Talent
Fixed-Fee Recruitment vs. Percentage-Based Recruitment
Recruitment commercial models shape agency behavior. Choosing the wrong one distorts sourcing and selection. This briefing frames the trade-off.
Reviewed by Director, Talent6 min readFunnel: Consideration
Thesis
Percentage models scale cost with candidate salary; fixed-fee models decouple cost from salary. The right choice depends on hiring volume, role level, and desired agency behavior.
01
How incentives differ
Percentage models incentivize higher-salary placements. Fixed-fee models incentivize speed and fit within a defined effort.
02
When each fits
Fixed-fee: high-volume, defined roles, predictable spend. Percentage: senior, hard-to-fill, or highly specialized.
03
Total cost, not headline cost
Compare across the year, including replacement rates and time-to-fill, not per-hire alone.
Practical framework
The Recruitment Commercial Fit Model
- Segment roles by seniority and volume
- Map incentive alignment for each segment
- Choose commercial model per segment
- Standardize SLAs and replacement terms
- Review annually against total cost
Key takeaways
- Commercial model shapes behavior; choose deliberately.
- Total cost of hire beats per-hire cost as a metric.
- Segmentation beats a single model across all roles.
Risks to avoid
- Assuming lower headline fee equals lower total cost.
- Applying one model to all role types.
Questions we hear
- What about hybrid models?
- Hybrids can work when incentives are carefully designed. They often become opaque; keep the structure simple enough to audit.
Related
Next step