Considering launching your own recruitment agency, or hoping to better understand the financial landscape of this industry? This blog will give you everything there is to know about recruitment pay – from commission structures to which specialities and regions are earning the most.
As a back office service specialising in recruitment start-ups, we find that a lot of the questions our clients and their employees have surround the topic of pay. How does recruitment pay actually work? How much does it cost to make a hire?
We’ve pulled together the most important and up-to-date facts and stats about recruitment pay in the UK at the moment to help you understand how it works and how the industry is looking in 2024.
How does recruitment pay work?
When a business has a vacancy, they may hire a recruitment agency to find suitable candidates. If the business hires one of the agency’s candidates, they pay the agency a fee, usually calculated as a percentage of the new employee’s first-year salary. This fee generally ranges from 15% to 20%, but can reach up to 30% for hard to fill positions. The agency then pays its recruiters, often through a combination of base salary and performance-based bonuses.
Like any industry, a recruiter’s earnings can vary significantly based on factors such as location and their performance. It will also be largely dependent on the specific commission structure the specific agency is using.
Recruiters can therefore increase their earning potential by regularly placing candidates into senior, high-paying job roles.
How much do recruiters get paid in the UK?
According to data from both Talent.com and Indeed, the average base salary for recruiters in the UK is £30,000 per year, which is the same as the national average. Entry level positions start at £25,000 per year while more experienced workers make up to £50,000 per year. However, the average earnings of recruitment agencies can vary widely based on their size, geographic location, industry focus and client base. Larger agencies working with a national or international presence may have higher revenue potential due to their broader reach and ability to serve diverse clients and job markets.
What is the highest paid type of recruiter?
The highest paid types of recruiter are recruiting managers (also titled talent acquisition managers, and staffing managers) and heads of recruiting (also titled chief talent officer or director of talent acquisition).
A recruiting manager’s duties include overseeing the company’s hiring process, managing all steps including finding candidates, conducting interviews and onboarding new hires.
A head or director of recruiting will develop and implement a strategy to support the growth of the company. They work on procedures to ensure a positive candidate experience, as well as monitoring and reporting on staff turnover.
Where do recruitment consultants get paid the most?
Unsurprisingly, recruiters tend to earn more in larger towns and cities than in small towns in more rural areas. According to Indeed, the top 5 highest paying cities in the UK for recruitment consultants are:
-London
-Milton Keynes
-Birmingham
-Norwich
-Manchester
This is primarily due to the high demand for skilled professionals in these cities, which are major economic centres of the country.
How much do senior recruiters earn?
According to data from Glassdoor, the average salary for a Senior Recruiter in the UK is £51,000 per year. A senior recruiter manages the recruitment process for mid to senior-level positions. Their responsibilities include vetting and recommending candidates to hiring managers, supervising the team, creating job descriptions, and negotiating job offers.
What does a trainee recruiter earn?
The average salary for a trainee recruitment consultant is £25,000; as they gain experience, they can then expect this to quickly increase. A trainee recruiter will also earn more if their role includes a commission component and they’re successful in placing candidates.
As a trainee recruiter, your role will involve learning the recruitment process, from sourcing candidates to closing deals. You’ll work closely with more experienced members of the team, learning from them and picking up interviewing and negotiation tactics.
How much do in-house recruiters get paid?
Hiring Hub, in their 2023 salary guide, saw salaries in the in-house recruitment sector increase in 2023, in a year on year change of between 6 and 8%. They found the average salary of an in-house resourcing administrator in the UK to be £27k, a resourcing project manager to be £52k, and a resourcing director to be £86k.
Do recruitment agencies charge candidates?
Candidates should never pay fees to employment agencies for job placement because legitimate agencies are compensated by employers, not candidates. Any request for payment from a recruiter should be viewed as a serious and illegal warning sign. While agencies might offer optional paid services like CV printing, their core function of connecting candidates with job opportunities is always free of charge.
How much does it cost to make a hire?
Cost Per Hire, or CPH, is the average spend on making a hire. This metric covers all recruitment costs associated with the hiring process, excluding subsequent costs like training. According to the CIPD, the average cost of filling a hire is approximately £6,125. This figure increases significantly for managerial positions, reaching around £19,000.
Is recruitment a lucrative industry?
Recruitment can be a lucrative industry, especially in high-demand sectors and competitive markets. While salaries vary widely depending on factors like experience, location, and company size, the potential for significant earnings exists, particularly through commission-based compensation structures. However, success in recruitment requires strong interpersonal skills, a strong understanding of industry trends, and a dedication to building strong relationships with both clients and candidates.
How do recruitment agencies make money?
Recruitment agencies primarily generate revenue through:
1. Contingency Placement Fees: The most common model, where agencies receive a percentage of the placed candidate’s first-year salary upon successful hire. This fee typically ranges from 15% to 30%, depending on the role’s seniority and market demand.
2. Retained Search Services: For high-level executive positions or specialised roles, clients may pay an upfront fee to secure exclusive agency services. This model often involves a three-stage payment structure: an initial retainer, a progress payment, and a final fee upon placement.
3. Temporary and Contract Staffing: Agencies place workers on short-term assignments, charging clients a markup on the worker’s hourly rate. This can provide a steady stream of income and may lead to permanent placements.
4. Additional Services: Agencies may offer complementary services to increase revenue, such as:
- Background checks and reference verification
- Skills assessments and psychometric testing
- Outplacement services
- HR consulting
- Training and development programs
5. Volume-based Agreements: For clients with high hiring needs, agencies might negotiate discounted fees in exchange for a guaranteed volume of placements.
New Millennia is a back office solutions provider, offering funding and payroll services to recruitment firms. We’ve worked closely with this sector for over 20 years, meaning that we know the ins and outs of what a recruitment firm needs to succeed. Get in touch with us today to find out how we can help.
