Why We Built Our Recruitment Cost Calculator
We hear the same objection fairly often: “Why would I pay a recruitment agency when I can hire someone myself?” It is a completely fair question. Recruitment fees are visible, easy to understand and, particularly when budgets are tight, easy to challenge.
If you are hiring someone on £100,000 and the agency fee is 20%, there is a very obvious £20,000 cost attached to that decision. Compare that with putting a role on your own website, posting it on LinkedIn and running the search internally, and hiring directly can look considerably cheaper. Sometimes it is.
The reason we built our Recruitment Cost Calculator is because the agency fee is normally the only part of that comparison that gets a proper number attached to it.
There is more to the cost of hiring than the fee
The things that are harder to see are usually happening in the background. How long has the role been open? Who is covering the work while the position is vacant? How much time is the hiring manager spending reviewing CVs, sourcing people and interviewing?
If it is a commercial role, there are other questions too. What is happening to the territory, pipeline or customer base while nobody is in the seat? None of those things produces a nice, tidy invoice at the end of the month, but that does not mean they are free.
That was really the starting point for the calculator. We wanted to build something that allowed a business to compare the obvious recruitment cost with some of the costs that tend to get forgotten.
What does it actually calculate?
The calculator lets you enter the basics of the role, including salary and, where relevant, a sales target. You can then adjust things like expected time to hire, internal resource involved in the search and the amount of time it might take somebody to reach full productivity once they join.
You can then compare that with the expected fee and timeframe of using Ultimate Asset. The important part is that the assumptions are editable.
We could quite easily have built a calculator using numbers that made an agency look cheaper every time. Apart from being fairly transparent, that would not be particularly useful. If your internal team normally fills a specialist role in three weeks, put three weeks in. If you think a particular hire has very little commercial impact while it is vacant, reflect that. If you know the role is difficult and your last search took four months, use that instead.
The value of the calculator is in using your numbers, not ours.
Hiring directly can still be the right answer
We are a recruitment business, so naturally we believe there are plenty of situations where using a specialist recruiter adds value. That does not mean every company should outsource every hire.
If you have a strong internal Talent team, good access to the relevant market and enough capacity to run the search properly, there are roles where hiring directly makes perfect sense. You may find the right person quickly and save the recruitment fee altogether.
We have written more about that in our piece on recruitment agency costs versus hiring directly. The problem tends to come when a search that was supposed to take a few weeks quietly turns into two or three months.
At that point, the conversation changes slightly. It is no longer just about whether you can avoid an agency fee. It becomes a question of what the vacancy itself is starting to cost.
The bit businesses often underestimate is time
Time-to-hire can sound like an HR metric, but for certain roles it is much more commercial than that. If you are trying to hire a salesperson into an empty territory, every additional month matters. If you are missing a senior marketer, campaigns or pipeline activity may be delayed. If a manager leaves and the rest of the leadership team is covering their responsibilities, there is an impact there too.
That does not mean a business should rush a hire to save a few weeks. Making the wrong hire is usually much more painful than waiting slightly longer for the right one.
But there is a difference between taking your time because you are assessing good candidates properly and taking your time because the search simply is not working. We looked at that separately in our article on what happens when a critical hire stays open for 30, 60 or 90 days.
Why we wanted to make this
Ultimately, we built the calculator because we wanted to make the recruitment-cost conversation a little more useful. Agency fees are easy to debate because everyone can see them. The cost of a role sitting empty for twelve weeks is much less obvious, despite the fact that it may have a much bigger impact on the business.
Our Recruitment Cost Calculator is not there to tell you that you should use Ultimate Asset. Put your own numbers in and see what they say.
If hiring directly comes out as the better option, great. If the numbers show that leaving the role open for another month is costing far more than expected, that is useful to know too.
Either way, at least you are comparing the full picture rather than just the most visible number.
