Is Fee-Based Recruiting Out?
When I first started at a scaling tech startup, I was floored to learn they had spent $800,000 on recruiting fees in just one year. The real kicker? 40% of the people they hired through the agency were gone in less than a year. What were they left with? A hiring gap, no internal talent pipeline, no data of their own, and no real strategy beyond continuing to throw money at outsourcing. And here’s the truth: blowing your HR budget on recruiting fees in this economy just doesn’t make sense anymore—if it ever did. Companies are navigating complex challenges right now, from retention struggles to evolving workforce expectations, and a fee-based recruitment model does nothing to build long-term hiring resilience. It’s a Band-Aid approach that keeps companies dependent on external agencies rather than strengthening their own ability to attract, hire, and retain the right people. Sustainable hiring isn’t about paying someone else to solve the problem; it’s about building the systems, relationships, and data that make great hiring repeatable.
Before diving into why fee-based recruiting is falling out of favour, let’s define three key models in the hiring landscape:
Fee-Based Recruitment: A traditional model where companies pay a recruitment agency a percentage of the hired candidate’s salary (typically 15-30%) as a one-time fee. The agency works on a contingent basis, meaning they are only compensated upon a successful placement.
Fractional Recruitment: A subscription-based hiring solution where companies engage recruiters on a part-time or flexible basis. These recruiters work exclusively on their roles, managing the full recruitment lifecycle, and companies pay a monthly retainer based on the time spent.
Recruitment Process Outsourcing (RPO): A third-party provider takes full ownership of a company’s hiring function, embedding recruiters within the organization and often managing employer branding, workforce planning, and process optimization. Unlike fractional recruitment, RPO models tend to be enterprise-level and require long-term contractual commitments.
The Problem with Fee-Based Recruiting
While fee-based recruiting has been a go-to for many companies, it’s no longer the best solution for organizations looking to build sustainable, high-performing teams. Here’s why:
It’s Not Scalable – Hiring needs fluctuate, and fee-based recruiting is not designed to accommodate rapid changes. Paying per placement creates unpredictable costs and limits the ability to plan for growth effectively.
It’s Expensive – With fees often hitting 20-30% per hire, businesses end up paying significant sums for each new employee. For startups and scaling companies, this model quickly becomes financially unsustainable.
It Doesn’t Build Internal Capabilities – Once a recruiter places a candidate, they move on. Companies don’t retain access to the talent pipelines, sourcing strategies, or relationship-building that went into the search. This means businesses repeatedly start from scratch when they part ways with their agency/recruiter.
It Encourages a Transactional Approach – Fee-based recruiters operate on commission, often prioritizing speed over quality. This can lead to mismatched hires and higher turnover rates.
Why Fractional Recruitment is the Future
Fractional Recruitment is a modern approach that provides companies with dedicated recruitment support on a flexible, scalable model. Instead of paying per hire, businesses invest in a recruiter—or a team of recruiters—on a retainer basis. This approach ensures:
End-to-End Recruitment Support: From sourcing and screening to interviews and offer negotiations, fractional recruiters manage the entire process.
Exclusive Focus on Your Roles: Unlike contingent recruiters juggling multiple clients, fractional recruiters dedicate their time and expertise solely to your hiring needs.
Ownership Over the Work: Companies retain the relationships, talent pipelines, and recruitment insights built during the engagement, meaning they can scale faster and more strategically.
Cost Predictability: Instead of hefty placement fees, companies pay a monthly fee based on time spent, leading to more transparent budgeting and better ROI.
Fractional Recruitment at Bloom
Hiring shouldn’t feel like a never-ending cycle of paying for the same thing over and over again. Yet, here you are—another open role, another agency invoice, and nothing to show for it but a shortlist of candidates that don’t quite fit.
At Bloom, we believe there’s a better way.
Our Fractional Recruitment Model gives you access to experienced recruiters who don’t just fill roles—they become an extension of your team. Whether you need one recruiter or several, they’ll manage your entire hiring process, working exclusively on your roles, with your best interests at heart.Instead of per-hire fees that drain your budget, you’ll pay a simple monthly retainer for a set number of hours. No surprise costs. No inflated commissions. Just strategic, efficient hiring.
But here’s the real game-changer: you own everything. The work, the relationships, the talent pipeline—it all stays with you. No more starting from zero every time you need to hire. If you’re ready to move beyond outdated recruitment models and invest in a smarter, more scalable way to grow your team, let’s talk. Bloom’s Fractional Recruitment Model was built for businesses that value hiring done right.