Are you curious about how recruitment agencies make money when it comes to permanent placements?
Permanent placements mean the agency provides the services of identifying the right talent for the company, with the talent being under the company’s payroll. This can also apply to contractual roles, not necessarily permanent ones.
So, how do they charge? Typically, they impose a percentage of the talent’s annual salary. The higher and more niche the role is, the higher the percentage will be.
Junior positions can currently be as low as 8.3% and C-Suite positions as high as 30%.
Here’s how a typical invoice might look. Assume the position is Senior HR Executive with a monthly salary of RM5000 and fixed allowances of RM500, with the agency charging a fee of 18%.
Annual Fixed Wages = (RM5000 + RM500) x 12 months = RM66,000
Agency Fee = RM66,000 x 18% = RM11,880
Services Tax 6% = RM11,880 x 6% = RM712.80 (wef 1 March 2024, this service tax will be raised from 6% to 8% in Malaysia)
Total Invoice to Pay = RM12,592.80
So, you see, it’s not a cheap affair, but clients are willing to pay the money to find the right fit. Honestly, it’s a small price to pay if you’re looking at your business on a long-term basis. Hiring the right talent is extremely important.
And that is also why the agency is always on the talent’s side; the higher they manage to negotiate your starting the salary, the higher their sales will be.
It is indeed a lucrative business, but considering the amount of effort and work that goes into it, it’s going to be worth it.
#Recruitment #TalentHunting #AuntyHR
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