Many founders consider using a recruitment agency when hiring — either because they lack time to run a search, are hiring for a specialist role, or have struggled to find candidates through direct advertising. Understanding how recruitment agencies work, what they offer, and what they cost helps founders decide whether this route is appropriate for a particular hire.
A recruitment agency sources and presents candidates to employers in exchange for a fee. Most agencies work on a contingency basis — paid only if a candidate they introduce is hired and remains in the role for a defined period. Executive search firms typically work on a retained basis, charging part of the fee upfront. Agency fees are usually calculated as a percentage of the placed candidate's first-year salary.
Recruitment agencies can significantly reduce the time and effort involved in finding candidates for hard-to-fill or specialist roles. The tradeoff is cost — agency fees represent a meaningful addition to the total cost of a hire. For early-stage businesses, whether the time saving justifies the cost is worth evaluating carefully. Our guide to using recruitment agencies covers how to work effectively with them.