The pursuit of talent

In today’s ever-changing business world, effective human resources management is one of the key elements of any company’s success. The challenges of attracting the right employees are becoming more and more demanding – HR teams face a dynamic labour market and high expectations from both candidates and Hiring Managers.

When choosing the most effective tools and optimizing selection processes internally, the decision is often made to use the support of an external recruitment agency. What can you expect from such cooperation? What are the most popular billing models? What are the different recruitment services and in what situations do they work best? Let’s check.

Success Fee – the most popular model of cooperation

How it works:

In this variant, the recruitment agency charges a fee only if a successful hire is made, most often a certain percentage of the candidate’s annual salary. In theory, making payment contingent on the result should be the agency’s biggest motivator to fully commit to successfully closing a given vacancy. Practice shows that much here depends on the quality standards and working model of the agency itself.

When considering this model of cooperation, it is worth verifying how the agency approaches working on its clients’ vacancies.

Does it work in a methodical, standardized way? Are projects carried out by teams or by individual recruiters? How many vacancies does each recruiter work on simultaneously?

The answers to these questions can be a good indicator of whether and how the agency is prioritizing individual projects and how much involvement the client can count on.

Advantages:

In addition to negligible financial risk, the Success Fee model also means that candidates from the agency’s internal base built up over the years can be quickly integrated into the pipeline, a wide network of contacts, and often benefit from additional collaborative services such as periodic industry reports or market consulting.

Disadvantages:

The biggest risk in this variant of cooperation is the quality of the service itself. Although the client does not incur any upfront costs, he has to commit his time and capacity to include the agency in question in his process. In the case of an ill-advised choice and failure to deliver the agreed results, it may turn out that it was not a completely cost-free cooperation at all.

For whom:

The Success Fee model usually applies to permanent full-time recruitments. Has your recruitment team been struggling with a vacancy that is particularly difficult to close for a long time? Agency support through the Success Fee model comes with minimal risk and can prove to be an extremely effective tool for the most challenging roles.

Likewise for irregular or sudden recruitment peaks, when there is no time or need to implement a full RPO model or recruit an additional person to the in-house team. By using the Success Fee model, you will avoid the recurring fees or costs of expanding your in-house team and only pay for the projects handed over and successfully completed.

Use case

An international financial institution with a heavily recruited department faced the challenge of recruiting a dozen programmers in a popular technology in a short period.
The decision was made to bring an external recruitment agency into the process, and in order to avoid recurring costs, a Success Fee model was opted for. With this solution, the company avoided financial risk, but also benefited from quick access to quality candidates, closing some of the vacancies mentioned earlier, as well as several more niche ones that the in-house recruitment team had been struggling with for a long time.

Method of settlement:

Although a percentage of a candidate’s annual salary is the most common way to bill for such a service, sometimes companies agree on a predetermined amount for successful recruitment, the so-called Flat Fee. As an alternative to the Success Fee, there is also often a so-called Retainer, in which part of the payment takes place before the service is performed. There are many hybrids between these models, in which, for example, part of the fee is collected by the agency at the start of the search, and the rest of the payment is already performance-based.

Success Fee how does it work

RPO, or dedicated exclusive recruiter

How it works:

Recruitment Process Outsourcing (RPO) is a more comprehensive service. In this model, the client gets their own dedicated recruiter who works full-time exclusively for the client, becoming, in a sense, a member of the internal recruitment team.

For many companies using this solution, RPO is not just another service, but a strategic partnership. The agency’s support here is not limited to recommending candidates. Depending on the needs, the RPO recruiter uses his experience to create a recruitment strategy for the client and is involved in the entire selection process. Working directly with Hiring Managers, he manages their expectations, being a valuable discussion partner and an expert in his field.

Advantages:

Among the biggest advantages of RPO is the ability to completely outsource the entire selection process. RPO covers the full range of recruitment activities, from strategy to finalization, virtually eliminating the need to involve an internal HR team. Another advantage is scalability – this model allows the company to adjust the level of agency involvement to the current recruitment needs. Finally – process optimization. The agency introduces professional tools and practices, optimizing the selection process in terms of time and cost.

Disadvantages:

A potential disadvantage to consider with RPO is the lengthy implementation. RPO can take time and effort to implement, which can be a challenge for companies expecting a quick start. It’s worth vetting a potential partner well from this angle – what the RPO recruiter’s onboarding process looks like and how quickly he or she can start working for the client. An equally important aspect is matching the recruiter himself to the client’s specifics – both in terms of personality, experience and specialization.

