Discover everything you need to know about partnering with a recruitment agency.
Finding and hiring qualified, skilled employees is one of the biggest challenges facing small to midsize businesses (SMBs) today. With limited resources and not knowing where to source top talent, the hiring process can drain precious time and energy from SMB leaders who already wear multiple hats. This is where working with a recruitment agency can help.
In this guide, we will help demystify the inner workings of recruitment agencies and provide you with valuable insights into how they operate. We'll explore the different types of recruitment agencies, the step-by-step process they follow, and the benefits they offer.
Whether you're new to the concept of recruitment agencies or looking to optimize your hiring process, this article will give you the knowledge and tools to make better decisions when recruiting.
What is a recruitment agency?
Recruitment agencies are specialized businesses that assist companies in finding and hiring qualified candidates to fill open positions. They act as intermediaries between employers and job seekers, providing a range of services that can streamline the hiring process and ensure a successful match for both parties.
There are several types of recruitment agencies, each offering different services and working under various contract models:
Traditional recruitment agencies: These agencies charge a fee based on a percentage of the candidate's salary, usually after they're hired by the client. They may work on a retainer or a contingency basis.
Temporary recruitment agencies: They hire candidates to work on a contract basis, helping companies address short-term hiring needs.
Specialized recruitment agencies: These agencies focus on specific industries (healthcare, tech, finance, etc.) or types of roles at an executive or management level.
Contingency recruitment agencies: They only get paid if they successfully fill a position. They carry multiple job openings at once and aim to present qualified candidates quickly.
Recruitment process outsourcing (RPO) agencies: These agencies take over the entire or part of a client's recruitment function, from planning and strategy to execution and evaluation. According to Gartner's Sourcing Structure and Process Ownership Benchmarks, 14% of organizations use RPO providers.[1]
SMBs can reap significant benefits from partnering with recruiting agencies, overcoming resource limitations, and competing effectively for top talent.
How do recruiting agencies work?
Before you learn how to find a recruiting agency, it pays to know what to expect from them. This will help you make an informed decision about whether or not to use their services.
Shelbye J. Reese, marketing director of Deshazo LLC, points out who is responsible for contract negotiations[2]: "The Director of Human Resources typically reviews and negotiates contracts with recruitment agencies. If this position does not exist in your company, the task may fall on the CFO or COO.”
Agreement terms and contract
When you first partner with a recruitment agency, you will need to sign an agreement that outlines the terms and conditions of your engagement. This agreement will typically specify the following:
The types of positions the agency will be responsible for filling
The fees the agency will charge
The timeline for filling open positions
The process for communicating with the agency
Information gathering
The first step in the recruitment process is for the agency to gather information about your company and the open positions you are trying to fill. This will help them understand your company culture, specific needs, and candidate qualifications you are looking for. The agency is able to customize its search and selection process in order to find the best candidates.
Job posting
Once the agency has a solid understanding of your needs, it will create a job posting that describes the position, the qualifications you seek, and the benefits of working for your organization. They will post the job listing on their website, job boards, and other relevant platforms in order to reach a wide audience and attract the best talent for your open positions.
Screening candidates
The agency will begin screening candidates to identify those who meet your qualifications. This may involve reviewing resumes, conducting phone screenings, or administering skill tests. The goal of the screening process is to identify the best candidates for the role and ensure that they truly have the skills and experience you are looking for.
Interviewing
After screening, the recruiter will conduct in-depth interviews with candidates, probe their experience, access their soft skills, and determine their fit. This thorough interview process ensures that the candidates presented to you are well-qualified and a good fit for your business. The recruiter will coordinate interviews with the company's hiring manager for final evaluation and support the internal interview process.
Offer
If the hiring manager decides to extend an offer after the interview process, the recruitment agency will handle presenting the official offer details to the candidate. This includes negotiated compensation, responsibilities, benefits packages, incentives, and other terms.
It is critical at this offer stage not to underestimate the employee experience. As Reese shared, "Current employee satisfaction and social voice are the two most important factors. Potential employees pay attention to reviews on Google, Indeed, social media, etc. They do their research before accepting a position." [2] Candidates want to hear positive experiences from current staff.
Onboarding
The agency will also work with your company to ensure that the new hire is properly onboarded. This may involve providing them with training, introducing them to their colleagues, and helping them get acclimated to your company culture.
