The True Cost of Hiring: Why Traditional Recruitment Agencies Might Not Be the Best Choice for Small Businesses

Hiring the right talent is critical to the success of any business, but for small businesses, the recruitment process can be especially challenging. With limited resources, tight budgets, and a lack of internal recruitment functions, many small businesses turn to traditional recruitment agencies for help. However, this comes with hidden costs that can make the process far more expensive and time-consuming than expected.

In this article, we’ll explore the true cost of using traditional recruitment agencies, highlight some of the lesser-known drawbacks, and introduce you to a cost-effective alternative: Recruitment as a Service (RaaS).

1. High Fees Based on Salary

One of the most significant costs associated with traditional recruitment agencies is their fee structure. Most agencies charge a percentage of the candidate's annual salary, which can range from 15% to 28% depending on the agency and the role. For example, if you're hiring for a position with a salary of €50,000, you could end up paying between €7,500 and €14,000 just to fill that role.

This model can be especially hard on small businesses with limited hiring budgets. When the agency’s fee increases as the salary rises, it can put a strain on businesses trying to keep hiring costs under control. Essentially, the more competitive your salary offer, the more you pay the recruiter, even though the effort to recruit doesn’t necessarily increase.

2. Mismatched Incentives: Higher Fees for Higher Salaries

Traditional recruitment agencies work on a contingency basis—meaning they only get paid if they successfully fill the role. While this might seem beneficial at first glance, it often creates a mismatch in incentives between the agency and the business.

Since agencies are paid based on the salary of the candidate they place, there’s a built-in motivation for recruiters to push for higher salaries. The higher the salary they negotiate for a candidate, the higher the fee they collect. This doesn’t always align with a small business’s budget or long-term strategy, and it could result in higher payroll costs than initially planned.

3. Time Delays and Slow Hiring Process

The contingent nature of traditional recruitment also tends to slow down the hiring process. Since the agency only gets paid upon successful placement, they often work with multiple clients simultaneously, prioritizing roles that seem most likely to close quickly or generate the highest fees. This can lead to delays in filling your vacancy, which in turn costs you more in terms of lost productivity and unfilled roles.

For small businesses, where every role is crucial, these delays can be particularly painful. Having a key position open for too long can disrupt operations and put extra strain on existing employees.

4. Risk for Agencies Means Higher Costs for You

Because traditional recruitment agencies work on a no-win, no-fee basis, they take on significant financial risk. If they spend time sourcing candidates for a role that doesn’t get filled, they earn nothing for their efforts. To compensate for this risk, agencies set their fees higher, often inflating the overall cost to your business.

For small businesses, this contingent model means you're effectively paying for the risk the agency assumes, even if the recruitment process is relatively straightforward.

RaaS: A Cost-Effective Alternative for Small Businesses

At Land Your Job, we recognize the challenges small businesses face when it comes to recruitment. That’s why we’ve developed a more transparent, affordable, and efficient solution: Recruitment as a Service (RaaS).

Here’s why RaaS is the smarter choice for small businesses:

1. Flat-Fee Pricing, No Surprises

With our RaaS model, you pay a simple flat fee of €3,500 for the entire recruitment process—regardless of the candidate's salary. This straightforward pricing eliminates the unpredictability of percentage-based fees and allows you to budget confidently without worrying about escalating costs.

2. Aligned Incentives

Unlike traditional agencies, we aren’t incentivized to push for higher salaries. Our fee remains the same whether you’re hiring for a junior position or a senior executive. This ensures that our goals are fully aligned with yours: to find the best candidate for the role, within your budget.

3. Faster, More Focused Process

Because we work on a flat-fee, project-based model, we can focus solely on your hiring needs without juggling multiple contingent clients. Our process is designed to be more efficient, getting you qualified candidates faster so you can fill your vacancy and keep your business running smoothly.

4. Reduced Risk

The RaaS model also minimises financial risk for both parties. We charge 50% of the fee upfront to start the search and 50% upon delivering five fully screened and qualified candidates. This shared investment ensures that we are committed to delivering results, and it allows you to engage in the process with confidence.

Conclusion: Why RaaS is the Better Choice for Small Businesses

While traditional recruitment agencies may work for larger organizations with more flexibility in their hiring budgets, small businesses need a more agile, cost-effective solution. The high fees, time delays, and misaligned incentives of traditional recruitment simply don’t make sense for businesses that need to hire quickly and affordably.

With Recruitment as a Service (RaaS), you can expect transparent pricing, aligned incentives, and faster results—all designed with the needs of small businesses in mind. If you’re ready to take the next step in your hiring journey, we’re here to help you find the right talent without breaking the bank.

If you’d like to learn more about how RaaS can streamline your hiring process, get in touch with us today!