Flat-Fee Recruitment: How to Get the Best Talent for a Fraction of the Price!
<span class="grey-callout"><span class="text-color-purple">Disclaimer:</span> I can’t be impartial on this topic because in 2009 I created the first flat-fee recruiter, RecruitmentGenius.com. This spawned an entire industry, and I’ve gone on to develop my latest venture: Starget.co.uk.</span>
What is a Flat-Fee Recruiter?
The basic service provided by a flat-fee recruiter (aka fixed price recruiter) is to advertise your vacancy on lots of job sites at once. CVs are collected by the flat-fee recruiter and made available to you, normally through an online dashboard. You’ll quickly receive applications, allowing you to test market conditions, interview and hopefully hire the best applicants.
Flat-fee recruiters have transformed the recruitment industry by offering dramatically lower fees and removing much of the pain and inefficiency of advertising on job sites.
Who Should Use a Flat-Fee Recruiter?
Flat-fee recruiters are trusted by thousands of well-known companies and this continues to rise as their awareness increases.
I personally have been involved with flat-fee recruiters that have over 30,000 UK based customers. Because small-to-medium size businesses often need to be more careful with their costs and cashflow, you’ll find the majority of customers are within this category. However, I’ve worked with thousands of well-known names including Shell, Tesco, Microsoft and Sony who benefit from the services of a flat-fee recruiter.
When Should an Employer Use a Flat-Fee Recruiter?
I recommend using a flat-fee recruiter at the beginning of a recruitment campaign. Once a job advert has been published, applications usually arrive within hours. Within a week you’ll have gained an interesting insight into market conditions and hopefully have arranged interviews.
Most importantly you must use a flat-fee recruiter before using recruitment agencies or headhunters. This is because they all use job sites to attract applicants. If a recruitment agency or headhunter send you CV that you later get from a flat-fee recruiter then it’s too late, you have to pay a massive recruitment fee! Unfortunately this frequently happens.
How Much do Flat-Fee Recruiters Charge?
Flat-fee recruiters should charge a low fixed price. They can do this because the combined buying power of lots of employers means they can get discounts from job sites and can pass on the savings. This means it is often cheaper to use a flat-fee recruiter rather than go to lots of job sites directly. For example, a flat-fee recruiter may charge £300 to advertise on a selection of job sites. If you went to the same job sites it may cost you over £1,000, making flat-fee recruiters approximately 30% of the price compared to going direct. (If you’re thinking of cutting costs by going to only a few job sites, remember: you need to advertise almost everywhere because applicants could be anywhere).
Flat-fee recruiters may also offer discounts for bulk purchases of job adverts helping you save even more.
If you compare a flat-fee recruiter to a traditional recruitment agency the savings are even greater. I discuss recruitment agencies in another article, but in a nutshell they charge a percentage of an applicant’s annual salary. Normally this is 20%, so if they fill a job paying £40,000, they charge £10,000! In fairness to recruitment agencies, they only charge if they successfully fill the job, compared to flat-fee recruiters who charge for advertising the job. And recruitment agencies should offer a guarantee if the applicant leaves which flat-fee recruiters don’t offer. But even if you could afford £10,000, a flat-fee recruiter may do the same job for £300, saving you £9,700!, or 97% cheaper!
Save a Lot of Time
A good flat-fee recruiter should save you a lot of time and hassle by writing your job advert; publishing it on job sites; receiving and filtering the response.
Some flat-fee recruiters may go even further by pre-screening and shortlisting candidates, then coordinating interviews. However, I’ve often found many employers get more value by screening and shortlisting candidates because they get a better understanding of market conditions and are less likely to overlook candidates who may be suitable for other roles. Additionally it can require even more work to coordinate interviews when a third-party is involved, and it is difficult to know who/what went wrong when a candidate doesn’t turn up for interview.
Types of Jobs Filled by Flat-Fee Recruiters
Flat-fee recruiters often recruit for permanent and long-term contract roles (they aren’t suitable for temporary staff). They typically recruit for all roles levels of seniority from trainee to board-level, I’ve personally placed the finance director of a FTSE 100 company using a flat-fee model. Because they should have access to a wide selection of job sites, they should be capable of recruiting in almost any sector and location.
I’m often pleasantly surprised just how successful flat-fee recruiters are at finding niche candidates. However, for jobs requiring very specific industry experience where there aren’t many active job seekers, you could test market conditions with a flat-fee recruiter, but may end up needing the services of a recruitment agency or headhunter.
How to Choose a Flat-Fee Recruiter
Of course, as in any industry, price, service and expertise vary wildly, and there are packages on offer that look great but in my opinion offer little value. I recommend the following strategies to choose the best flat-fee recruiter.
