Retained search fees for high-volume hiring

Hi All -

What would you charge a large client for a retained search fee for a high-volume recruiting project (around 100 reqs, figure $75k average salary)? How would you structure payment?

Thanks in advance.

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Permalink Reply by Nicholas Meyler on October 18, 2016 at 2:38am

Super-cheap discounted rate would be like $100K up front with a 15% to 20% fee for each position, remainder paid upon start date.

At 20% (still discounted) this would be $1,500,000 worth of business ($15,000 x 100).

At 33%, it would be $2.5 million worth of fees.

So, you might have good leverage to offer a discounted rate at 20% or lower per search... If the searches are very similar, you might want to design a sliding scale fee, where you start at 25% and go 1% lower for each successive hire, down to 15%. I would hesitate to go below 15%, though, because that seems awfully cheap, from my perspective.

An "orthodox" fee arrangement would be something like $500,000 up front, with the remainder due upon start, for each individual position, with search fee percentage at 20%.

So, nice problem to have, if you have that problem. Let me know how it goes...

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Permalink Reply by Linda Ferrante on October 20, 2016 at 2:51pm

From a business perspective, I would encourage the client to hire a recruiter for these positions. Or, you could hire a recruiter and funnel the costs plus mark up, to the client.

If they are looking to pay for each position, evaluation of differences in skill set would be priority. If you can recruit more than one candidate per skill set, then looking at reduced flat rates per position. $1.5M in fees seems excessive. I guess I'm looking at the what's cost effective yet productive for the client first, then my bottom line next.

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Permalink Reply by Nicholas Meyler on October 31, 2016 at 8:41pm

Bearing in mind that $1.5 million is a discounted rate, I would not say it is "excessive" at all. Nonetheless, there are clearly potential reasons to offer discounts beyond a 20% rate, depending on the situation.

$1.5 million would be a standard, discounted rate. Frankly, after 28 years in this industry, every time someone tells me "we could hire 5 guys with that skill set", it really means "send me all the resumes you can, and I'll maybe hire 1 person, eventually"... I'll try to remember one time where a client actually hired 2 people with the same skill-set over my career, but nothing comes to mind currently.

Mostly, even if a client gives me three or ten searches simultaneously, they still end up hiring just one or two people, even when the searches are retained and paid up-front... any exception would be rather rare.

Linda Ferrante said:

From a business perspective, I would encourage the client to hire a recruiter for these positions. Or, you could hire a recruiter and funnel the costs plus mark up, to the client.

If they are looking to pay for each position, evaluation of differences in skill set would be priority. If you can recruit more than one candidate per skill set, then looking at reduced flat rates per position. $1.5M in fees seems excessive. I guess I'm looking at the what's cost effective yet productive for the client first, then my bottom line next.