The Biggest Recruitment Fees and How to Collect Them

The only thing better than big recruitment fees . . . are bigger recruitment fees. But where exactly are those fees? More specifically, in which industries do they exist?

TE Network^TM is a split placement recruiting network. Since 1988, Top Echelon’s recruiter network has been helping recruiters generate more revenue through split placements. Also since that time, the Network has been a valuable source of information, especially in terms of recruitment trends and statistics. So any discussion of the biggest recruiter fees has to include what’s happening inside the Network.

Recruiters in TE Network^TM make placements in nearly all industries and niches. So what happens within the Network is a rather good barometer for what is happening within the recruiting profession overall. (TE Network^TM members are independent, third-party recruiting agencies that share candidates and job orders for the purposes of leveraging their resources and making more placements.)

Recruiter fees: the top five industries

Top Echelon tracks a number of different statistics within its split placement network. A portion of these statistics pertain to the recruiting fees that are collected through the Network. Those statistics include the following averages:

• Fee for placements made
• Fee percentage for placements made
• Salary for positions that are filled

Top Echelon tracks these statistics on a yearly basis. So you might be wondering what the stats were in these categories for 2018. Well, we have the answer! The 2018 statistics for recruitment fees in TE Network^TM are as follows:

• Recruiting fees average: $20,283
• Average fee percentage: 21.5%
• Average starting salary: $93,407

But what about the top five industries in the Network as far as recruiter fees are concerned? Where are Network recruiters earning the biggest recruitment fees? The top five industries are as follows:

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As you can see, the largest average fee percentage doesn’t always translate into the largest average recruitment fee. Placement fees for Finance and Banking positions are #1 in the Network with an average placement fee of $33,922. However, the average fee percentage for Scientific is only 21%.

On the other hand, Engineering boasts the biggest average fee at 23%. However, it stands in third place with an average recruiter fee of $24,521. What’s particularly encouraging is that nearly all of the top five industries in TE Network^TM average over $21,000.

Example placement fees for recruiters

To this point, we’ve only been talking in general terms (and in terms of average, as well). But what about specific numbers? What kind of typically large recruitment fees are TE Network^TM recruiters collecting?

We have the answer to this question, too, in the form of the top 10 recruiter fees in the Network for 2018. The list is in descending order, meaning that the largest recruiter fee is at the very top.

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Once again, what’s particularly encouraging is that all of the top 10 biggest placement fees in TE Network^TM were at least $56,250.

As you can see, there are a lot of vice presidents on the list. There are also a lot of directors and associate directors. With those kinds of titles come some pretty hefty starting salaries. In this case, all of those salaries were at least $180,000 per year. Nine of the 10 were over $200K and three reached the $300K plateau.

And what do we have here? Two flat fees in the top 10? Absolutely! This is one of those instances in which flat fee recruiting makes perfect sense. You have an important, high-level position with a lot of urgency attached to it. As a result, there’s not a lot of downside to a flat recruiting fee. That’s because more than likely, the fee is going to be large regardless.

So what does a recruiter have to lose by working for a flat fee? Not much of anything. What do they have to gain? According to the chart above, a recruitment fee of more than $50,000.

How do you collect your placement fee?

Okay, so there are a couple of obvious keys to earning the biggest recruitment fees:

1. Working the in right industries
2. Working on the right job orders

The right industries would be classified as those where high-quality candidates are in great demand. That’s because a client has to be properly motivated to pay a large fee. When they can’t find the candidate they need to save their life, they are properly motivated to pay a large fee.

Then, of course, you need to work on high-profile search assignments. Positions that command a large starting salary (like VP or director level, for instance) are those that translate into a large recruiting fee. Companies don’t just hand job orders like these out like they’re candy, though. (Heck, they don’t hand candy out like it’s candy.)

However, let’s say that you’ve done both of these things. How can you ensure that you’re going to collect your placement fee? And perhaps just as importantly, how can you ensure that you’ll collect your placement fee more quickly?

