I've learned over my 7-year career that some hiring authories are under the impression that recruiting firms are inflexible, rigid entities who try to ram square pegs in round holes. That their only purpose is to refer resumes and if someone is hired then pay them an exorbitant fee ranging between 20-35% of the person's salary. Let me explain what causes me to make that assertion...
I've had a couple initial discovery conversations with prospective client companies over the past few weeks where the first questions out of the client's mouths are, "What are your fees?", "What does your process look like?" and "How big is your database?" Well, those are all good questions, but they were posed at the absolutely wrong time in the conversation. When someone does this, I know right away that they've had experience working with a 3rd-party contingency recruiter before. I know this because 95% of the traditional recruiting firms out there work according to a sliding scale fee schedule based on percentages of the candidate's first year salary (which I'm not sure how basing a fee on salary makes any sense, but I'll save that for another discussion). They also have a structured "process" they follow which has been ingrained via training in every new recruiter working a desk at that firm. Assuming that I charge a placement fee based on percentage of salary, I've also had people's first question be, "What's your fee percentage?" Whoaaa, hold on buddy! We're getting ahead of ourselves here. I don't even know what problem(s) you have yet that I'm supposed to solve! Tell me more about the challenges you're experiencing with your talent acquisition (and perhaps retention) game plan... Then I can work on drafting a solution and proposal for you.
1) Are you having difficulty sourcing candidates?
2) Are you having problems processing incoming resumes/candidates?
3) Are you spending too much money on job postings?
4) Are you looking to increase efficiencies across your whole process?
5) Are you having issues with your temporary workforce structure?
6) Are you looking to ramp up hiring by 50% over the next 12 months and need to expand recruiting capacity?
7) Are you simply looking to fill a single high-level position and that's it?
8) Are you looking to leverage our investment of resources so you don't have to build an in-house operation from scratch?
These are all problems that require different solutions. And the full-service recruitment process outsourcing firms should be able to custom tailor a program to meet those needs. The pricing structure is going to vary based on the solution (eg. a 12-month RPO engagement isn't going to be based on a percentage of a hire's salary. That would be a very expensive proposition for the client if they had to pay 25% on 50 new hires. An RPO firm can dramatically reduce costs because they can realize efficiencies in working for a specific client as a partner).
It's important to keep in mind when working with a recruiter that it's not necessarily an "all or none" proposition. There's many levels of service below the traditional 25% of salary mindset that many folks have when considering using a 3rd-party recruiter.