Benefits of using a recruitment agency
Working with a recruitment agency offers many benefits for businesses of all sizes. One significant advantage is that recruitment agencies focus their expertise and resources solely on sourcing and screening the best candidates for open positions.
This emphasis on candidate experience is particularly beneficial for SMBs, which may not have the dedicated HR staff or resources to provide the level of personalized attention and support that candidates seek.
Access to a wider pool of talent
Recruitment agencies have access to extensive networks of qualified candidates that SMBs may not be able to reach on their own. They also have established relationships with passive candidates who are not actively looking for a new job but are open to new opportunities.
Access to resources
Recruitment agencies have access to a variety of tools and technologies that can help them source, screen, and interview candidates. They also have the experience to handle all aspects of the hiring process, from job posting to candidate onboarding. For SMBs, this means they can take advantage of the expertise of recruitment agencies to find the best talent for their needs without having to invest in costly or complex software or platforms.
Time and cost savings
The hiring process can be time-consuming and resource-intensive. By partnering with a recruitment agency, SMBs can free up their internal staff to focus on their core business activities and save time and money.
Reduced risks
Hiring the wrong person can be costly and time-consuming. Recruitment agencies can help SMBs minimize this risk by thoroughly assessing candidate skills, experience, and cultural fit. They can also help businesses avoid compliance issues by ensuring their hiring practices are legal and compliant with applicable laws and regulations.
Improved efficiency
Recruitment agencies can streamline the hiring process, reducing the time and resources required to find and hire qualified candidates. For SMBs, who are often short on both time and resources, leveraging agency expertise supports hiring productivity without overburdening internal staff.
What kind of business should consider working with a recruitment agency?
There are several situations where partnering with a recruitment agency can benefit an SMB:
Rapid growth: Scaling up quickly requires filling multiple new positions. Recruiters can service candidates faster than internal teams.
High turnover: If your business has above-average turnover, recruiters can help find replacement employees more efficiently.
Specialized roles: Hard-to-fill roles like tech talent, salespeople, or executives can be outsourced to niche recruiters.
Limited HR bandwidth: SMBs without robust HR teams can leverage outside experts to strengthen hiring.
New geographical market: Recruiters have localized networks to find top talent if you're expanding into a new region.
How do recruitment agencies charge?
Recruitment agencies typically charge fees based on a percentage of the candidate's first-year salary. The percentage can vary depending on the position, industry, and agency, but it generally falls between 15% and 30%.
Here are the most common pricing models used by recruitment agencies:
Contingency: | This is the most common pricing model. The agency only charges a fee if they successfully place a candidate in a permanent position. |
Retainer: | This model is typically used for high-level or specialized positions. The company pays the agency a retainer fee, whether or not they place a candidate. |
Project: | This model is used for short-term or project-based positions. The agency charges a fee based on the scope of the project. |
Hybrid: | This model combines elements of the contingency, retainer, and project models. The agency may charge a combination of fees depending on the position and the client's needs. |
How to find a recruitment agency
Not all recruitment agencies are equal. When selecting an agency, follow these tips on how to choose a recruiting agency that best fits your needs:
Define the roles you want to fill so they can source relevant talent. Avoid generalists if your needs are niche.
Interview multiple agencies to compare their experience, screening process, networks, fees, and responsiveness.
Ask for referrals from similar companies who have used recruiters and read online reviews.
Provide clear communication. Ensure they understand your goals and ideal candidate profiles.
Check for industry expertise, such as healthcare recruiters for medical roles or tech recruiters for developers.
Align on speed, budget, and expectations. Be explicit about hiring timelines, target spend, and other requirements upfront.
Assess their vetting process. What is their screening, interviewing, testing, and evaluation methodology?
Request a trial run on a lower priority opening before committing long-term.
Getting the most out of your recruitment partnership
Recruitment agencies can be a valuable resource for businesses looking for qualified candidates for open positions. By working with a recruitment agency, businesses can access a wider pool of talent, save time and cost, reduce risk, and improve efficiency.
To find the right recruitment agency for your business, it's important to define your needs clearly, research potential agencies, compare agencies, and check their experience. Each will follow a process similar to the one outlined in this article. While recruitment fees can seem costly at first, time and cost savings come with working with a recruitment agency in the long term.
To learn more about recruiting qualified employees and working with recruiting agencies, check out the following resources: