Why Don’t Veterinary Recruitment Agencies Publish Their Fees?

In today’s business environment, so many veterinary practices are running short-staffed and it is becoming increasingly challenging for veterinary hospitals to attract qualified veterinarians, veterinary technicians, and veterinary support staff to available job openings. In an effort to increase their applicant pool, some practices consider turning to a veterinary recruitment agency or “head hunter.”

One of your first questions when considering appointing a recruitment agency is probably a simple one: how much does a recruiter charge? Unfortunately, finding transparent information on the fees associated with veterinary recruiting can be a challenge. Veterinary recruitment firms seldom publish their fees publicly, so uncovering this information requires a bit of sleuthing. This lack of transparency creates uncertainty and chews up your valuable time… time that you would probably rather spend seeing patients, or getting a head start on your search for employees. Is hiring a recruitment agency the right choice for your practice? And, if so, how much does it cost? Find the answers here…

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What Accounts for the Lack of Transparency in Recruitment Agency Fees?

A lack of pricing transparency not only makes it difficult to assess the value of using a recruitment agency, it also makes it difficult for you to make educated comparisons between multiple recruitment agencies.

Most veterinary recruitment agencies determine their fees based on a percentage of the new hire’s compensation. If they provide you with an applicant and you decide to hire that applicant, you may be expected to pay the recruitment agency a fee that is equivalent to 10% to 30% of the employee’s total first year compensation.¹ For example, if your new associate veterinarian’s total first-year compensation will be $140,000 and the agency charges 20% of your associate’s first-year compensation, you can expect to pay approximately $28,000 for recruiting services. An extraordinary number.

Recruitment agencies that charge a percentage-based fee differ in how they calculate employee compensation. Some recruitment agencies only include base salary and benefits in this calculation, while other agencies also factor production bonuses into their determination of employee compensation. Before entering into a percentage-based agreement, you not only need to know the percentage that a recruitment agency charges, but also how they will calculate your new hire’s compensation.

Other veterinary recruitment agencies use a fixed fee model for pricing. This model is less common than a percentage-based model, but has the advantage of being more predictable. Some agencies may offer multiple “levels” of recruitment service, each associated with a different fixed fee.

Regardless of a recruitment agency’s pricing model, the actual price paid for services often varies considerably, based on the client. Percentages and flat fees are typically negotiable and, in most cases, employers should attempt to negotiate a lower rate.² Other aspects of the agency’s agreement, such as payment deadlines, are also often negotiable. Veterinary recruiters are typically paid on a commission basis, so their prices may increase or decrease based upon their need for work. It’s not uncommon for every client that is represented by a recruitment agency to be paying a slightly different fee or to be working with the agency under slightly different terms. This variation minimizes transparency, because the price you pay is ultimately determined by your negotiating skills. There is no true “set price” for most veterinary recruitment agencies; they attempt to charge the highest rate that the market will bear, and it’s up to you to see whether you can negotiate them down to a more reasonable level.

Advantages to Using a Veterinary Recruitment Agency

Recruitment agencies do have their place in the world of veterinary employment. A recruitment agency can offer a number of benefits to a veterinary hospital that is looking for new employees.

Perhaps the largest benefit of a veterinary recruiting agency is confidentiality. If your practice wants to hire a new associate without alerting your current employees or other members of your local veterinary community, a recruiting agency can be a way to avoid having your practice’s opening discovered in public job listings. Additionally, recruiting agencies can help a practice that is conducting a highly targeted search. If you are looking for a specialist, for example, a recruiter may have knowledge of specialists in your field who are open to new job opportunities.

Finally, a recruiter can be helpful if you have limited time available to devote to hiring. Some practice owners prefer to outsource preliminary interviews and contract negotiations to a recruitment agency, in order to free up time for other responsibilities. While this approach may offer time savings, however, it does mean giving up some control and flexibility in your hiring process.

