I wrote a blog on this...the original post is here. But...
The decision to pay a recruiter by the hour versus a flat fee depends on several factors, including the type of job you are hiring for, your budget, and your overall recruiting needs.
Here are some potential advantages and disadvantages of each payment method:
Paying a recruiter by the hour:
Advantages: You only pay for the time the recruiter spends working on your job, so you can potentially save money if the recruiter finds success in less hours than the flat fee amount divided by the hourly rate. Additionally, because you are paying for services up front, hourly payment should involve more project transparency than what you might expect in a flat fee arrangement, whether contingency or retained. This will help you make more informed hiring decisions.
Disadvantages: If the recruiter takes longer than expected to fill the position, the total job cost could end up being higher than if you had paid a flat fee. Additionally, if the recruiter spends a lot of time on your job but ultimately doesn't find the right candidate, you could end up paying a lot without getting the result you wanted.
Paying a recruiter a flat fee:
Advantages: Whether retained or contingency, with a flat fee you know upfront exactly how much you will pay for the recruiter's services, regardless of how long it takes to fill the position. This can be helpful for budgeting purposes. Additionally, a flat fee can incentivize recruiters to focus on finding the best possible candidate as quickly as possible to maximize their margin.
Disadvantages: If the position is filled quickly, you may end up paying more than you would have with hourly payment. With contingency where payment is entirely dependent on earning a candidate placement, recruiters may focus on easier to fill roles, so you may not get the attention your search needs for success.
Ultimately, whether paying a recruiter by the hour or a flat fee depends on your specific needs and circumstances. If you have a tight budget and need to control costs, paying by the hour may be a good choice if you are comfortable putting some skin in the game. On the other hand, if you have the budget and are more risk averse, a flat fee may be the better option. If you prefer the flat fee approach, retained search is a powerful way to set your job up for success as you will help the search firm cover operating expenses on your search.
Author’s note: In my 11 years of agency experience, hourly has been the more cost effective approach 85% of the time.
The decision to pay a recruiter by the hour versus a flat fee depends on several factors, including the type of job you are hiring for, your budget, and your overall recruiting needs.
Here are some potential advantages and disadvantages of each payment method:
Paying a recruiter by the hour:
Advantages: You only pay for the time the recruiter spends working on your job, so you can potentially save money if the recruiter finds success in less hours than the flat fee amount divided by the hourly rate. Additionally, because you are paying for services up front, hourly payment should involve more project transparency than what you might expect in a flat fee arrangement, whether contingency or retained. This will help you make more informed hiring decisions.
Disadvantages: If the recruiter takes longer than expected to fill the position, the total job cost could end up being higher than if you had paid a flat fee. Additionally, if the recruiter spends a lot of time on your job but ultimately doesn't find the right candidate, you could end up paying a lot without getting the result you wanted.
Paying a recruiter a flat fee:
Advantages: Whether retained or contingency, with a flat fee you know upfront exactly how much you will pay for the recruiter's services, regardless of how long it takes to fill the position. This can be helpful for budgeting purposes. Additionally, a flat fee can incentivize recruiters to focus on finding the best possible candidate as quickly as possible to maximize their margin.
Disadvantages: If the position is filled quickly, you may end up paying more than you would have with hourly payment. With contingency where payment is entirely dependent on earning a candidate placement, recruiters may focus on easier to fill roles, so you may not get the attention your search needs for success.
Ultimately, whether paying a recruiter by the hour or a flat fee depends on your specific needs and circumstances. If you have a tight budget and need to control costs, paying by the hour may be a good choice if you are comfortable putting some skin in the game. On the other hand, if you have the budget and are more risk averse, a flat fee may be the better option. If you prefer the flat fee approach, retained search is a powerful way to set your job up for success as you will help the search firm cover operating expenses on your search.
Author’s note: In my 11 years of agency experience, hourly has been the more cost effective approach 85% of the time.
