TRUE: BountyJobs Says Average Contingency Recruiter Fee Paid Is 20%…

Kris Dunn Kris Dunn, Recruiting, Working With Recruiters

There are a couple of topics that get the blood flowing for third party recruiters.  Talk about fees, and talk about BountyJobs.

Fees you know about.  In case you aren't initiated related to what BountyJobs is, BountyJobs is a Bountyjobs-269x49 centralized marketplace where corporate recruiters/companies can go to post a job, include the fee they're willing to pay, then have 3-5 recruiting firms (who are registered and approved with BountyJobs) compete to fill the job in question, with each firm submitting candidates and generally trying to beat their competitors to the punch.

If it sounds a lot like contingency recruiting, it is.  The thing that gets the Irish going in recruiters is that BountyJobs starts with the concept of multiple recruiters being involved and competing in each search, which means contingency recruiters never have a chance to develop a special, exclusive relationship with a client.  It's competitive from the start, with no double talk about "you're the only one I'm dating at this time".

In short, BountyJobs seeks to be a disruptor in the recruiting scene in this way, an avenue to remove some of the inefficiencies in the game for companies.  It's an interesting model, and one that 3rd party recruiters shouldn't automatically discount as a form of lead generations.

With that type of model, you would think that fees paid to recruiters who are registered and compete on BountyJobs will be much lower than average.  After all, the big play with the model is about efficiency, and what is it that gets removed when efficiencies of scale are created?  Right – cost.

If you thought that, new data pulled from the BountyJobs ecosystem says you're wrong.  BountyJobs is set to release their first version of a data set called "The BountyJobs Index", with CEO Mike Hard breaking down the fee situation at BountyJobs:

"On BountyJobs, the corporate recruiter sets the percentage of salary that he or she is willing to pay a headhunter for a successful hire. The fee is posted with the job requisition, and headhunters can choose to accept the fee and submit candidates.

“When the recession happened, everybody thought headhunters would be so desperate, with so few jobs being posted and so many people in the job pool, that headhunters would accept much lower fees,” Hard said. “You would expect fees to go down, but they didn’t. The headhunters who have survived are a very strong and resilient group.”

Between Jan. 1, 2009, and March 31, 2011, the BountyJobs Headhunter Index shows:

•• The average headhunter fee posted on BountyJobs (the “bounty”) was 19.72 percent of candidate salary.

•• The lowest rates were posted in the second quarter of 2009, when the average dropped to 19.45 percent of candidate salary.

•• The highest rates came in the last quarter of 2010, when the average hit 20.02 percent of candidate salary.

“It shows that headhunters who survived the worst recession in 50 years and continued to offer quality results were able to maintain their fees,” Hard said.The strong consistency in the average fee rates for headhunters bodes well for the headhunter industry and the corporate recruiter-headhunter relationship.

Bounty jobs 
I shared some of the data with my recruiting friends who are aware of the BountyJobs model and think the end game purpose is to make them extinct.

Their response: "I don't believe that".

Predictable response?  Maybe.  But I think the data is true and underscores what the market has been trained to expect as a fair price for contingency services.  You know the dance:

Recruiter: "We're a retained search firm, and our normal fee is 25 to 30%."

Company: "We can't pay a dime over 15%.  And I need you to take it on contingency".

Recruiter:  "Wow.  I can't do 15%.  Let me check on what I can do and get back to you.

<a day of silence>

Recruiter: "I pushed for an exception.  Can you do 20% contingency?"

Company: "Done.  20% it is."

It's the dance you've seen hundreds of time before.  The dance has trained the market on what a fair price for contingency is. The BountyJobs index proves it, because the companies are naming their own price.

Quality of search?  Probability to close? That's up to you to figure out as a third party recruiter, and no index from BountyJobs will help you do that.

Good luck… Check out the full whitepaoer on the BountyJobs Tracking Index here….

Kris Dunn
Kris Dunn is a Partner and CHRO at Kinetix, a national RPO firm for growth companies headquartered in Atlanta. He's also the founder Fistful of Talent (founded in 2008) and The HR Capitalist (2007) – and has written over 70 feature columns at Workforce Management magazine. Prior to his investment at Kinetix, Kris served in HR leadership roles at DAXKO, Charter and Cingular. In his spare time, KD hits the road as a speaker and gives the world what it needs – pop culture references linked to Human Capital street smarts.