1. Compare pricing policies
Your first point of comparison will likely be price. Bear in mind the following:
- Some flat-fee recruiters’ charges are based on a job’s salary, despite there being no extra work involved from a highly-paid role. This is a relic of traditional recruitment agencies who often charge a percentage of annual salary. I’d recommend suppliers who charge the same fee regardless of the salary.
- Some flat-fee recruiters charge on a cost per hire, while others charge on a cost per advert which allows you to hire everyone that your advert attracts at no extra cost. This is helpful if you decide to hire multiple staff from the same job advert. Again, given that the recruiter doesn’t need to do any more work, I’d recommend a cost-per-advertisement arrangement.
- Many offer what looks like a low price but charge for additional extras that seem essential, such as writing job advertisements, advertising on additional generic job sites, filtering CVs, searching CV databases, arranging interviews, allowing multiple users to access CVs and so on. It’s best to work with flat-fee recruiters that have a clear, simple pricing policy. Most employers only require basic filtering of CVs (often to remove those who live too far away) and then take care of recruitment from then on.
- The most common extra that you should be careful of is the inclusion of your company logo. Some providers only want you to include your company name or logo to earn them extra commission. They may convince you that “branding” generates a better response, but this is often only the case for very well-known and influential brands (probably not yours). You can read more about my thoughts on advertising anonymously.
- Some flat-fee recruiters don’t ask you to pay anything until the job is filled. Though this seems a great deal, it often means significantly higher charges and if you read the small print you may find that it requires exclusivity.
- A minority of flat-fee recruiters have an up-front “advertising” charge, and an additional “placement” fee!
As you can see terms like “flat”or “fixed” can be misleading and the cost can quickly escalate. Usually the best value comes from paying “per advert” (so you can recruit everyone who applies), and not needing any extra charges.
2. Compare “guarantees”
Unfortunately it is very difficult for flat-fee recruiters to offer a guarantee. If your job is very hard to fill, you have unrealistic expectations, or you haven’t followed their advice – they can’t magic applicants from nowhere - the response will purely reflect market conditions. (Fortunately their low price will mean it shouldn’t be a costly mistake).
I‘ve only seen one flat-fee recruiter offer a genuine money-back guarantee. This is a great show of confidence in the service and reduces your risk. However, as they are taking on all the risk, if they aren’t confident your role is attractive, or that you have appropriate recruitment processes in place, they may not offer a guarantee.
Most guarantees I’ve seen are for a minimum number of CVs and have nothing to do with quality. If you don’t receive the minimum number of CVs, they may give you another employer’s CVs or simply re-advertise the job. Often, the cost of re-advertising is factored into a higher initial price and you’re unlikely to achieve better results the second time round unless something fundamental changes.
3. Compare job site coverage and duration
Not all flat-fee recruiters offer the same job site coverage – worrying given that this is the most important part of the service! I found one supplier who said they will advertise on “one of the UK’s best job sites”. Worse still, some don’t advertise where they say they do, so you should always check they are on the job sites they say they are. My advice is simple: if you can’t find them advertising where they say they are, move on.
But it wouldn’t be practical for a flat-fee recruiter to advertise everywhere because there’s too much choice and it would be unaffordable. That’s why if you have a preferred industry publication or unique job site it might be worth asking if they can purchase it for an additional cost (aka media buying). They’ll often be able to negotiate better deals and pass some of the savings on to you while sparing you the hassle of negotiating and publishing the job advert yourself.
Some flat-fee recruiters suggest they also attract applicants via social media. In practise this only means sending a tweet or posting on their company page. In my experience it often generates no applicants, perhaps because they purchased followers. Moreover, some say they do “Employer Fencing” which means if they do run adverts, it is only to people who live nearby.
4. Compare campaign duration
Probably the most complicated variable is “campaign duration”.
In my experience, your advert must be visible for 28 days or longer on every job site. Some poor-quality flat-fee recruiters offer a 28-day “campaign” that in reality means advertising on one job site for seven days, another site for a further seven days and so on over the 28 days. Only the better flat-fee recruiters have the buying power to offer 28 days of advertising on each job site.
5. Check your applicants are actually yours
Some flat-fee recruiters share your applicants with other employers to bolster application numbers. Not only does this create more competition for you, but you may also be receiving CVs from applicants who never knew about your job. Ensure that your applicants aren’t shared with anyone else and make sure you’re not getting “dummy” applicants.
If you do receive applicants from a CV database search, ensure that they are clearly flagged as such because you will need to adapt your approach.
