Are In-House Recruiters Worth It?

Well my friends, that depends on your cost-benefit analysis. There are plenty of questions you would need to answer before arriving at a concrete decision as to who will help you find candidates. For some organizations, an in-house recruiter makes complete sense, while for others, a recruiting agency or executive search firm is more appropriate.

You can typically expect a search firm to charge a 20% finder’s fee. This means that if they find you a candidate you end up hiring, you will pay them 20% of that hire’s first year salary. Sometimes it’s 15% or 30% but on average, 20% is the magic number. First, your organization needs to do some forecasting for the quarter or year to see how many people you’d like to hire, for what positions, and at what salaries.

Please note that salary negotiations are inevitable and you’re bound to end up paying a bit more than originally planned for some future hires. Let’s pretend you now have a general idea of your hiring plans for the year. To keep things simple, say you’re scaling a business and 5 entry-level employees along with 5 managers are needed at annual base salaries of $50,000 and $100,000 respectively. With a search firm charging 20% fees, you can expect to pay a minimum of $150,000 since we mentioned earlier that salaries are often negotiable.

As long as the hiring of these 10 employees is nicely spread out through the course of a year, many in-house (corporate) recruiters would agree that this workload is a manageable solo effort. A corporate recruiter with 3-4 years of experience should be up to the task and according to Salary.com, he/she (in Boston) should make around $63,200 a year.

When you hire a recruiter full-time at your organization, you’d need to provide health benefits on top of an annual salary. Of course this is an additional cost you wouldn’t have to worry about when using a search firm. On average, health benefits cost approximately $3000 a year for a single person and $6300 for a family.

So at the end of the day, all you have to do is compare the potential costs side by side. Hiring a corporate recruiter full-time could cost you almost $70,000 annually. Clearly, this is substantially less than the $150,000 you would otherwise pay out to a search firm. In this particular scenario, yes, an in-house recruiter is worth it.

Don’t just opt for a search firm because it seems easier. Do your due diligence as that should always be part of your best practices. Otherwise, you might seriously regret it. Will your hiring strategy change in the future? Do you expect to target a lower volume of hires and/or focus more on entry-level employees who would earn much less? Thankfully the math is fairly simple and a quick crunching of numbers can help you determine which move is the best for your team. Good luck!

Vic

Victor Mahillon
Victor Mahillon
Director of Recruiting

Victor Mahillon is the Director of Recruiting at Kamcord. Previously he was a Talent manager at OpenView.
You might also like ...
Leadership
4 Tips for Setting Your Company's Annual Rhythm

Every company starts the new year with big goals and aspirations. But how many of those companies actually accomplish them?

by Kristin Hillery
Product Marketing
How to Get Your First 100 Customers—Smart, Actionable Advice from Top Executives

Leaders from Twilio, IBM, SurveyMonkey and more share their best tips.

by Casey Renner
Startup Strategy
We Explored 3 Product Positioning and Branding Failures. Here’s What NOT to Do.

B2B brand and product positioning will only continue to become more important with the rise of the End User Era.

by Margaret Kelsey