What your recruiting fee is actually measuring

Say a practice hires twice in one year. In the spring it adds a client service associate at $65,000. In the fall it brings on a senior advisor at $180,000.

Same firm, same hiring manager, same recruiter, same process from start to finish. On a percentage-based fee the second invoice is close to three times the first.

That is normal, and almost nobody asks why. The answer tells you what you are buying.

A percentage measures the salary

Most recruiting firms charge a percentage of first-year compensation. The typical range is 20% to 25%, applied to whatever the role ends up paying.

That number has exactly one input, and it is the salary. Not how long the search took. Not how many people someone had to contact, or how thin the market was in your city, or how far into a candidate’s background you asked anyone to go.

Everything else about the search can change and the formula does not move. The salary changes and the fee moves with it, whether or not the work changed at all.

Sometimes the salary is a fair proxy

To be fair to the model, salary is not a random thing to price against. A $180,000 advisor role usually is harder to fill than a $65,000 support role. The pool is smaller, the people worth talking to are not looking, and the cost of getting it wrong is higher, so the process usually needs to go deeper.

When those things move together, a percentage roughly tracks the work. That is the honest case for it, and on senior producer roles it often holds up.

It stops holding up in two places, and both are where smaller practices do most of their hiring.

Hard and expensive are not the same thing

A paraplanner search in a thin market, where there are a handful of realistic candidates in the whole state, can take longer than an advisor search in a metro with a deep bench. The first one costs a percentage-based firm more time and earns it less money. The second is the opposite.

Difficulty and salary are related. They are not the same measurement, and a percentage fee only ever sees one of them.

Then there is the minimum fee

Most firms do not see this one coming. Minimums are standard practice, but they rarely show up in the rate a recruiter advertises.

Almost every percentage-based firm puts a floor under the fee. Below a certain salary the percentage would not cover the recruiter’s time, so a minimum applies instead. Among firms recruiting specifically for advisory practices those floors are high. One publishes a minimum of $25,000 for non-advisor roles and $30,000 for advisor and certified financial planner roles.

Here is what a $25,000 floor does to a fee advertised at 25%.

First-year compensation	25% of it	What a $25,000 minimum charges	The rate you actually pay
$50,000	$12,500	$25,000	50%
$65,000	$16,250	$25,000	38%
$80,000	$20,000	$25,000	31%
$100,000	$25,000	$25,000	25%
$150,000	$37,500	$37,500	25%

Read the last column. The advertised rate is 25% the whole way down. The rate you actually pay is 25% only at the bottom of the table. On a $65,000 client service associate it is 38%, and on a $50,000 role it is half of the first year’s salary.

Below roughly $100,000 the percentage stops being a percentage. It becomes a flat fee that nobody calls a flat fee.

What we price instead

We price the work, because the work is the part that varies.

Every My1Hire package includes the same search: compensation research for your market, the job ad written and placed, our own database worked, and direct approaches to people who are doing the job well somewhere else and were never going to answer an ad. Every candidate completes a phone interview with written notes before you see anyone.

What you choose is how much further the process goes before a person reaches your desk. A personality profile and an integrity survey. Skills assessments and a recorded interview. A personality baseline of your existing team for candidates to be matched against. You pick the steps you want run, only the candidates who complete them are sent to you, and you pay for those steps and no others.

The number is published, you know it before the search starts, and it does not move when the salary does.

First-year compensation	Percentage fee at 25%, with a $25,000 minimum	My1Hire Elite
$65,000	$25,000	$8,990
$80,000	$25,000	$8,990
$115,000	$28,750	$8,990
$180,000	$45,000	$8,990
$250,000	$62,500	$8,990

The guarantee moves with the process rather than with the price: 30, 60 or 90 days, running longer as more is found out about the person before they reach you.

When a percentage is the right answer

Not every role belongs in a flat-fee package, and we would rather say so than pretend otherwise.

If you are replacing a department head confidentially, hiring at the executive level, or you want a firm running one search exclusively with a dedicated team on it for months, a retained or engaged model is built for exactly that and ours is not. Those searches are genuinely different work and the firms that do them price accordingly.

What we would push back on is treating that model as the default. Most of the hiring an independent practice does in a year is a client service associate, a paraplanner, an operations hire, or an administrator. Those are the roles where a percentage with a floor underneath it costs the most and explains itself the least.

Two questions worth asking any recruiter

Whichever model you choose, and it will not always be ours:

• What does the number pay for? Ask for it itemized rather than as a percentage. A firm that cannot break it down is asking you to price an outcome without seeing the work behind it.
• Where is the minimum, and what does it do to my rate? Get the floor in writing before the search starts, then do the division yourself against the salary of the role you are actually filling.

We publish our answer to both because we would rather settle it on a web page than in the middle of a negotiation. What your fee pays for sets out what the first payment covers, and comparing the packages puts the three side by side.

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Humans Being Resources is a direct-hire recruiting firm placing permanent employees for firms in financial services, accounting and tax, and insurance, in all 50 states.