Show Me The Money: 5 Steps to Reduce Agency Spending

Today we’re kicking off a mini blog series we’d like to call, “Show Me The Money”. This three part series will cover everyone’s favorite topic — money, of course. Most importantly, each part will provide tips for how recruiters can save money and increase performance. Let’s get started! 

In every corporate recruiting environment, there’s a consistent discussion around how to lower hiring cost, specifically agency spending. While utilizing recruiting agencies can be incredibly valuable, it’s the corporate recruiters job to understand the situations in which they need to be utilized and how often. 

Here’s a quick step-by-step guide on how you can lower agency spending quickly.. 

Step 1: Review Current Staffing Agencies in Use 

It’s not uncommon for a company to be utilizing far too many agencies. The first step is to review each agency to understand who has worked and who hasn’t? Create a list of the top agencies by skill. When done, you should have a list of the top agencies for IT, Sales, Marketing, etc. Try to come up with a top 2-3 for each skill area. 

Step 2: Review Current Recruiting Staff & Tools 

Why are so many agencies being used? How many recruiters does your team have? How many openings are they each asked to work on per month? How much of their time is spent communicating back and forth with agencies? These are all important questions that need to be answered. 

Considering that the eventual goal will be to cut down on the use of agencies, it may be smart to look into bringing on a new recruiter, maybe someone with agency experience. Using a video interviewing vendor will create a quicker moving process, especially given the increased number of screens the recruiting team will conduct. 

Step 3: Decide Which Skill Areas and Positions Need Agency Help 

After identifying what your recruiting team can accomplish on their own, you’ll have an idea of just how often you’ll need to utilize an agency. This will be different for each company. 

Step 4: Review & Revise Selected Agency Contracts 

Once you’ve selected the agencies that will be moving forward with your organization, it’s important to take some time to review their current contracts, specifically the placement percentage that was agreed on. Hopefully your company negotiated well enough, but the percentage may still be too high. 

If your selected agencies are receiving 30% or higher for permanent placements, you’ll want to negotiate that down to 20%, or lower. Not every recruitment agency will like it, but let them know that they are a preferred vendor and will be one of the 2-3 moving forward in their specialty. They’ll have a higher possibility of making placements and will receive more work from your company. 

Step 5: Review & Improve 

Even though your new strategy may add openings to your current recruiters, they should be able to complete their jobs in about the same amount of time as before. Your selected agencies moving forward should perform stronger in knowing that they have been selected. 

Depending on how many agencies your organization is working with, these five steps may be fairly easy to run through, or could take some time. In the end, it will be worth it to evaluate your program and reduce spending. 

Make sure to join us next week for part two of our “Show Me The Money” series. We’ll be talking about free recruiter tools. 

---originally posted at 

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Comment by Paul Slezak on April 3, 2013 at 6:11am

Nice post, Christopher! Of course one solution could be to engage an experienced independent recruiter at an hourly rate who will share high quality recorded video interviews with the relevant hiring managers to really help screen and assess candidates.


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