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CostHelper > Personal Finance  > Employment > Employment Agency

Employment Agency Cost


How Much Does an Employment Agency Cost?

 
average costEmployer-Paid Agency: 10%-25% of Employee's First-Year Wageshigh costHeadhunter or Recruiter: 10%-30% of Employee's First-Year Wages
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An employment agency, also called a recruitment or staffing agency, is a place for job seekers to find permanent work. According to Investopedia, there are two types of employment agencies: employer-paid and applicant- paid. There are also temporary agencies, which are typically employer-paid and offer short-term employment.

Typical costs:

  • An employer-paid employment agency collects a placement fee for each worker that is hired. A typical range is 10%-25% of the employee's first-year wages (gross wages, before taxes). For example, Larchmont Employment Agency[1] in New York specializes in child care and domestic placement services and charges families a nanny or housekeeper hiring fee of 15% of the employee's first-year wages. The company guarantees a suitable replacement within two months if the hire is unsuccessful. Adamen, Inc.[2] in Poulsbo, WA, offers accounting employment solutions at a rate of 17% of the employee's first-year salary for management and executive positions and 12% for support staff.
  • A headhunter or recruiter is a type of employment specialist that aggressively searches for high-level job candidates for 10%-30% of the employee's first-year salary. For example, Hans the Headhunter in Seattle charges employers an initial $1,000 executive search fee and an additional 10% of the employee's annual salary if the business chooses to hire one of their candidates. Rather than companies seeking out employment agencies, headhunters look for the best job candidates in a certain field and shop them to different businesses.
  • Employment agency fees generally vary by state, according to the Better Business Bureau[3] . Higher fees are typically associated with higher-level jobs.
Related articles: Online Job Hunting, Resume Software, Resume Services, Career Counseling, Temporary Agency

What should be included:
  • Employment agency services include collecting resumes, interviewing job candidates and performing assessments, in order to narrow down the applicant pool to highly qualified employees. This includes background and reference checks.
  • The employer can also leave hiring decisions up to the employment agency. Once the position is filled, the employer pays a one-time fee to the agency. The new, permanent employee is paid through the company's payroll and has no more dealings with the employment agency once hired.
Shopping for an employment agency:
  • An applicant-paid employment agency collects a one-time fee to the employee, rather than the employer. SmartMoney magazine[4] and the Association of Executive Search Consultants[5] caution people against using applicant-paid employment agencies.
  • The leading trade group for employment agencies, the American Staffing Association[6] has a directory listing partner agencies by state, which adhere to the group's code of ethics[7] .
  • The Better Business Bureau gives an extensive overview of employment agencies[8] , including a fees explanation and possible red flags to avoid. They recommend checking into laws which apply to local agencies.
  • Lib Gig, a professional networking website, offers 10 tips for using employment agencies[9] , including salary negotiation and interviewing.
  • Snag a Job lists tips on what to wear to an employment agency interview and a rundown on some common tests an applicant might have to take, such as spelling or typing assessments.
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External Resources:
  1.  www.thelarchmontagency.com/new_families.nxg
  2.  www.adamen-inc.com/Our-Fees-are-Reasonable~71396~12525.htm
  3.  www.bbb.org/us/article/employment-services-279
  4.  www.smartmoney.com/spend/family-money/10-things-your-headhunter-wont-tell-you-3941...
  5.  members.aesc.org/eweb/DynamicPage.aspx?Site=aesc.org&WebKey=a8ec879d-c739-4d9b-aae...
  6.  www.americanstaffing.net/chapters/directory.cfm
  7.  www.americanstaffing.net/members/code_of_ethics.cfm
  8.  www.bbb.org/us/article/employment-services-279
  9.  www.libgig.com/toptenemploymentagencies
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