Calculating fees for service?

[Kmt21]

Hi,

This is my first post/question so please go east on me .

After deliberating for a while about which kind of business I would like to put my energy into I have decided to explore the recruitment industry. Although I don’t have vast experience of a full time recruiter I have been recruiting as part of my job (Kitchen Manager) for over 13 years. I feel like I can bring something different and I have a few ideas on how, using my links with top industry companies, I can get a foot in the door.

I’ve researched on how recruitment agencies base their fees, typically 10-30% of the yearly salary, but can anyone please break it down for me and the process that I should be looking to research?

Thank you in advance,
K

 

[fisicx]

Hi @Kmt21 and welcome to UKBF

@IanSuth will be able to advise - he is our resident expert.

Your chances of survival are slim. You also need a big pot of cash, lots of insurance, factoring and be better are marketing than you are a recruiting.

 

[Paul Kelly ICHYB]

Welcome.

Whilst we will probably be hard, it will generally be good, solid, based on experience advice.

As mentioned, this will be a very difficult market to enter, primarily because it is normally based on numbers - lots of jobs/vacancies to match to lots of potential employees.

Whilst you have experience in recruiting staff, it isn't exactly the same as recruitment. Maybe you could do something niche, but that will require a very good contacts list!

 

[DontAsk]

Interviewing is not the same as recruitment.

 

[Ozzy]

Welcome along @Kmt21

The recruitment industry is a harsh industry. There are some great companies out there, and there are some not-so-great companies, and I've experienced a good mix when recruiting for my own business.

Have a listen to this podcast episode where I interviewed the founder of the recruitment company I work with to see how ruthless the industry can be. You're going into a challenging market, so I wish you every success and the best of luck!

Your success will rest on your marketing, and the systems you have in place to connect people to employers before someone else does - because generally people register with more than one agent so the successful one is the one that can get the CV in front of an employer before their competition.

 

[BusterBloodvessel]

How exactly have you been recruiting as a kitchen manager?

 

[IanSuth]

recruitment agencies at the contingency general end will be in the 10-15% of base salary range - you ONLY get any money if you fill the role (and will likely have a sliding scale rebate period covering if anyone leaves early - they tend to range between 10wks and 6mths)

Your outgoings will have to cover all advertising you need to do - be aware whilst there are free resources such as indeed, if you ONLY use the free resources you are using the same resources as everyone else and you are then VERY reliant on being better at writing ads (by which i mean understanding the search algorithm to get your ad higher in the non sponsored ads list ) and quicker to react which is hard as if you actually follow the laws you will still often be beaten by those ignoring them (like actually speaking to an applicant and ascertaining their fit plus getting permission to submit vs just sending the cv straight over). So you will need to subscribe to various online cv databases with paid advertising (often a deal that covers x cv's downloaded per month plus x ad/weeks per month) like cv library, totaljobs etc.

You will soon realise how much of what agencies do is actually filtering out the rubbish and doing work on things that end up leading to zero fee as the client fills otherwise or shuts the role.

Anything esle you want to know ?(also read https://www.legislation.gov.uk/uksi/2003/3319/contents/made which is the law for agencies - if you do temp there are other laws like the Agency workers directive as well)

 

[Kmt21]

Welcome along @Kmt21

The recruitment industry is a harsh industry. There are some great companies out there, and there are some not-so-great companies, and I've experienced a good mix when recruiting for my own business.

Have a listen to this where I interviewed the founder of the recruitment company I work with to see how ruthless the industry can be. You're going into a challenging market, so I wish you every success and the best of luck!

Your success will rest on your marketing, and the systems you have in place to connect people to employers before someone else does - because generally people register with more than one agent so the successful one is the one that can get the CV in front of an employer before their competition.

Hi Ozzy,

Thank your for the reply. I will definitely give that a listen.

I’m very aware that the recruitment industry is a competitive one, but as suggested before I will be looking to target a specific sector that I have experience in, hospitality.

I’ve also worked along side recruitment agencies and in house recruitment teams and I’ve always felt the roles in the industry were always plastered with short term solutions hence why the turn over of Chefs/front of house were always very very high.

Thank you for your advice, much appreciated

 

[Ozzy]

You will soon realise how much of what agencies do is actually filtering out the rubbish and doing work on things that end up leading to zero fee

This is why I work exclusively with the agent I do; they do an excellent job of this and took the time to get to know our business and culture and business plans. Be a good agent and you can then build some really good long-standing relationships, we've been working with ours since 2009.
...and plug the podcast, we talk about this

 

[Kmt21]

How exactly have you been recruiting as a kitchen manager?

Hi,

I was in complete control of advertising, screening & interviewing for various roles in the business and other sites in my company.