For whom:

The beneficiaries of such a service can be companies that have a recruitment peak ahead of them and need a temporary augmentation of their recruitment team, and do not want or have the ability to hire another full-time recruiter.

Another example where RPO may be the best option is smaller organizations or start-ups that don’t yet have in-house recruiting expertise.

Use case

A Scandinavian technology company, starting its operations in the Polish market, decided to use the RPO service. With no experience in the local labour market and no HR structures in Poland, the company needed comprehensive recruitment support.

The recruitment agency became a key partner for the company, providing a dedicated recruiter who not only recommended candidates, but also actively participated in the development of the recruitment strategy. The company was able to completely outsource the selection process, eliminating the need for an internal HR team.

Thanks to the efficient onboarding and quick launch of the service, the company quickly noticed the efficiency and professionalism of the dedicated recruiter, which was crucial to the success of their first recruitment in the Polish market.

Method of settlement:

RPO is usually an investment for an extended period, usually several months, although the flexibility of the service’s duration varies from one company to another. The service is usually settled by a fixed monthly fee (known as a management fee). Sometimes the agency’s fee also includes a moving component, such as a smaller monthly management fee, but in addition, a specific success fee for each candidate hired.

RPO how does it work

Maximum flexibility – Contracting/Body Leasing

How it works:

The last service analyzed is the outsourcing of employees temporarily. In this model, the company hires employees from a recruitment agency. Most often, it is the agency that handles all aspects of their employment here, although solutions are also encountered in which it is the client that incorporates agency contractors into its payroll.

Regardless of the billing method, it is an extremely flexible solution, allowing the company to take advantage of additional resources exactly when they are needed.

Advantages:

The biggest advantage of this solution is the minimal need for the client to get involved in formal issues. The agency takes care of all the administration, including contracts, salaries, as well as any problems that may arise during the cooperation. Not only does the company gain immediate access to additional employees, but it also avoids the hassle of permanent employment and can focus on its core business.

Disadvantages:

A potential disadvantage of this solution may be the difficulty of maintaining organizational culture. Contractors may be less well integrated into the client’s organizational culture, which affects the relationship with the team.

For whom:

This is ideal for a company that needs specialists or entire teams for a specific purpose – for a specific period or a specific project.

Use case

A technology company from the United States, with plans to develop and scale its project, was looking for alternatives to hiring more programmers in the US market. Research led them to Poland, but to avoid opening a local company, they decided to use contracting, hiring a team of specialists with specific skills for the duration of the project.

This solution allowed them to flexibly adapt their resources to the needs of the project, eliminating the need for permanent hiring. The recruitment agency, acting as an intermediary, handled all the administration, from hiring paperwork to payroll issues, allowing the company to focus on the essence of the project. As a result, the company gained immediate access to specialized staff, avoiding cumbersome recruitment and administrative processes, which effectively assisted in achieving business goals.

Method of settlement:

Of course, the greater responsibility, and therefore risk, that the agency takes on in this model also comes at a higher cost. In exchange for a lot of freedom, the client has to expect that the hourly rate of a specialist on contract will be higher than the salary of a full-time employee. As for the agency’s remuneration, it usually takes a certain margin or mark-up from each hour worked in a given month by the outsourced contractors. Some agencies only tell their clients the total cost of the service, while others are more flexible and clearly communicate what amount they charge as their salary and what the specialist’s rate is – often also allowing their client to negotiate the rate directly with the contractor.

Outsourcing IT what is it

Which recruitment service is right for me?

In conclusion, the choice of a model of cooperation with a recruitment agency depends on the individual needs and strategy of the company.

Success Fee is the ideal solution for those who want to pay only for effectiveness. RPO is a comprehensive solution for companies that need support at every stage of selection, and Contracting is a flexible option for those who want to increase the capacity of their teams for a specific purpose without hiring additional full-time specialists.

Before making a final decision, it is crucial to thoroughly understand the company’s needs and recruitment goals. Working with a recruitment agency can bring tangible benefits, but only by choosing the most tailored service can a company achieve full success in talent acquisition.

A key element is to thoroughly vet your recruitment partner, its modus operandi, tools, experience and processes.

Selected in such a conscious way, the offer measurably increases the chances of a fruitful and rewarding cooperation.

IT Recruitment comparison

If you want to learn more about the services of IT recruitment agencies, or are looking for someone to help you choose the perfect one for you, you can talk to one of our experts!