Which Is Right for Your Company?
In the ever-evolving landscape of recruitment, companies face the perpetual challenge of finding the best talent while balancing costs and efficiency. Two prominent models, the traditional pay-per-hire approach and the embedded recruitment model, offer distinct advantages and considerations. In this article, we'll delve into the differences between these models and why we advocate for the traditional pay-per-hire method.
The Traditional Pay-Per-Hire Model
The traditional pay-per-hire model, often employed with a no-cure, no-pay structure, is a familiar concept in the recruitment world. Under this model, companies engage external recruiting agencies to find suitable candidates for specific roles. Payment is contingent upon successfully hiring a candidate recommended by the agency.
One of the primary advantages of the pay-per-hire model is its cost-effectiveness. Companies only pay when they successfully onboard a candidate, reducing financial risk. This model also provides a level of flexibility, allowing companies to engage recruitment agencies on a per-project basis, tailoring their efforts to immediate hiring needs.
Moreover, external agencies specialising in pay-per-hire recruitment often possess extensive networks and expertise in candidate sourcing, screening, and selection. They bring a fresh perspective and can tap into pools of talent that may not be accessible internally.
However, the traditional pay-per-hire model has its limitations. It can be transactional, with recruiters focusing primarily on filling roles rather than deeply understanding the company's culture and long-term hiring needs. Therefore, it's important to choose recruitment agencies by understanding their focus, network, and who will be working on these specific hire(s). The price often varies from a 15-20% salary cut.
Embedded Recruitment
Embedded recruitment, also known as Recruitment-as-a-Service (RaaS) or Embedded Talent Partner, represents a shift towards a more integrated approach to talent acquisition. In this model, external recruiters become part of the client's in-house talent function for a defined period, typically 6, or 12 months.
The core principle of embedded recruitment is collaboration. External recruiters work closely with internal hiring teams, and try to become as close to an in-house employee as possible.
Key elements of embedded recruitment include:
Dedicated On-site Recruiters: Recruiters physically work alongside internal teams, facilitating seamless communication and collaboration.
Cultural Alignment: Because they spend more time in-house, it could be easier understanding the culture aspect. 3. Price: Often it's a normal consultant price per hour ranging from 800-1250 NOK fixed cost per hour.
Traditional Pay-Per-Hire vs Embedded Recruitment
Why we favor the traditional Pay-Per-Hire Model when comparing the Traditional Pay-Per-Hire vs Embedded Recruitment. While embedded recruitment offers compelling benefits, we believe that the traditional pay-per-hire model better suits the needs of most companies. Here's why:
Link the cost to performance, not time: With pay-per-hire, companies only pay for successful placements, minimising financial risk.
Flexibility: Companies can engage external agencies on a project-by-project basis, scaling their recruitment efforts according to immediate needs.
Specialised Expertise: External agencies often possess specialised knowledge and extensive networks, allowing them to source top talent efficiently. Because a recruiter work with more companies at the same time it could generate a synergy effect where you gain candidates from other companies pool as well.
Price: On average, a consultant from an embedded recruitment company would cost you 1.7 million NOK a year, with a price tag of 1000 NOK per hour. The average price for pay-per-hire would be around 120,000 NOK, meaning the embedded recruitment consultant would need to hire at least 14 roles per person, per year. Additionally, it's a fixed cost, so ideally, that consultant should hire some more roles as well risk-wise.
While embedded recruitment can be beneficial for certain organisations scaling fast with 15+ roles a year, particularly those with very niche roles and specialised hiring needs, we believe that the traditional pay-per-hire model offers a more cost-effective and flexible solution for the majority of companies.
Conclusion In conclusion, when evaluating traditional Pay-Per-Hire vs embedded recruitment models, it's essential to consider factors such as cost, flexibility, and alignment with organisational values. While embedded recruitment offers advantages in terms of cultural fit and collaboration, the traditional pay-per-hire model provides a pragmatic and cost-efficient solution for most companies' hiring needs. In both cases, take your time to pick the right company for your organisation to work with, it's an essential choice. Best of Luck!
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