No more tiers! (The end of the tiered percentage structure?)
Posted by Lawrence Bond December 22, 2022
As a recruiter, have you ever REALLY challenged your agency supplier as to why they use a tiered percentage structure?
I heard an experienced recruitment professional speaking at a trade fair recently. He commented that ‘thought leadership’ means that you don’t just agree with everyone else’s approach in your sector. I suspect that most agency recruiters will disagree with my thoughts here, however most in-house decision makers will agree with us and different opinions are what make our wonderful world more interesting.
As such, and if you are a recruiter for your business, I’m suggesting you should ask any external recruiter this question and REALLY consider whether the tiered percentage structure approach is fair?
To those who haven’t dealt with recruitment consultancies, most agencies charge a percentage of the candidate’s first year’s salary/remuneration. The norm is to have salary bandings where the percentage charged increases depending on the salary of the successful applicant. For example, up to £30,000p.a. is often charged at 20%, £30-£50,000p.a. is charged at 25% and so on.
This tends to be the norm but why don’t more recruiters challenge this?
If asked to justify a tiered structure, the stock agency response will be connected to the increased challenges of candidate attraction and sourcing as the seniority of a vacancy increases. In truth, agencies do normally have to dedicate far longer to the more senior or niche roles that consequently command higher salaries.
However, based on a higher salary, an agency charging a flat percentage of the first year’s salary, would earn more anyway. That’s fair.
In any business, there are often different prices for different services but how many companies/sectors could justify a pricing model similar to the standard recruitment agency.
The answer is simple. Not many. I would be surprised if the business you’re working within could charge in this manner, assuming it’s not a recruitment agency or our fantastic public transport service where the same journey costs more before 9.30am.
Well at BondMoran, we have NEVER agreed with a two or three-tiered rate.
Since our inception, we have charged the same flat rate, worked extremely hard to add value and provide superb results for our customers (both candidates and recruiters), and we have had a consistent approach and rate that we apply to all roles, regardless of whether the salary is £50,000pa or £200,000p.a.
Fair and transparent? We think so.
So if nothing else, next time you meet an agency with a tiered rate structure, REALLY challenge them and let us know if you’re still happy to pay a higher percentage of a higher salary.
To speak to us about all things recruitment, contact one of our team today on 020 3519 0099.