After slowly rising for the last five years, placement fee percentages may be flattening out. The executive search marketplace BountyJobs predicts agency fees for 2015 will average out to 21.3% of first year salary, a barely noticeable increase over last year’s 21.2% average.
Payouts, though, are forecast to take a $2,000 jump this year, growing to an average of $24,000 per placement, a consequence of the increased salaries paid to candidates hired through search firms.
In its semi-annual benchmarking report, BountyJobs suggests that a “healthy supply of agencies” now exists leading employers to keep fees flat. The report notes that if more agencies and recruiters enter the market, the percentage could decline.
“In 2015,” the report says, “We’ve already seen certain areas and industries experiencing downward pressure on fees.”
However, citing pharmaceuticals where fees have increased from about 22% to nearly 24% in two years, BountyJobs notes “there are some industries in which the need for agencies remains white hot.”
That is part of the reason why BountyJobs predicts that so-called premium fees — 25% and up — will again represent about 35% of all fees paid.
“Using the trends and data available,” says the report, “We project that 38% of fees in H2 will be at or exceed 25% of a position’s salary, resulting in a 2015 total of 35% premium fees. Industries that remain very competitive in the premium fee space include pharmaceuticals, financial services, and manufacturing and production.”
Pharmaceuticals and biotech have also see a rapid rise in the dollar payouts. From a low of about $25,000 in 2012, the average fee is now somewhere in the $32,000 range.
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Overall, BountyJobs expects this year’s average agency fee to work out to $24,000, a $2,000 increase over 2014. Much of that increase is due to a projected big jump in fees in the second half of this year. BountyJobs says the average fee paid to the agencies in the first six months was $23,121. In the current six months, the average fee is forecast to hit $24,907.
The data is drawn from the 40,000+ transactions completed since 2010 via the BountyJobs marketplace. CEO Mike Hard said, “The Bountyjobs platform is now so broad it’s the most statistically representative indicator of what’s happening in the US market in general.”
The smaller and newer Scout Exchange volunteered that transactions through its marketplace averaged 17.5% with an average payout of $14,044.
Scout’s CEO, Sean Bisceglia, said he “expects reliance to search will rise in very specialized areas due to labor shortfall like IT where there is very low unemployment and healthcare where job projections are soaring due to aging population. There is also a need for more specialized skills like STEM and finding qualified candidates will be competitive.”
He provided a by-industry list of average fees, percentages and salaries. The top average fee on Scout was $22,330 paid by employers in the oil, mining and utilities sector. The smallest fee — $4,000 — was for placements in the recreation industry. However, some sectors had so few transactions that the averages shouldn’t be taken as indicative of the broader market.