First, the good news — not all direct hire agency fees will be increasing in 2016.
Salaries are continuing to rise, but the payment rate for direct hire recruiters (a percentage of the first year’s salary) is fluctuating by industry — increasing for some and decreasing for others.
Based on data from our upcoming 2016 Direct Hire Agency Benchmarking Report, fees for engineering have increased, while fees for IT have decreased. In our Recruiting Leader Data Toolkit, we provide our latest released data for each industry — summarizing fees for 2014. (We work with 40 percent of the Fortune 1,000, and we’re seeing ruthless competition for the engineering and information technology industries.)
Engineering and IT averaged fees of 22 and 21 percent at the end of 2014. At the end of 2015, engineering fees rose to 22.2 percent, while IT fees dropped to 20.6 percent on average.
Compiling our data on direct hire fees with that of the U.S. Bureau of Labor Statistics’ data on salaries, we’re predicting the highest fee you can expect to pay in 2016 based on this change for engineering and IT talent.
Recent data from the Korn Ferry Hay Group’s 2016 Salary Forecast projects wages in the United States to rise by 2.7 percent in 2016 — a little less than the predicted increase of 3.1 percent from the Society for Human Resource Management back in July.
The rise in wages is happening for two reasons — there is an increased demand for skilled workers, and the country is experiencing historically low inflation at the same time.
In order to predict 2016 salaries, we took the most recent salary data on engineering and IT professionals from the Bureau of Labor Statistics, and projected the 2016 salary based on the 2.7 percent increase.
From there, we used data from our Recruiting Leader Data Toolkit, as well as data from our upcoming report, to calculate both the current and projected fees for professionals in both industries. (If you have questions or want to talk more — we’ll be at ERE in Las Vegas, booth 520.)
Sending a job to search usually happens when you’re searching for executives and business-critical positions for your organizations. These are usually the positions that are the hardest to fill, and that have the highest salaries.
“The basic rule of supply and demand explains why. Demand for skilled engineers is at an all-time high. Supply of these engineers is, however, not so high.” — Sarah Walpert
As the supply of available engineering talent wanes, the fee to find top talent increases. At the beginning of 2015, the average fee for engineering talent was 22 percent. In 2016, expect to pay a fee of 33 percent.
The top executives of engineering will require the following agency fees:
| Engineering Executives | ||||
| Title | Salary (Current) | Projected Salary (+2.7%) | 2014 Fee (22%) | Projected 2016 Fee based on Average 2015 Fee (22.2%) |
| Architectural and Engineering Managers | $130,620.00 | $134,146.74 | $28,736.40 | $29,780.58 |
| Top Executives | $102,750.00 | $105,524.25 | $22,605.00 | $23,426.38 |
| Chief Executives | $180,700.00 | $185,578.90 | $39,754.00 | $41,198.52 |
General engineering talent will require the following agency fees:
| General Engineering | ||||
| Title | Salary (Current) | Projected Salary (+2.7%) | 2014 Fee (22%) | Projected 2016 Fee based on Average 2015 Fee (22.2%) |
| Aerospace Engineering and Operations Technicians | $63,780.00 | $65,502.06 | $14,031.60 | $14,541.46 |
| Aerospace Engineers | $105,380.00 | $108,225.26 | $23,183.60 | $24,026.01 |
| Agricultural Engineers | $71,730.00 | $73,666.71 | $15,780.60 | $16,354.01 |
| Architects | $74,520.00 | $76,532.04 | $16,394.40 | $16,990.11 |
| Biomedical Engineers | $86,950.00 | $89,297.65 | $19,129.00 | $19,824.08 |
| Cartographers and Photogrammetrists | $60,930.00 | $62,575.11 | $13,404.60 | $13,891.67 |
| Chemical Engineers | $96,940.00 | $99,557.38 | $21,326.80 | $22,101.74 |
| Civil Engineering Technicians | $48,340.00 | $49,645.18 | $10,634.80 | $11,021.23 |
| Civil Engineers | $82,050.00 | $84,265.35 | $18,051.00 | $18,706.91 |
| Computer Hardware Engineers | $108,430.00 | $111,357.61 | $23,854.60 | $24,721.39 |
| Drafters | $51,940.00 | $53,342.38 | $11,426.80 | $11,842.01 |
