Is 8% Recruitment Agency commission new UK standards?

UKrecruitmentcomission7%

Commission charged by recruitment agency operating in UK has been quite high as compared to commissions you pay to hire across  the world. Here are few justifications recruitment agencies tend to give for this high commission:

  • UK is very expensive to do business in.
  • Cost per employee here is one of the largest in the world
  • Competition is very high so the closure rate is low
  • Work spikes & falls during many months so company needs to earn more in productive months
  • Market is very competitive so we need to hire best people & pay more

All these reasons are genuine reasons but the main factor why all these agency burden end client with high recruitment cost is because they don’t invest much in bringing down cost of operations & neither they invest much in improving operational efficiency of existing delivery process. Most of the agencies which I have encountered with run in very classical fashion where owners put money only to expand operations when they can clearly see money coming in. In fact, This industry didn’t much learn from Manufacturing or IT Services industry which time to time adopted cost cutting techniques line concept of lean”Lean”  or have expanded to other geographic to be competitive.

High profits & less innovations from last two decades have lead recruiters in UK to set-up their own shops bringing down cost which is sustainable only when they work as individual consultants from their home & do not expand.

Thinking more on why do industries bring down cost? What factors take out their lethargy & force them to go that extra mile to reduce cost of operations by doing whatever is needed to bring down cost? Why Apple made iPhones in China?

Clearly, it’s consumers. Market value is driven by clients who pay for the services. Till now most of the UK companies are paying huge to agencies, might be unhappily, but at the moment they do not shop around more, they do not bargain hard or explore cheaper agency alternatives this might be due to prejudice of cheaper being bad. But the point is cheaper here is not bad, as resources are the same in market. Whether it’s agency which takes 20% commission or the one which take 6%, most of the time they will supply resources which are actively looking for the job in market & it’s clients interview capabilities which eventually filters right resources for them.  Funny part here is because cheaper agencies are not much utilised they are left to die in peace.

So now is the time, wake up, be demanding & ask your HR/Procurement team to explore agencies which work for no extra than 8%-10% as standard commission rates for carrying out end to end recruitment & bring down your recruiting cost by half.

 

 

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