Direct Hire Agency Recruiting in 2015 and Beyond

The key takeaway? The surge in demand for highly skilled candidates is creating fierce competition for companies who have premium jobs to fill. Between the strong jobs market, increasing employee turnover, and a rising contingent workforce, organizations are having a difficult time finding qualified candidates. As a result, companies are turning to direct hire agencies to fill their most critical jobs.

If you plan to use a direct hire agency in 2015 and beyond, here’s what you need to know:

Agency fees are stabilizing

Direct hire agency fees paid as a percentage of an employees’ first-year salary has been steadily increasing over the past 5 years but is currently leveling off. In 2014, the average fee was 21.2% , compared with 21% in 2013.

This is slightly above the industry standard of 20%, showing that companies are willing to pay a little extra to remain competitive.

Premium fees are at an all-time high

The proportion of premium fees — those fees that are at or exceed 25% of a position’s salary — is at an all-time high. In 2014, about 35% of fees were at or above that threshold, up from a low of 20% in 2010.

To the previous point, this finding proves that not all jobs are equal in terms of demand and that companies are paying higher than average fees to fill roles with the most competition.

Salaries are rising

While the average fee as a percentage of salary stabilized, the average fee in dollars is up 6.3%. The average direct hire agency fee collected in 2014 was $22,113, compared with $20,793 in 2013.

This is because companies are offering stronger salaries to close highly skilled and, therefore, scarce talent. To remain competitive in the candidate market, you may want to review your compensation plan.

Pharmaceutical and biotechnology jobs are hot

Pharmaceutical and biotechnology employers paid an average fee of $31,449 for candidates in 2014, by far the highest of all industries. While this industry has commanded the highest fees for the past 5 years, we still saw a 10.8% increase in fees over 2013.

As competition for pharmaceutical and biotech workers increases, so do the salaries – it’s the supply and demand model. Companies in competitive industries should expect to pay higher agency fees to recruit top-tier talent.

The importance of direct hire agencies in 2015 and beyond

Manpower’s annual Talent Shortage Survey found that 38% of employers are having difficulty filling jobs – a 2 percentage point increase over 2014. Those jobs, for which corporate leaders are seeking more qualified candidates, are the jobs that are most often filled through the direct hire agency marketplace. As the difficulty of hiring qualified candidates continues to increase, so will the use of direct hire agencies.

We hope that the data in our benchmarking report will help you make informed decisions about how you use direct hire agencies as part of your recruitment program.

Please download The 2015 Direct Hire Agency Benchmarking Report for more useful insights.