| Electrical and Electronics Engineering Technicians | $59,820.00 | $61,435.14 | $13,160.40 | $13,638.60 |
| Electrical and Electronics Engineers | $93,260.00 | $95,778.02 | $20,517.20 | $21,262.72 |
| Electro-mechanical Technicians | $53,070.00 | $54,502.89 | $11,675.40 | $12,099.64 |
| Environmental Engineering Technicians | $48,170.00 | $49,470.59 | $10,597.40 | $10,982.47 |
| Environmental Engineers | $83,360.00 | $85,610.72 | $18,339.20 | $19,005.58 |
| Health and Safety Engineers | $81,830.00 | $84,039.41 | $18,002.60 | $18,656.75 |
| Industrial Engineering Technicians | $53,370.00 | $54,810.99 | $11,741.40 | $12,168.04 |
| Industrial Engineers | $81,490.00 | $83,690.23 | $17,927.80 | $18,579.23 |
| Landscape Architects | $64,570.00 | $66,313.39 | $14,205.40 | $14,721.57 |
| Marine Engineers and Naval Architects | $92,930.00 | $95,439.11 | $20,444.60 | $21,187.48 |
| Materials Engineers | $87,690.00 | $90,057.63 | $19,291.80 | $19,992.79 |
| Mechanical Engineering Technicians | $53,530.00 | $54,975.31 | $11,776.60 | $12,204.52 |
| Mechanical Engineers | $83,060.00 | $85,302.62 | $18,273.20 | $18,937.18 |
| Mining and Geological Engineers | $90,160.00 | $92,594.32 | $19,835.20 | $20,555.94 |
| Nuclear Engineers | $100,470.00 | $103,182.69 | $22,103.40 | $22,906.56 |
| Petroleum Engineers | $130,050.00 | $133,561.35 | $28,611.00 | $29,650.62 |
| Surveying and Mapping Technicians | $40,770.00 | $41,870.79 | $8,969.40 | $9,295.32 |
| Surveyors | $57,050.00 | $58,590.35 | $12,551.00 | $13,007.06 |
While the fees for engineering are increasing significantly, you won’t feel your wallet get as light when recruiting for IT talent in 2016.
Executive IT professionals are the cream of the crop, and are highly sought after across all vertical industries. Because of the intense competition, jobs are sent to search more often than in other industries — but the talent isn’t as hard to find as in engineering.
“When economic cycles shift, you see a lot of turnover in IT leadership because companies that had been cutting costs now want to innovate, and they need a new CIO with a different skill set to achieve that goal. When those new CIOs come in, they create a whole new market for IT leaders up and down the ranks.” — Martha Heller, Founder, Heller Executive Search
IT executives will require the following agency fees in 2016 on average:
| IT Executives | ||||
| Title | Salary | Projected Salary (2.7%) | 2014 Fee (21%) | Projected 2016 Fee based on Average 2015 Fee (20.6%) |
| Computer and Information Systems Managers | $127,640.00 | $131,086.28 | $26,804.40 | $27,003.77 |
| Top Executives | $102,750.00 | $105,524.25 | $21,577.50 | $21,738.00 |
| Chief Executives | $180,700.00 | $185,578.90 | $37,947.00 | $38,229.25 |
General IT roles will require the following agency fees in 2016 on average:
| General IT | ||||
| Title | Salary | Projected Salary (2.7%) | 2014 Fee (21%) | Projected 2016 Fee based on Average 2015 Fee (20.6%) |
| Computer and Information Research Scientists | $108,360.00 | $111,285.72 | $22,755.60 | $22,924.86 |
| Computer Network Architects | $98,430.00 | $101,087.61 | $20,670.30 | $20,824.05 |
| Computer Programmers | $77,550.00 | $79,643.85 | $16,285.50 | $16,406.63 |
| Computer Support Specialists | $50,380.00 | $51,740.26 | $10,579.80 | $10,658.49 |
| Computer Systems Analysts | $82,710.00 | $84,943.17 | $17,369.10 | $17,498.29 |
| Database Administrators | $80,280.00 | $82,447.56 | $16,858.80 | $16,984.20 |
| Information Security Analysts | $88,890.00 | $91,290.03 | $18,666.90 | $18,805.75 |
| Network and Computer Systems Administrators | $75,790.00 | $77,836.33 | $15,915.90 | $16,034.28 |
| Software Developers | $97,990.00 | $100,635.73 | $20,577.90 | $20,730.96 |
| Web Developers | $63,490.00 | $65,204.23 | $13,332.90 | $13,432.07 |
All these numbers are meaningless unless you know what to do with them, and how to use them to make your organization successful.
Use these projected fees to support your data-driven talent acquisition efforts this year.
Being able to plan for direct hire agency fees will allow your organization to build a better talent acquisition budget, and plan for recruiting’s highest line item — agency use.