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