Recruitment Costs: What to watch out for!
Working with a recruiter requires some spend from the business account, but it can often be a good investment, especially if you’re finding and hiring great people. However, that good investment can quickly feel like a con when there are hidden costs attached to the invoice.
Here are the top five areas to check when agreeing recruitment terms:
1. What’s included in the salary percentage calculation?
Some companies will charge on car allowance, pension contributions and other emoluments. I’ve even heard of companies charging on bonus payments. If you don’t check and challenge this, your recruitment bill can increase by literally thousands.
2. What salary are they charging you on?
Some recruitment firms will charge on whichever is the higher salary: the one you’ve just offered or the candidate’s last salary from their most recent role. So, if a candidate has taken a pay cut to join your business, you might get charged on their previous salary, costing you more than you’d planned.
3. What’s your guarantee?
Rebates and replacements normally depend on paying your invoice on time – If you’re late paying by even a day, it may negate your rebate or replacement, so double-check and make sure you understand this point.
Often, finance teams aren’t involved in that discussion and may pay a few days late due to how payment runs fall. So, it’s important to either negotiate payment terms that work with your payment runs or, better still, just pay on time. Not doing so might cost you more in fees.
4. Understand any cancellation fees
This is a common clause on retained recruitment projects designed to protect the agency for work done that otherwise doesn’t get paid for. For transparency, we operate cancellation clauses in our terms too, so become familiar with what constitutes a cancellation and when a fee becomes payable. Not being aware of these clauses can lead to costs that could otherwise have been managed or negotiated.
5. How long is a candidate ‘owned’?
Most recruiters will have a 12-month introduction period. This is the period for which they have ownership of a candidate when submitted for a role with a client and is intended to discourage what’s known in the industry as a ‘back door hire’.
But some recruiters have even longer periods, which can cost you if you recruit a candidate whose CV was submitted two years ago – possibly to a different hiring manager and possibly for a different role. This could create a surprise invoice that, according to the terms, you’ve agreed to pay.
This clause is especially important if you regularly recruit a high volume of people with the same skills. Negotiating this down to 12 months or less can help avoid unexpected costs.
- These five clauses are among the most often overlooked and can result in additional, avoidable costs to your business. For an informal chat that will help you benchmark your recruitment costs, give us a ring on the number below or email jordan@1492-search.co.uk