There are a few things that you can do, the most important of which is . . .

#1—Always have a signed fee agreement.

The best way to make sure somebody pays your recruiter fee is to make sure that they’re legally obligated to pay your recruiter fee. And yes, this agreement must be in writing. The recruiter agreement should spell out in no uncertain terms the conditions under which you will be paid for your services. The rule of thumb is rather simple: if you don’t have a signed fee agreement, then you should not be conducting a search. They go hand-in-hand. Like peanut butter and jelly. Like spaghetti and meatballs. Or like Sonny and Cher. (What?)

Now, what you negotiate in that fee agreement is up to you. However, there are a few elements that you should certainly include. Those are your recruiting process, the fee structure (contingency, retainer, container, etc.), the timeline, the recruitment agency guarantee period and terms if there is one, and what will happen in the unlikely and unfortunate event of a fall-off. Oh, and when and how you’re going to get PAID. We can’t leave that out of the agreement, now can we?

#2—Be strategic when negotiating your fee.

Every professional in the industry would love to charge a 30% standard recruiter fee until the cows come home. And even after those cows came home, they’d still try to charge 30% fees. Alas, this is not the world in which we live. These is no Santa Claus and the cows never come home. However, you can collect your placement fee more quickly than you usually do . . . and that makes up for a Santa-less world.

If you’re willing to be flexible and negotiate your fees, then you can get something in return. What you get is up to you. Below are three examples of how you can be flexible and strategic in the negotiation of your fee:

1. Lowering your fee percentage, but only for a recruitment agency exclusivity agreement. For example, instead of 25% for one search, your fee percentage is 20% for three exclusive searches.
2. Lowering your fee percentage, but only if payment is remitted within a certain time frame. Considering how long it usually takes for clients to pay recruiting fees, this certain time frame is typically between 10 to 15 business days.
3. Lowering your fee percentage, but only if you’re being tasked with helping to hire an entirely new department or if you’re helping a start-up or new company build their organization. In situations like these, it could make sense to sacrifice a portion of your fee percentage. In this case, you truly will “make it up in volume.”

Do these tactics help you to score bigger recruiting fees? No, they do not! But they do help you to score them more quickly. And sometimes that tastes just as sweet.

#3—Always, always, always provide value to your clients.

The best way to convince your clients to pay you big recruitment fees and to pay them more quickly is to provide incredible value. Of course, that value starts with presenting superstar candidates to them on a consistent basis. Your clients want talent. They want the best talent. They will pay for the best talent.

When you consistently provide value, clients trust you with their most important job orders. As time goes by, those job orders represent positions that are higher and higher within the organization. Eventually, you’re conducing searches for VP and director positions. And as we’ve already seen, those are among the searches that generate the biggest recruitment fees.

However, the value that you provide to clients should extend beyond presenting superstar candidates. Yes, that’s the focus. But you should strive to position yourself as a consultant and as a hiring expert, if possible. Send your clients a newsletter. Give them market intelligence regarding top industry trends and help them solve human resources issues. Show them how they can not only hire the best candidates, but also how they can retain their best employees.

Provide your clients with the most value possible if you want to earn the biggest placement fees possible. It doesn’t get much simpler than that.

Keys to the largest recruiting fees

So once again, everything boils down to two things:

1. Building relationships
2. Creating a high level of trust as a result of those relationships

And this involves more than just building relationships and creating trust with your clients. It also involves building relationships and creating trust with your candidates, as well. Why is that? Because when you build relationships and create trust with the top candidates in your industry, you’ll be able to place them more easily.

So on the one hand, you have the top talent in your industry trusting you with their careers. On the other hand, you have a base of clients that trust you with their most important, high-level searches. You put the two of them together, and what do you have?

A ton of placements, almost all of them with large recruitment fees that you’re able to collect in a timely fashion.

Provide value. Build relationships. Create trust.

Repeat as necessary, and watch the size of your placement fees (and your overall billings) continue to rise.