6. Ensure that they have a solution to help manage all your applicants
To stop your inbox getting deluged, it’s important that you’re given an online portal to access your applications. This is commonly called an Applicant Tracking System (ATS). You need a solution that your colleagues will want to use, often simple and intuitive ones without lots of features.
Ask for a demonstration before you commit as some look as if they require an instruction manual! Worse still, many flat-fee recruiters seem to use the same off-the-shelf solution that has been crudely adapted and may not be fit for purpose.
If you have your own ATS, it might be worth asking if they can integrate with it. If this isn’t practical, it may be easier to use the solution provided and only upload the applicants you want to interview into your ATS. I have more advice if you’re considering purchasing an ATS.
7. Application filtering should be included
Most online recruiters should include some form of filtering to save you the hassle of having to review clearly unsuitable CVs. There are four main types of these:
- Automated/algorithm filtering. These assess CVs for relevance and calculate commuting distance to identify local applicants. It’s important you still have an opportunity to look at every CV as algorithms do make mistakes and you don’t want to miss anyone.
- Hand-filtering. This is useful for removing obviously unsuitable applicants, but don’t expect too much as those doing the filtering won’t have in-depth knowledge of your industry, company and job. It’s also important to make sure you’re dealing with someone experienced. Be careful of companies who outsource hand-filtering as you have less control over who is doing it and where; those carrying out the task may lack the knowledge needed to do a good job.
- Screening questions. These ask each applicant the same yes/no questions. If the applicant doesn’t give the answer you want, they’re automatically rejected. (Unfortunately this doesn’t prevent some applicants guessing the answer you want and lying!)
- Automated telephone screening. This asks applicants questions over the phone, the equivalent of a sophisticated answering machine. You hear applicants’ answers, allowing you to identify their general suitability and communication skills. While few flat-fee recruiters have this latest technology, it’s incredibly powerful and often better than reviewing a CV.
Application filtering should be included. Be careful of flat-fee recruiters who charge extra for it as there may be lots of other hidden costs.
8. Check their references
With low barriers to entry, the online recruitment market can be a bit like the Wild West. Check that you’re dealing with a reputable company or you may waste your money and a lot of time:
- Review case studies and real testimonials (where full names are given) to ensure you’re satisfied that the recruiter can deliver on their promises and offers great customer service.
- You’ll often see the logos of well-known brands and large companies embellishing a website. Be aware that these companies may often do little due diligence, and that it is relatively easy to do business with them. A logo may only indicate that the service was used once (was it even paid for, or part of a free trial?). Without hard evidence to back up the logo, there’s no guarantee that the service provided was any good.
- Get recommendations and references. Ask to speak to previous or current clients, particularly those who are recruiting for similar roles or at the same volume as you need to.
- You may also need to do a light bit of digging about the company and directors’ background. For example, I know of one flat-fee recruiter who, despite being disqualified and jailed for fraud, continues trading. Just as I know of other companies that have “phoenixed” many businesses, leaving customers and suppliers with a lot of debt and little recourse.
<div class="grey-callout"><h2>Key Takeaways</h2><p>Online flat-fee recruiters are worth investigating. They can quickly offer candidates, minimise the risk of advertising on a small number of job sites, take away a lot of the hassle of filtering CVs and significantly lower your overall recruitment costs. </p><p>Here’s a summary of questions to help find the best flat-fee recruiter, in order of importance:</p><p><ul><li>Can you find the flat-fee recruiter advertising on the job sites they say they advertise on?</li><li>Are the adverts running for 28 days (or longer) on each job site, or do they only offer seven-day adverts as part of a 28-day campaign?</li><li>Are your applicants shared with anyone else, and do you receive anyone else’s applicants?</li><li>Are you charged a fixed fee or a percentage of annual salary?</li><li>Is their charge for an advertising campaign, or are you paying a cost per hire?</li><li>Is there a clear and simple pricing policy, or are there lots of additional extras that increase the cost?</li><li>Do they offer a money-back guarantee or are they hoping you’ll be gullible enough to be satisfied with a “smoke and mirrors” guarantee?</li><li>Are case studies and real testimonials provided, or do they hide behind lots of big brands and unverifiable names?</li><li>Is there a simple ATS included? If so, can unlimited users gain access to it at no additional charge?</li><li>Are the adverts anonymous, or do you need to include a company logo or name?</li><li>What applicant filtering do they offer, and how much hassle is that going to save you viewing irrelevant applicants?</li><li>Do they require exclusivity on the vacancy?</li><li>Do they offer guarantees?</li></ul></p></div>
<span class="navy-callout">Download a checklist to help you select the best flat-fee recruiter at www.starget.co.uk/book</span>