Comparing Search Firms, Flat-fee Partners, and In-house Recruitment

Are you feeling overwhelmed by the demands of recruitment, struggling to find your next hire, and unsure if outsourcing is the right choice for you? In this article, we’ll explore a comparison between a search firm that charges a percentage of the salary and a recruiting partner that charges an upfront flat fee. Additionally, we’ll examine the choice of keeping all recruitment efforts in-house, without outsourcing to a third party.

According to SHRM, a leading organization in several areas related to HR management, many employers estimate that the total cost to hire a new employee can be three to four times the position’s salary. That means if you’re hiring for a job that pays $60,000, you may spend $180,000 or more to fill that role. “Of those costs, I would say 30 percent to 40 percent are hard costs, and the other 60 percent are soft costs,” said Edie Goldberg (SHRM Foundation chair-elect).

Table of Contents

In this blog post, we will only focus on direct costs.

Let’s consider the following example:

You need to fill 6 open roles for registered nurses at Evergreen Health Hospital in Boston

According to the United States Bureau of Labor Statistics (BLS), the median annual wage for registered nurses (RN) in the United States was $81,220 as of May 2023.

Search Firms

Search firm fees are usually calculated as a percentage of the first-year salary of the hired candidate. This percentage can vary depending on the type and level of the job, the firm, and the number of positions.

The average fee is around 25%, but it can go as low as 10% or as high as 33%.

  • Suppose you find a search firm that charges a 25% fee of the candidate’s salary.
  • If we apply this percentage to the salary of an RN nurse, it will amount to $20,305.
  • That would take you to a total cost of $121,830 for 6 RN Nurses.
  • (Median Annual Wage) X (Search Firm Fee) X (Number of RN Nurses)
  •  81,220 X 0.25 X 6 or $20,305 X 6 = $121,830

Recruiting Partner – Velocity Resource Group

A recruiting partner like Velocity Resource Group which charges a low flat fee and allows you to make as many hires as you want from one campaign might be a much better option.

  • Velocity charges an up-front one-time fee for each 30-day project. In this specific example, our project fee would be less than 7% of the total cost ($121,000) of working with a search firm to fill the 6 RN positions. And for that cost, you can fill the 6 open roles plus use the data to make as many hires as you want now and in the future!

With a project, you get:

A consultative Intake Call to understand the position challenges, specs, and sourcing strategy.

Expert-Level sourcing with bandwidth to scale the internet for even the most hidden passive & active talent.

Weekly check-ins with a dedicated Client Manager to develop and execute your specialized sourcing strategy.

Advanced active & passive sourcing from job boards, open web, social media, and resume databases supporting your project plan.

Sponsored ads, and programmatic job postings across major job boards.

Inbound resume review from job postings – matching candidates in advance of Velocity’s phone screening process.

Candidate research specialists with access to 20+ paid-subscription tools.

Direct marketing campaign & data collection via Phone, Email, and Text to the qualified talent pool.

Unlimited users in the Resflex Candidate Manager System with real-time updates of project activity.

Weekly activity reports

All data collected is the property of the client in perpetuity!

Unlimited hires can be made from Velocity research now AND in the future!

Or…Skip the Outsourcing, Do It In-House

If you choose not to outsource your recruitment, there are several direct costs to consider, including candidate assessment costs, employer branding efforts, careers page costs, internal recruiters’ costs (including salaries, benefits, and travel expenses), and job board fees.

Consider the following tools/subscriptions needed to handle your recruitment in-house:

  • Job Boards
    • Indeed Posting
    • ZipRecruiter Postings
    • Monster Postings
    • CareerBuilder Posting
    • LinkedIn Recruiter Seats(s)
  • Recruitment Marketing Platforms
    • Job Slot on LinkedIn
    • LinkedIn InMail
    • Indeed – Professional Subscription
    • Monster Subscription 
  • ATS
    • HireEZ
    • WorkDay
    • Taleo
  • Resume Databases
    • Zoominfo TalentOS
    • Dice
    • CareerBuilder Sourcing Seat
    • ZipRecruiter Sourcing
    • Other Industry Specific/Specialty Databases (Healthcare, Environmental, Nonprofit, Tech, etc)
  • Candidate Relationship Management (CRM) Systems
    • Avature
    • Beamery
    • Yello
  • Interview Scheduling
    • Calendly
    • Clara

These are just some of the commonly used examples, but there are several more tools available just to connect with the right talent. The combined cost of these tools and services can average over $25,000 per month ($300,000/year), although it’s important to note that some costs may vary depending on specific factors and variables of the company, industry, and hiring needs.

It is also important to note that some of the most significant costs of handling all your recruitment in-house are the 60% of soft costs mentioned at the beginning of the article. For a detailed rundown of these costs check out our article:The Cost of Recruitment: Indirect Impacts On Your Bottom Line.

The Choice is Yours… and Velocity is a smart one!

By outsourcing the front end of your recruitment process, you can access expert-level sourcing, advanced technology, and a wider pool of qualified candidates that may otherwise be unavailable to you. Leaving sourcing and initial candidate contact in the hands of a trusted partner, you and your team can focus on other important aspects of your business, such as strategy and growth. Not only will you be saving money by cutting in-house costs, but the benefits of a great sourcing partner will increase the potential of accessing the highest quality candidates and provide major efficiencies to your organization.

Ultimately, the decision to outsource your recruitment depends on your business needs and resources, but it is definitely worth considering as an option for scaling your team and achieving your business goals, quickly!

If you’d like to learn more about Outsourcing vs Building an Internal Team, check out our breakdown here – Velocity vs. Internal Sourcing

Velocity Resource Group assists recruiters in the identification of qualified, available, and interested candidates. We source talent across multiple platforms, review resumes, screen candidates, and place them for you. We have over ten years of experience in attracting the best talent in the healthcare, hospitality, retail, technology, manufacturing, logistics, and supply chain sectors.

Call 813-586-1700 or email info@velocityresourcegroup.com to schedule a free demo.