Here is a fact that should change how you use recruitment agencies: the agency that places your new hire is, within a few months, often the same one quietly trying to entice them back out. Recruiters are paid when people move, not when they stay. A healthy, stable team is bad for their business. That does not make them useless, but it makes their incentives different from yours, and you need to understand the gap before you hand them your hiring.
To be fair upfront: not all recruiters are like this. I know a few who are genuinely excellent, honest, and worth every penny. But I know more than a few who are not, and the system rewards the behaviour, so you should assume it until proven otherwise.
Paid to move people, not to keep them
The core problem is structural. An agency earns its fee when a candidate changes jobs. So the entire industry has an interest in people moving around, which means stimulating exactly the staff rotation you, as an employer, are trying to prevent. Once you have built your team, the same agencies that helped you build it become a destabilising force, picking off your people for their next placement. In that narrow sense they are a kind of parasite on the system, and yet it is genuinely hard to build a team without them.
The fees, and how to negotiate them
The standard ask is 30% of the candidate's annual salary, payable within weeks of the hire starting, on a no-win-no-fee basis, which is the one good thing about it. That headline number is very negotiable. Established agencies will usually come down to around 15%. You can sometimes find a newer outfit that will take 10% for exclusivity, but they are often weaker at delivering. I tried that once and regretted it, wasting months for some very poor matches.
The bigger lever is the rebate. Agencies take the full fee on the assumption that the person stays a year or more, but pay it all upfront. What happens if your hire quits after two months? Negotiate a refund. Most will only offer a sliding rebate over the first three months, grudgingly, after a long round of haggling. I have never met an agency that would take its fee monthly across the year, or refund in proportion if the person does not stick. Push anyway.
The tricks to watch for
Two in particular. First, agencies will present candidates who are a poor fit as if they were a perfect match, because they are paid to close, not to be right. Either they cannot screen properly for the technology, or they do not care to. Second, the A-players showcased when they bid for your business are not always the people who turn up to do the work.
The defences are simple. Name the specific people in the contract. Check references yourself, with real conversations, not the box-ticking confirmation-of-employment that agencies pass off as diligence. An agency will never go looking for a reason not to hire, because all it wants is to close.
How to use a recruiter without getting fleeced
Used well, an agency gives you one valuable thing: a flow of candidates you would not have found. Treat that as a supplement to your process, never a replacement for it.
- Keep exclusivity short: two to three weeks, no more. If the candidates are not flowing by then, move on.
- Or run two or three agencies in parallel. More than that and they step on each other, get discouraged, and stop really trying.
- Do your own interviews and technical assessment. No one can take this off your plate.
- Use a technical leader to screen and brief so you are not relying on a recruiter's grasp of the tech.
This is the same imbalance of knowledge that runs through every agency relationship, the same dynamic I have written about with agency-supplied technology leadership. The person across the table knows more than you and is paid on an outcome that is not quite yours. Knowing that is most of the protection you need.
If you are building a team and want help running the process, or a technical eye on the people an agency puts in front of you, that is something I help founders with. Let's talk.
Related: How big tech wins the talent war, and it isn't the money · The hidden conflict of interest in hiring a fractional CTO · You don't need to build a brewery to drink a pint of beer