 

[IanSuth]

I am just reading a report about recruitment (as i now sell into the industry) these are figures for in house recruitment (be it line managers doing direct, general hr or specialist internal recruitment teams)

99% advertise directly on Indeed (in 2023 up from 95% in 2022) of those 40% sponsor their ads and 60% don't

1/3 use agencies

Hospitality/leisure/tourism (sorry not broken down more than this) looks to be about 30% increasing hiring, 60% same 10% decreasing

same sector expect hiring budgets to 15% increase, 60% same, 25% decrease

Hope that helps a bit

 

[Kmt21]

I am just reading a report about recruitment (as i now sell into the industry) these are figures for in house recruitment (be it line managers doing direct, general hr or specialist internal recruitment teams)

99% advertise directly on Indeed (in 2023 up from 95% in 2022) of those 40% sponsor their ads and 60% don't

1/3 use agencies

Hospitality/leisure/tourism (sorry not broken down more than this) looks to be about 30% increasing hiring, 60% same 10% decreasing

same sector expect hiring budgets to 15% increase, 60% same, 25% decrease

Hope that helps a bit

Thank you Ian, that’s really helpful.

Would you agree there is an opportunity within the hospitality sector to offer a tailored approach to recruitment for the big brands? Doing all the leg work then presenting the best suits to safe the businesses time?

 

[fisicx]

Thank you Ian, that’s really helpful.

Would you agree there is an opportunity within the hospitality sector to offer a tailored approach to recruitment for the big brands? Doing all the leg work then presenting the best suits to safe the businesses time?

That’s what recruitment agencies already do. They spend buckets of cash gathering leads, contacting potential leads and hoping to be the first. And that’s because everyone is doing the same thing. It’s sausage factory.

 

[Mark T Jones]

Thank you Ian, that’s really helpful.

Would you agree there is an opportunity within the hospitality sector to offer a tailored approach to recruitment for the big brands? Doing all the leg work then presenting the best suits to safe the businesses time?

It's always a good idea to niche - and the hospitality sector will definitely always be a lively market.

At this moment your huge challenge will be finding suitable, quality, reliable candidates.

Then, as I'm sure you know - going the chef route comes with its own set of unique challenges. (Don't spend your commission until 6 months is up!)

 

[IanSuth]

Thank you Ian, that’s really helpful.

Would you agree there is an opportunity within the hospitality sector to offer a tailored approach to recruitment for the big brands? Doing all the leg work then presenting the best suits to safe the businesses time?

What are you thinking you can do differently to identify better people cheaper or quicker (choose any 2) ?

How will you do that whilst others are just throwing mud at the wall ?

I literally spent 27 years banging my head against the wall (in fact it was a bus shelter if you want the full story) trying to prove we worked better and getting the "we got that cv yesterday" reply from companies when i knew the applicant had had no contact from the other agy who was just trawling databases, throwing all the cv's out without contact but with terms saying "if you read the cv you are bound to our terms" . Companies most of the time don't care - there is the cv that looks good, they don't want to even talk about the law and the most that would happen from an argument was "well we won't see them from anyone then" 99% of the time

I was on the committee of the local branch of the industry body, my first MD was chair and a guy i work with now helped set up the syllabus for the industry exam (with the AQA) - when licencing for agencies was removed there ceased to be ANY real policing and the cowboys flourished with some of the big boys the worst (REED being one)

 

[DontAsk]

Keep in touch with clients after you have placed them in employment. After a few years see how they are getting on and whether you can help them change jobs by introducing them to your current hiring clients

This happened to me, as an employee, resulting in a very lucrative move through the same agent, and a nice commission for him.

 

[IanSuth]

to clarify

When you were working as an internal recruiter did you use agencies ?

If an agency you didnt usually use sent you the cv of someone who looked good out the blue - did you stop agree all terms of business and ensure the applicant had been properly briefed etc ? Or did you go wow quick get them here asap for an interview worrying about details later.

If the latter then why do you expect to be treated differently by clients ?

 

[IanSuth]

Keep in touch with clients after you have placed them in employment. After a few years see how they are getting on and whether you can help them change jobs by introducing them to your current hiring clients

This happened to me, as an employee, resulting in a very lucrative move through the same agent.

Hard to do without the current employer feeling you are maybe trying to entice them away. (and until the 2003 act was illegal to entice or seek to entice a worker you had placed for a fee to register again for the purposes of finding them a new job under the previous 1973 regs)

It is a difficult juggling act - obviously after 27 years I had clients i had put in as juniors (in fact my very first placement that i totally managed from finding the role to her starting was a graduate developer for the company that became Iris and she is still employed by them as a development consultant (part time now after several maternity leaves)

But short term that gains you nothing, it is a medium or long term strategy

 

[nancyosas]

Like a lot of people have already said, marketing and networking is a key factor in this type of business. The big recruitment companies have millions for marketing and have already build industry connections so you would be u[p against it. My suggestion is to start with people you already know. Do you have friends in the hospitality industry who are not already tied into a procurement contract? If you do, you can start with them and try to grow your business through direct referral by other businesses in the industry