An Alternative Model for Recruiting

Sometimes you can take an old idea and apply it somewhere it’s never been tried, resulting in something fresh and new. In the CPA industry - and in the broader professional services industries in general - fee structures have generally been designed using “per hour” rates.  These structures are, in essence, selling your time, and are built around some sort of fixed fee, project-based model but still designed with an hourly rate in mind. This has been the standard way to evaluate cost, efficiency, profit, and all other key performance indicators.  

On the contrary, in the talent agency world, the standard operating procedure is to charge a fee based on a percentage of the first-year salary of the candidate you hire. Normally, this fee is around 25-30% and is usually a fixed amount. Companies generally play ball as alternatives do not really exist. In some ways, the pricing model across the recruiting industry could be an example of price fixing, something we see prominently in the airlines and real estate industries.

What HHM Talent has done is apply the traditional hourly billing method to the talent agency space. Clients appreciate this approach, especially when you consider the actual time it typically takes to fill a position.  

Let's take an example of what a 25% fee will cost for a management level accounting position. A Controller on the market now will typically cost $125-$150k. Taking the lower end of this range, 25% of $125k is a fee of $31,250. One may argue that the value of this hire is worth $31k, but the mental gymnastics to make it make sense consistently can be taxing.

HHM Talent typically takes 15-20 hours of real time to hire a candidate for any position. In the previous example, if you take $31,250 and divide it by the high end of the range - 20 hours - you are paying $1,562/hr.  Even if you are hiring for a role paying $60k, you are paying at least $15k or $750/hr. It starts to make less financial sense once you slow down and think deeply about the cost versus the value.

The goal of any professional services firm, be it a CPA, lawyer, or talent agency, is to establish a partnership that grows over time. Talent agencies do themselves a disservice by charging steep fees, as the relationship feels lopsided and uneven.

Evaluating all your hiring options is part of being a good steward of your company’s finances by not allowing your bottom line to suffer at the hands of excessive fees. By exploring forward-thinking options like HHM Talent, your company’s resources are used to not only fill a vacant position but also to establish an ongoing relationship with a talent agency committed to your recruitment needs beyond today.