Stamp duty v recruitment fees

Stamp duty v recruitment fees

There was some good news yesterday for anyone who is thinking of moving house: the widely hated Stamp Duty Land Tax has finally been reformed, meaning that from today 98% of people buying houses will pay less of it.

This tax shares some characteristics with permanent recruitment fees, namely:

  • It’s only payable when the event actually takes place (placement / house purchase);
  • People hate paying it; and
  • There is little or no perceived value from it.

But here are the differences, as I see them:

  • You can’t avoid paying stamp duty, but you can avoid paying the recruitment fee, by doing it yourself!
  • It’s possible to view the fee as an investment rather than as a tax. It’s far less painful this way.
  • There is actually no value from paying stamp duty, but there is value to be gained from the payment of a recruitment fee.

So what is this value, and why should a recruitment fee be viewed as an investment?

Because getting the right person for your team is worth more than the fee you pay. Getting the wrong person for your team will cost you an awful lot more than just the fee. Estimates vary, but the majority view is that taking on someone who doesn’t fit in and then leaves will cost several times the base cost of employing that person, because of – for example – double recruitment fees, advertising costs, time spent interviewing, training, time spent managing, severance, impact on morale, and the opportunity cost of not hiring the right person in the first place.

The combination of the benefits of taking on the right person and the opportunity cost of taking on the wrong person is why a recruitment fee that is paid to a good recruiter should be seen as an investment.

So what IS a good recruiter? One who works to reduce the risk of getting the wrong person in place.

A good recruiter should take the following steps, over and above the basics:

  • Work out at the start what the job actually requires
  • Test candidates’ technical ability
  • Assess their behaviour
  • Analyse their motivations
  • Report on how well they fit what you actually need
  • Give you a management plan to increase the chance that they will stay for the long term.

If your recruiter is not doing these things, your risk increases. If they are, carry on using them.

Even if you move house.