How do recruitment agencies get paid?

Hiring new candidates can be extremely stressful for business owners. The process of posting a job, trolling through applications, conducting interviews, and choosing a final candidate is time-consuming. Luckily, recruitment agencies are here to help you. 

An employment agency is a company to which you outsource all your hiring responsibilities. They take on the stressful work and deliver only the most qualified candidates. Whilst there is no doubt that agencies are practical and effective, how economical are they compared to an internal HR team? In this article, we explain everything you need to know about recruitment agencies and how much they cost.

What is a recruitment agency?

A recruitment agency is an organization that helps employers find suitable job candidates. These agencies provide services such as pre-screening of job candidates, interview scheduling, and training for job seekers.

How to attract employees to your company

What is the role of a recruitment agency?

The primary role of a recruitment agency is to sift through potential employees to find the perfect fit for your business. However, they take on a multitude of different responsibilities in order to reach that perfect fit. 

Below is a brief list of things that agency recruiters do:

  • Headhunting 
  • Interviewing potential candidates to match them with clients
  • Performing background checks on potential hires
  • Creating lists of the most suitable candidates for each position
  • Organizing interviews for clients to choose a final candidate
  • Facilitating adequate job advertisement 
  • Aiding in interview preparation
  • Fostering positive relationships with clients
  • Etc. 

Is it worth using a recruitment agency?

There are a multitude of different reasons why recruitment agencies are more effective and beneficial than internal recruiters. Below are key reasons why hiring a recruitment agency is worth it. 

Faster hiring 

One of the main reasons companies choose to work with recruitment agencies is the fact that they are guaranteed to speed up the hiring process. Unlike internal recruiters who often have additional responsibilities within an organization, a recruiting agency is 100% dedicated to finding talent. They have a vast database of talent they can consult to find suitable candidates. 

Qualified candidates

When you post a job advertisement and rely on your own internal recruiters to find talent, you open up your vacancy to the entire job seeker market. This means that you can’t guarantee that those applying for your job are sufficiently qualified. Thankfully, when you hire a dedicated agency, recruiters pre-interview candidates and only send the most qualified professionals your way. You, therefore, don’t have to lose time interviewing unqualified candidates.

Extended reach 

The headhunting element of a recruitment agency is one of its biggest assets. Not everyone is looking to leave their job to find new permanent employment elsewhere, meaning you don’t necessarily have access to the best job candidates on the market. Thankfully, since agencies put time and effort into building networks and connections, they are able to find the best possible candidates, even if they aren’t currently looking for a job. Recruiters have a better knowledge of the talent within your industry than anyone else. 

Focus on one job 

When you put pressure on your staff to find and hire employees in-house, it can be overwhelming as it isn’t the only job they have to do. Creating an internal hire team for short periods of hiring means you are taking employees away from other tasks to focus on the hiring process, which reduces the efficiency of your business. However, recruitment agencies are completely dedicated to searching for candidates. 

How do recruiting agencies make money?

Contingency basis 

The contingency model of payment is the most common type when the staffing agency is seeking to place individuals in full-time positions. This system means that if the agency is unable to find you the perfect candidate, you don’t have to pay them. 

However, if they find a suitable candidate that you end up hiring, you have to pay the agency a percentage of the hire’s annual base salary.  You can usually expect to pay anywhere between 15% and 30% of the hire’s base salary, although this doesn’t come into effect until they have completed the required probationary period.


The second most common model of payment is the retainer basis model. This means that you are responsible for paying a flat fee to your recruitment agency upfront before the search starts. This means that the recruiter gets paid whether they find you a candidate or not. This is a popular payment option amongst clients, as it means that you know exactly what you have to pay to your recruiter.


The container approach is a merging of the previous two payment models. You pay the recruitment firm half of the agreed fee upfront and once they find the perfect candidate and you hire them, you pay them the remainder of the fee. This is a best-of-both-worlds’ approach, which is why many recruiters and clients like this system. 

How much should you pay a recruitment agency?

How much you pay a recruitment agency depends on different things such as the type of job to fill. In most cases, you should expect to pay recruitment agencies a percentage of the new hire’s annual salary. How much you pay the recruitment agency can differ each time depending on the role you are recruiting for. The average percentage that recruiters charge is anywhere between 15% and 30% of the hire’s first-year salary.

Recruitment services

If you want to optimize your hiring process and find qualified employees, you should collaborate with an experienced recruitment agency. Spartanium is dedicated to finding the best possible candidates for businesses in the fields of insurance, law, and accounting. We understand just how difficult it can be to find the right employee, which is why we make this process easy for you. Our extensive database, expertise and industry knowledge allow us to find the perfect match every time. 

Contact us

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