a business. Size is no longer an indicator of quality. There needs to be an aspect of quality in the recruitment agency branding, but a key recruitment consultant will be representing you in the marketplace so choose them first, brand second.
  • Be respectful in communication: Quality recruiters specialise in niches long term. At some point, they’ve typically operated in all functions, from recruiting to sales to agency management. You could intercept them at any point in their career.

Problems When You Engage Multiple Recruitment Agencies

Problems when you engage multiple recruitment agencies

What Does Engaging Multiple Recruitment Agencies Mean?

You ask more than one recruitment agency to fill a vacancy for you at the same time.

Why Choosing Multiple Recruitment Agencies Causes Problems

Imagine instructing 3 law firms to defend you in court. You offer to pay only one of them if you’re successful in your defense. If you win, you will pay the firm based on who you think the judge spoke to first. The trouble is you also have noise cancelling headphones on.

Do you think the 3 firms would treat your case seriously? At best they’d assign a junior with a template summary for you on the off chance it might work. This is what recruitment agencies do when they work on vacancies alongside others.

There is an oversupply of recruitment agencies so they’re often falling over themselves to win your work. This does not mean that choosing multiple recruitment agencies will result in a higher quantity and quality of candidates. You relinquish control of your employer brand, must control multiple inputs, and often end up in bun fights between agencies over candidates (who did the judge look at?).

Key Takeaways:

  • Pick one recruitment agency: Shop around and choose one agency at a time to work with. Improve your selection criteria at the beginning to save you headaches later on.
  • Define an introduction: Be aware that by inviting a candidate to interview through a recruitment agency, often you will trigger an acceptance of their terms & conditions in doing so and a fee will be due if you appoint that person (I’m no lawyer so a legal eagle may dispute me here but at the very least you’ll have to deal with the outcome).
  • Bring it back to your hiring metrics: Hold regular reviews with your chosen recruitment agency to find out what activities they’re doing. You want to know that they’re doing their utmost to fill a vacancy rather than just waiting for an advert response > you could do that yourself.

Need a to measure more? I’ve put together a tracker for measuring your recruitment activity. Pick it up here.

Recruitment Agencies Can Damage Your Reputation

Recruitment agencies can damage your reputation

What Does Poor Marketing & Communication From Recruitment Agencies Look Like?

We’ve all been on the end of it; untargeted communications that are not relevant. Low quality emails. Speculative CVs. Sales reps who have no idea about what they’re selling. Everyone hates it. Do you want your employer brand associated with it?

Why It's Important To Work With Recruitment Agencies Good Marketing & Communication Skills

A recruitment agency is an extension of your hiring team, they are the first point of contact for prospective team members. It is imperative that they represent you well.

Key Takeaways:

  • Check out their marketing materials: Do they have a presence in your industry? What is their content like? Does it contain errors? Is it generic? How is the tone of voice? Does it resonate with you?
  • Look for recommendations: Go to your network and ask your peers who they have enjoyed working with in the past. Posting out on social media can get you some inbound but joe public can have vested interests so take public recommendations with a pinch of salt.
  • Ask for case studies and reviews: Anyone can throw up some lines of text to a website. It is more difficult to fake things like: video testimonials, Google reviews, and Linkedin recommendations. Look for genuine praise and, if you have any doubt, ask to be introduced to one or more of the brand advocates.

Recruitment Agency Fees Are A Front Loaded Investment

Recruitment Agency Fees Are A Front Loaded Investment

What Is A Front Loaded Investment?

If you work with a recruitment agency, it’s going to cost you up front. The best will ask for a deposit and, with the majority of the rest, you’ll be invoiced around the offer or start date.

Why It's Important To Consider Recruitment Agency Fees

As with any business expense you need to add it to your budget and forecast. It’s important to understand the payment terms with your recruitment agency before engaging. They should also be able to give you a strong estimate on the hiring timescales.

Factor in the full cost of hiring when making your decision on how you recruit.

Key Takeaways:

  • Paying on outcomes isn’t always best: The upside is you only pay based on a successful outcome. The problem is that this is often a demotivator to a recruitment agency and your vacancy enters the commodity zone alongside 20 others.
  • Check payment terms and triggers: Have the money conversation up front and understand what you’re signing up to. This includes things like: candidate ownership period, qualifying events for invoicing such as shortlisting, rebate and replacement policies etc.
  • Make sure you can afford it: Engaging recruitment agencies on multiple roles can give you a cost spike that will eat into cash flow. Talk to your recruitment agency to about any concerns and how can flatten the peak.

Is It Worth Using A Recruitment Agency?

Is it worth using a recruitment agency

In short, it depends.

At the right time, on the right vacancy, the right recruitment agency can be worth their weight in gold. Quite literally. However, it’s important to avoid the detritus floating around and complement with your own strategies.

I’ve given you plenty of ammo for your decision making. If you want to take it a step further, download our Recruitment Activity ROI Tracker and you can keep an eye on outputs.

Want Us To Guide You On How To SCALE Your Hiring Efforts Using Tactics From This Guide?

We can hold your hand to build you a talent machine.

We get results. This might mean you outsource all of it to us, or we give you the tools you need and move on. In reality, it’s usually a mix of both.

What you need to succeed:

  • Hiring managers actively involved in the talent acquisition process. We don’t believe in shipping the hiring problem off to HR and forgetting about it. Out of sight, out of mind doesn’t work when it comes to good recruitment.
  • A long term mindset. You need to commit to a variety of methods to develop a consistent flow of great people into your organisation. We’ll help you become a super desirable employer but this involves trying things and it won’t happen overnight.

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Alex Lockey
Director | Bolt Jobs
Founder Alex Lockey is an expert in further education, learning, and skills sector. He leads cost-effective hiring solutions and is known for successful talent placements. Dynamic and driven, Alex seeks innovative solutions to solve sector hiring challenges.