In this short guide we'll explore the options available to you to ensure you’re making the right call for your stage and context. We’ve made some assumptions so we can compare apples with apples, but the data and scenarios used are based on real-life insights from having helped over 60 SaaS businesses succeed at hiring, including Monese, Seedlegals, Farewill, Launchdarkly, Visionable, Collibra & Spryker.
Your 4 main options;
You know the drill, you agree terms, you brief them, the agency sends you candidates and if you eventually hire one, you pay a fee.
💰Commercials: Fee based on a percentage of the successful candidate’s annual salary, typically between 17 and 25%
Speed
They can move fast, their entire business is built on building a large network of talent within their vertical, so they probably have candidates ready to go quicker than your other options.
Familiarity
It's been a traditional method of recruiting for many years and we’re hard wired to avoid change. We know how it works, and we’re willing to take the rough with the smooth of the experience as long as we get the hire at the end of it.
Flexibility
Use when you need, no long-term commitments and can be scaled up or down with your hiring demand
Less financial risk
Agencies only make money when a hire is made, so you only ‘pay on success’. In addition, agencies have rebate periods built-in so if the agency hire doesn’t work out, and you need to release them within probation, they’ll refund a percentage of their fee.
Variable costs
The fee is based on the eventual successful candidates salary, not your planned budget for the role, often these may differ significantly, making forecasting a challenge
Conflict of interest
Connected to the above, agencies are paid on a fee that is dependent on a % of the successful candidate's base salary, meaning the higher the salary the higher the commission. In addition, their candidates are often interviewing at multiple clients and will logically prioritise those clients with higher budgets.
Employer Brand
In terms of level of control, agencies operate in a black box when it comes to how they’re representing your brand to the market, so they’re a huge risk here. When was the last time you saw a message that an agency was using or you listened in to a screening call with a candidate? The one hire you do make from the agency could have generated 20 detractors of your brand in its wake, and you’d have no idea if it did, until it was too late. While we're on the subject, for some advice on getting your employer brand off the ground, check out our article.
Your ability to grow talent pools.
The key reason agencies are not a good solution as you scale is that whenever they submit a candidate, that candidate will have a fee associated with them for at least a year, should you hire them. Assuming the agency submits multiple candidates for your roles, they’re creating a talent pool that is ring fenced from you, severely limiting your ability to move to a direct hire model.
Cost
They’re expensive, the average salary of Software Engineer in London, for example, is £60k, making the average fee of an agency charging 17%, a whopping £10,200
A contractor who works with you as your in-house recruiter. Is usually a senior profile with many years of experience.
💰Commercials: Charges a day rate and is engaged for a fixed period of time on a rolling weekly or monthly basis
Employer brand
You should have visibility and control over candidate messaging, so you’ll be able to protect your brand more.
Learning
For the good ones, they should leave you with a better place than they found you, with processes improved, talent pools grown, hiring managers enabled and a more mature talent acquisition function
Flexibility
Use when you need, no long-term commitments and can be scaled up or down with your hiring demand
Cost
More expensive than hiring your own permanent staff with day rates averaging 350+ VAT per day / totalling 7.5k per month + VAT
Speed
As with any single person performing multiple tasks in a multi-stage process, one area will suffer at the expense of another. E.g when they’re speaking to candidates, they’re not managing stakeholders or improving processes.
Tools usually not included
Most of the tools needed to make hires, such as linked in recruiter licences, email sequencing software & candidate databases will need to be covered by you.
Financial risk
You’re taking a risk with a freelancer because if they don’t deliver the hires you need, you have no recourse as the freelancer will still need to be paid. You’re vulnerable to the quality of the individual in this scenario.
Pretty self-explanatory: Your own in-house recruiter or recruitment team.
💰Commercials: they are full-time permanent members of staff.
Cost
Over time, this is a cost-effective option if you have hiring visibility for the year, the time to recruit and onboard an in-house recruiter(s) and there is sufficient hiring volume to justify the long-term investment.
Employer brand
You’ll have full visibility and control over candidate messaging & experience, so you’ll be able to protect your brand more.
Learning
processes improved, talent pools grown, hiring managers enabled and a more mature talent acquisition function
Lack Flexibility
You’re in for the long haul and your team can't scale as quickly as a third party can with the ebb and flow of hiring demand. If you do decide to cut your team in times of uncertainty, this can have a negative impact on your employer brand.
Financial risk
No money back guarantee or rebates here, no success means no hires and of course, you still have to pay. The average in-house recruiter salary in London is£42,500 with a linked in recruiter licence sitting at £8000 per annum. so the investment even for one mid-weight, is not insignficant.
Speed
If you factor in onboarding and time to ramp, this is the slowest option for you to get those hires over the line.
A recruitment company that provides services via a recruiter or team of recruiters who will embed themselves within your business for a set period of time.
💰 Commercials: Typically charge a set monthly subscription on a rolling basis.
Tools
An Embedded partner comes with all of the tools needed to make hires, such as linked in recruiter licences, email sequencing software & candidate databases as well as Talent intelligence platforms, like Move does, which enable you do make better recruiting decisions
Speed
Embedded partners like Move have specialists in key areas that allow stages of hiring normally done sequentially to be run in parallel. For example, sourcers can run outbound campaigns while your talent partners make sure the engine is running smoothly.
Cost
For a comparable cost to a freelance recruiter, you can get access to a team of people. In addition, as costs are fixed, you can hire multiple roles and have costs per hire equivalent to if you had your own team humming. Typically we see that costs are less than 50% of those of a recruitment agency
Employer brand
An embedded partner will help with your employer brand and EVP creation so you’ll move away from brand protection to brand amplification.
Learning
As with your own team but with the added benefit of working with a portfolio of clients and the playbooks this has created, you’ll be left with a more mature talent acquisition function
Flexibility
You’ll have the ability to scale resources up and down within 30 days so costs can scale back alongside demand without causing disruption to service.
Less financial risk
Unlike freelance recruiters and your own team, Embedded talent providers often come with money-back guarantees and other de-risking commercial elements in their terms to ensure you’re not on the hook for lack of hires.
Not suitable for 1 role
If you have just 1 hire, you’re better off briefing an agency
In an ideal state, when you get above 24 hires per year, you’d have an In-house recruitment team already at ramp for your verticals and clear hiring roadmaps. However, with volatility being the norm, as opposed to a rarity, having a go-to Embedded Talent partner can mitigate the risks of the spiralling costs of agencies, a demotivated and/or overstretched internal team and poor quality experiences for those interacting with your brand.
Move's embedded talent service ensures you get it right when you most need to. We’re experts at securing top talent that thrives in early-stage tech businesses. And, we’ll set you up for hiring success so you can do it without us in the future 🚀 Work with your own dedicated, expert talent team on a subscription basis during periods of growth. No long contracts. Guaranteed hires.
We’ll make the hires, you keep the playbooks 🛠🤝 Don't take our word for it, check out our testimonials page 👀🚀🚀
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