Average Headhunter Fees Surge In 2014

Note: This research has been updated to include all 2014 data – see the new blog post, Agency Fees Rose 6% in 2014.

Looking for a new leading indicator on where the jobs market is heading? Try checking out average headhunter fees.

Headhunter fees, typically offered as a percentage of a candidate’s first year’s salary, have long been known as an indication of where the high end of the job market is heading. If a company feels that a job is so critical that it offers a fee to get it filled, it has an urgent need for great talent.

These types of recruiting fees are only paid if the company hires the headhunter’s candidate, and the jobs filled this way typically have an average salary of $100K and up. If more fees are being paid, more critical candidates are being hired. If higher fees are being offered, competition for top talent is getting more fierce.

Percentage bargraph 1

So where’s the market going? Every quarter the BountyJobs Research Team updates the data, and the data from Q3 shows fees paid to 3rd party recruiters (as headhunters are also known) have surged in 2014.

We’re seeing that not only are headhunters across all industries getting higher fees, but also that the best headhunters in legal, the best headhunters in finance, and the best in a few targeted segments are commanding higher fees than ever before.

BountyJobs is the cloud-based platform that employers use to improve the way they work with headhunters. Several hundred million dollars of recruiting fees pass through the BountyJobs platform every year, covering every job, geography and sector.

Quarterly Findings on Recruiting Fees from BountyJobs
Percentage bargraph 2

Percentage bargraph 3

  • Average headhunter fees for Q3’14 were 21.5%, slightly higher than the average fee of 21.3% in Q2’14, and a huge step up over average fees of 20.7% from Q1’14.

    Average fees across the entire US marketplace have been rising every year since the end of the recession. Fees earned by headhunters bottomed out at 19.7% in 2009, hit 20.2% in 2011, and have been rising steadily ever since. Not surprisingly, the dollar amounts of fees being paid to direct hire agencies has climbed as well: from a low of $17,822 in 2009, to a high of $22,895 in Q3’14.

  • The percentage of “premium fees” offered at 25% or above, a bellwether mark for the industry, is also at an all-time high.

    The best 3rd party recruiters have been able to command higher fees for their services for a while. Back in 2010 (the first year BountyJobs started tracking the data) only 20% of all fees were premium fees. Fast forward to Q3’14, and the percentage of premium fees is staggering at 34%. This isn’t a short term blip: premium fees were 31% of all fees on the marketplace in 2013, so things have been steadily heating up for a while.

  • Which industries are driving all of this activity?

    How are the best headhunters in pharma doing? How about top recruiting agencies in accounting? Our data shows high fees. Pharmaceutical / Biotech (23.8%); Accounting / Auditing (23.5%); Agriculture / Forestry / Fishing (24.1%) and Food & Beverages (24.2%) are hot industries with fees all well above the US average. In terms of hot jobs, Research & Development (24.4%) and Legal (22.9%) stand out as commanding agency fees well above the norm.

  • On the flip side, are there industries or jobs that are losing steam?

    Low fees, or those below 15%, have dwindled from 10% of all fees earned in 2009, to 4% of all fees earned thus far in 2014. The percentage of low fees on the marketplace has remained markedly stable in the past five years, ranging from a high of 6% of all fees in 2010 to a low of 3% in both 2012 and 2013.

    The industries with the lowest average agency fees in Q3’14? Hospitality (15.8% average fee earned); Education / Training / Libraries (16.0%); Consumer Services (17.0%); Government & Policy (18.3%) and, ironically, Legal (17.5%). The fact that agencies placing candidates in legal jobs earn some of the highest fees, but fees for all roles across the legal industry are lower, seems to indicate an overall stronger demand on hiring across the entire market. This in turn cycles into an upward pressure on fees across the board but especially for top tier positions.

Looking for a more detailed report on how recruiting fees are behaving in your industry or sector? Want to know how the best headhunters are doing for sales positions? Who are the best headhunters for IT?

Give us a ring and ask for a copy of the BountyJobs Research Team’s Quarterly Industry Reports. Better yet, start using BountyJobs to improve how you work with headhunters. With BountyJobs, you get fee and performance data not only on the work your agencies perform for you, but on the jobs they fill all across the marketplace.

To see more up-to-date data, check out our newer blog post, Agency Fees Rose 6% in 2014.

[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

2017-07-28T16:38:05+00:00 November 7th, 2014|

About the Author: