For years, businesses have accepted recruitment agency fees as a necessary expense. The standard model - where agencies charge 15-25% of a new hire’s salary (including super) has been the industry norm. But if you take a closer look, it’s clear that this system isn’t built to serve employers. It’s built to sustain agencies.

Recruitment fees are high not because hiring is inherently expensive, but because the contingency recruitment model is inefficient by design. Businesses are paying for far more than just recruitment. They’re covering an agency’s lost time, failed searches, and the overhead of a system that forces recruiters to prioritise speed and volume over quality.

It’s time to move on from a model that no longer serves its purpose.

How Contingency Recruitment Became a Flawed System

At its core, contingency recruitment is a gamble. Agencies work on multiple jobs at once, knowing they will only get paid if they successfully place a candidate. On average, a recruiter will fill approximately one in ten roles they take on. That means the time spent on the other nine is effectively wasted - at least from a revenue perspective.

Since agencies are in business to turn profit, they recover these losses by charging high placement fees on the roles they do fill. This creates a system where businesses aren’t just paying for the hiring work being done for them; they’re subsidising all the work done for other clients that didn’t result in a hire.

Beyond the financial waste, this model also shapes how recruiters operate. Because they only earn money when a placement is made, contingency recruiters are driven by one goal: closing the deal as quickly as possible. Instead of conducting deep searches and making thoughtful recommendations, they focus on:

• Submitting candidates fast to beat competing agencies.

• Prioritising candidates who are easy to place, rather than the best long-term fit.

• Keeping hiring managers engaged just enough to secure a placement before moving on.

Recruiters aren’t to blame for this. The model forces them to work this way - always chasing the next placement, always competing against other agencies, always working with the risk that they might walk away with nothing.

This isn’t what businesses need from a hiring partner. And in reality, it’s not what most recruiters want either.

Why the Traditional Model No Longer Works

Hiring today is different. Businesses don’t just need access to candidates - they need flexible, cost-effective support that aligns with their hiring needs. The contingency model doesn’t offer that. It locks employers into a transactional, high-cost relationship where they pay a premium for access to talent, even though recruiters are working under conditions that discourage quality and depth.

On top of that, hiring an internal recruiter isn’t always a practical alternative. Salaries for experienced in-house talent acquisition professionals can reach $150,000 per year, and that’s before factoring in tools, advertising, and ongoing hiring costs. Worse, if your company goes through periods of low hiring activity, you’re still paying that salary even when no recruitment is needed.

Employers are stuck between two inefficient options: overpaying for agency placements or committing to a full-time recruiter they may not always need.

A More Efficient Way

The problem with recruitment isn’t just cost - it’s how the cost is structured. Instead of tying hiring fees to salaries or forcing recruiters into a race to close deals, businesses need a model that reflects the true cost of hiring and allows them to pay for recruitment when they need it, and stop when they don’t.

That’s exactly how On-demand Talent Acquisition works.

Instead of charging high commissions tied to salaries, the on-demand model offers fixed, upfront pricing so businesses know exactly what they’re paying. There are no placement fees, no commissions, and no disputes over candidate ownership - just experienced recruiters working for you, not for their commission.

By separating revenue from placements, the focus shifts back to hiring well, not just hiring fast. Recruiters can take the time to find the right candidates without the pressure of competing against other agencies or closing a deal as quickly as possible. And because the service is available on-demand, businesses get the support they need without locking themselves into unnecessary costs.

The Future of Recruitment is Employer-Focused

The traditional recruitment model was built for a different era - one where businesses had fewer hiring options and agencies had all the leverage. That’s no longer the case. Companies today have access to more hiring tools and technology than ever before. What they need isn’t just more candidates - they need a better way to hire.

Paying tens of thousands in placement fees for every new hire no longer makes sense. Businesses deserve a model that works in their favour, where costs are transparent, recruiters act as true hiring partners, and hiring success isn’t dictated by commission incentives.

Recruitment doesn’t have to be expensive, inefficient, or transactional. It just needs to change.

And now, it finally can.