Drawbacks to Working With a Veterinary Recruitment Agency

Perhaps the largest drawback to working with a veterinary recruitment agency is the high cost that is associated with these services. Paying an estimated 20% of your new hire’s salary to a recruitment agency means having less funds available to offer a competitive salary, hire additional staff to support your new employee, invest in laboratory equipment, or make other improvements in your practice.

Depending on your contractual agreement, there may be other disadvantages to working with a veterinary recruitment agency. For example, while some veterinary recruitment contracts only require you to pay the recruiter if they present you with a successful hire, many agencies also charge a retainer fee that must be paid whether or not you successfully find a new employee.¹ This means that you could end up paying a recruiter several thousand dollars, even if your search for a new employee is completely unsuccessful.

Many veterinary recruitment agencies require you to work with them exclusively in your hunt for a new veterinary team member. Obviously, this prevents you from working with other recruitment agencies. However, an exclusivity agreement may have other unanticipated impacts on your employee search. An exclusivity agreement could mean that you are required to pay the recruiting agency’s fee if you find a new hire through your own personal networking and connections, or even if a new hire approaches your practice unsolicited.¹ These exclusivity policies can have significant potential impacts on your hiring practices and can cost your practice money.

Before working with any veterinary recruitment agency, it is essential to have your contractual agreement reviewed by an attorney who is familiar with recruitment agencies. A qualified attorney can help you understand all of the implications of a recruitment agency’s contract, allowing you to make the best possible decisions about your hiring practices. If you’re thinking of using a recruitment agency, be sure to incorporate the cost of an attorney contract review into your budget.

While veterinary recruitment agencies can offer benefits for some practices, it’s important to view them in a balanced manner. In addition to the cost of these agencies, there are other potential drawbacks that must also be considered in determining whether a recruitment agency is the right choice for your employee search.

Is a Veterinary Recruitment Agency Right for You?

After reviewing the pros and cons of working with a veterinary recruitment agency, you may have an idea of what might work best for your particular situation.

However, here’s one more factor to consider:

The average associate veterinarian turnover is 16%,³ which means you can expect your new hire to remain with your practice for an average of six years. If you routinely use a veterinary recruitment agency in your new associate search, you can expect to pay a recruitment fee of up to 30% of a veterinarian’s total compensation every six years. If your total associate veterinarian compensation package is $150,000, you could end up spending up to $45,000 every six years for the services of a recruiter. Is that good value? Maybe, or maybe not.

Consider whether there are other ways you could spend that money, in order to make your practice more attractive to a potential candidate. If you are going to invest that money in your practice, is there a better way to invest it? Would a $7,500 increase in base salary, a $45,000 signing/relocation bonus, a $45,000 equipment upgrade, or an additional part-time support staff member make your practice more competitive, helping you attract more qualified candidates? If so, consider whether retaining a recruitment agency is really the best use of your practice finances, or whether you should instead focus on investing in your practice and marketing your practice to the right candidates.

Summary and Conclusion

Determining the true cost of hiring a recruitment agency can be challenging, given the lack of pricing transparency in the recruiting profession. However, you can safely assume that you will likely spend anywhere from 10% to 30%, and typically 20%, of your new hire’s first year compensation on the services of a recruiter. While some practices may evaluate the pros and cons of recruitment agencies and decide that this fee is a worthwhile investment, it’s important to evaluate your situation critically and determine whether you may gain better returns by investing that money in other aspects of your practice.

References

1. Olah, KG. (October, 2021). What You Need To Know About Recruiting. Today’s Veterinary Practice. Retrieved from https://todaysveterinarybusiness.com/veterinary-team-recruiting/ (Accessed October 19, 2021.)
2. Bacharach, CR, Kellner, RC. (December 14, 2017). Rethinking Recruitment Agency Agreements. Retrieved from https://www.gfrlaw.com/what-we-do/insights/rethinking-recruitment-agency-agreements (Accessed October 19, 2021.)
3. Veterinary Business Advisors. (January 15, 2020). Compensation Best Practices in 2020. Retrieved from https://veterinarybusinessadvisors.com/compensation-best-practices-in-2020/ (Accessed October 19, 2021.)

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